Chancellor Olaf Scholz is struggling to persuade Germans he can handle the litany of troubles looming over the country he has led since 2021.

With his coalition government beset by squabbling, the shadow of a recession lingering, and the industrial base underpinning its economic model under threat, the Social Democrat who won office after a hapless campaign by the Christian Democrat Union is on the back foot again.

The sense of drift has opened the door to a surge in far-right support, eroding a political consensus underpinning almost eight decades of prosperity since World War II. The country led by Scholz finds itself in one of its most unsettling moments since reunification in 1989.

German-made tanks deployed in Ukraine and nuclear missiles moving closer in Belarus show how security priorities have suddenly changed. A rushed energy transition has found greater urgency with an end to Russian gas flows. Meanwhile China’s electric vehicle push is threatening the car industry that drives Europe’s biggest economy.

The combination of challenges heaps pressure on a 65-year-old chancellor whose limited charisma isn’t helping. His response is an awkwardly cheery tone, offering hope and reassurance to an uneasy public.

“Many citizens are not so sure how the future will be — not now, but in 10, 20 or 30 years,” Scholz told reporters on Friday in Berlin. “For me that means that one has to follow a policy which gives people enough reasons to believe in a good future.”

His message is a direct response to the surge of the Alternative for Germany — commonly known as the AfD — which leapfrogged his center-left SPD in polls to become the second-most popular party behind Friedrich Merz’s CDU-led conservative movement.

While that partly reflects Merz’s failure to capitalize on discontent with Scholz, it falls to the chancellor to act. Only about a fifth of voters back the AfD, less than peers in France or Italy, but Germany’s extremist history means it’s too sensitive to ignore, forcing Scholz’s inner circle to pay attention.

His advisers reckon a sense of decline is darkening the mood, driving Germans to the right. Scholz believes a society which doesn’t see a future for itself will vote extreme, according to a person familiar with his thinking.

The chancellor, an avid reader whose briefcase always contains a book by some big thinker, recently revealed he’s working his way through “Pragmatism as Anti-Authoritarianism” by the American philosopher Richard Rorty. That may well inform his approach.

For a modern democracy, “members of such a society must be able to tell themselves a story about how everything can get better,” Scholz says on his own website, referring to Rorty. “They must not see any insurmountable obstacles to this story becoming true.”

War, inflation and a recession are hurting that narrative — as is the sense that Germany’s high point is past.

An Allensbach poll in January, for example, showed only 39% still think the country will be a leading industrial nation in 10 or 15 years — down by a fifth from 2018. Its sway over the global car market suddenly seems vulnerable as China focuses its electric vehicle push on Europe.

Meanwhile the government’s policy agenda of climate protection was hijacked by the war in Ukraine, forcing a race to find alternative energy sources and build a liquid natural gas infrastructure from scratch. Scholz, in a Friday press conference before his summer break, pointed to this as a key achievement.

Scholz audaciously promised a €100 billion ($112 billion) defense fund to end chronic underinvestment in Germany’s army, but that semblance of decisiveness was overshadowed by a reluctance to send weapons to Ukraine. Domestically, the government delivered 105,000 fewer new apartments in 2022 than pledged, and missed key climate goals.

Recent surveys show dissatisfaction of as much as 79% with Scholz’s three-party coalition with the Greens and pro-business Free Democrats. Weighing too is the SPD’s longstanding participation in German governments over the past 12 years.

“As a political leader in a crisis, it’s probably too much to expect of him to comfort people and give them a sense of security and safety,” said Olaf Hoffjann, communication expert and professor at the University of Bamberg. “He is having a hard time winning people over.”

Chancellery insiders remain sanguine, insisting AfD support will fade once the coalition overcomes disagreements and voters see the results of recent policy decisions.

As one example, officials point to Intel Corp’s decision, encouraged by a large government subsidy, to invest more than €30 billion in a new semiconductor factory in Saxony. That’s one of three states in the former communist East where the AfD is projected to become the strongest party in regional elections next year.

Chancellery officials say similar announcements are pending, including the creation of more factories as talks with several companies from the US and Asia conclude.

But the flagship project of Scholz and his coalition partners, most notably the Greens, is to retool Germany for a carbon-neutral future. A recent initiative to effectively ban new fossil-fuel boiler systems next year was branded a “heating hammer” by the country’s Bild tabloid.

The AfD’s success is tapping into discontent about such bigger national challenges. Its position of questioning the impact humans have on global warming, stemming record immigration, and channeling skepticism on the war, sets it apart from the mainstream parties.

Earlier this month, the AfD won its first ever mayoral election in the East German town of Raguhn-Jessnitz. A week before, it clinched the district council of Sonneberg, also in the East.

The optimistic response of Scholz, a one-time lawyer and former mayor of Hamburg, in western Germany, sometimes relies more on hope than expectation.

In January, in contrast with more cautious colleagues, he declared on Bloomberg Television that Germany would “absolutely” avoid a recession. The economy was actually shrinking at the time for a second consecutive quarter.

Coalition infighting has hurt. The heating policy in particular pitted Economy and Climate Minister Robert Habeck, a senior Green, against Finance Minister Christian Lindner, leader of the Free Democrats, who he accused of letting lawmakers pick the draft law to pieces.

Insiders say Scholz sees coalition ructions and the AfD’s rise as evidence that Germans have lost the ability for compromise.

In public, voters glimpsed the strain when, in a town near Berlin, he snapped at rightwing protesters accusing him of aggression by aiding Ukraine. Scholz told reporters on Friday that he was glad to be going on holiday.

Ultimately, if the chancellor’s analysis on the AfD holds, confronting Chinese ascendancy might offer a more active response.

“Is Germany going to just sit back and say, ‘ok fine we’ll just accept all of your electric vehicles to the detriment of our economy?’” Freya Beamish, chief economist at TS Lombard in London, told Bloomberg Television. “I don’t think so.”

The chancellor, whose SPD once led opposition to the Nazis before being crushed under totalitarianism, remains determined to use opimism against the rise of the AfD. He even calls it the “bad mood party.”

“I’m confident that the AfD will not score differently at the next federal election than it did in the last election,” he said on Friday.

--With assistance from Alexander Weber, Kamil Kowalcze, Francine Lacqua and Michael Nienaber.