Brussels (AFP) - Germany's political crisis threatens to paralyse the EU, experts warn, robbing it of Chancellor Angela Merkel's leadership just as it wrestles with Brexit negotiations and ambitious French proposals for far-reaching reforms.
The collapse of Merkel's efforts to form a ruling coalition in Berlin means Europe's biggest economy faces months without a proper government able to take bold decisions, undermining hopes of relaunching the EU after the shock of Brexit.
The EU insisted on Monday that it was unconcerned by the upheaval in Berlin, but there is little doubt it brings fresh uncertainty to a European Union already grappling with the departure of one of its members, the crisis in Catalonia and the growing threat from Russia -- and casts a shadow over next month's summit on the future of the euro.
European leaders led by France's President Emmanuel Macron had hoped to use the shock of Brexit as a springboard to deepen defence, political and economic ties and revamp the bloc's institutions.
But with Merkel -- by far the EU's longest-serving leader -- hamstrung this will be no easy task, as Austrian Finance Minister Hans Joerg Schelling spelled out.
"I believe that this failure has created a very difficult situation," Schelling said as he arrived for talks with fellow ministers in Brussels.
"Germany is a driving force of the European idea. We are in the middle of a phase where we discuss if and how we deepen Europe -- and there such a partner is of vital importance."
- 'Vacuum in leadership' -
For Macron, who had been waiting for Merkel to form a government to start serious talks about his ambitious EU overhaul plans, which include creating a new eurozone finance minister position, the crisis comes as a major blow.
Dominik Grillmayer, of the French-German Institute in Ludwigsberg, Germany, said that without Merkel's support, Macron was in no position to play "the strong man of Europe".
"He needs Germany for his reforms -- he underlined the need for German agreement in his election campaign," Grillmayer said.
"It's bad news for Europe: there is no one who can fill the gap left by Merkel."
The crisis also has major implications for Brexit negotiations, which are effectively deadlocked over Britain's divorce bill, citizens' rights and the Irish border.
Olaf Boehnke, a foreign policy expert at the Rasmussen Global consultancy, said the weakening of Merkel had left a "vacuum in European leadership" that would make it harder for the EU to compromise with the UK.
"London should be watching with concern as Berlin's political focus continues to look inward for quite some time and the clock is ticking, making the current EU position unlikely to move," Bohnke said.
And Sebastien Maillard, director of the Jacques Delors Institute, warned that Britain would be wrong to think the crisis in Berlin gave them a chance to wrest a better deal from the EU.
"Possibly the British will want to exploit this weakness politically, but the Germans are among those who are most annoyed by the idea of Brexit -- and the most hardline," Maillard told AFP.
"Whoever's in the coalition, this is not an issue where the Germans will be divided."
An EU source agreed, saying that despite British efforts to split the bloc, Germany was still united alongside the 26 other member states.
"It's not a disempowered German government -- there's huge consensus around its European policy -- I think (worries are) a bit exaggerated," the source told AFP.
- 'Crisis for the West' -
News of the collapse of talks pushed the euro and Germany's blue-chip DAX stock market index down slightly, and while they later clawed back gains, the stability of Europe's economic powerhouse is vital to the rest of the continent.
And a major doubt now hangs over next month's summit on the euro in Brussels, which was due to have featured 27 countries without Britain, with an EU source saying if Berlin asked for postponement "I think we would have to".
It is scarcely the early Christmas present that those in the corridors of power in Brussels would have wished for, and Germany's Suddeutsche Zeitung newspaper put the extent of the challenge in stark terms.
"The crisis in Berlin is a crisis for the continent. And if we add the unpredictability of the United States under Trump, it becomes a crisis for the West," the newspaper wrote.