Merkel, chancellor since 2005 and the EU's longest-serving leader, was sworn in Wednesday with a "grand coalition" of Germany's biggest parties. That ended nearly six months of drift after September's election, during which Germany's voice in the world has been weakened by the domestic political impasse.
Merkel can turn her attention fully to matters such as French President Emmanuel Macron's months-old proposals for ambitious reforms of the EU and its currency union, and U.S. President Donald Trump's threats of trade tariffs against the EU and even taxes on German automakers.
Merkel, 63, has long dismissed the notion that she should be regarded as the "leader of the free world" following the election of Trump, who is unpopular in Germany and elsewhere in Europe. She says no one person or country can solve every problem.
However, German President Frank-Walter Steinmeier underlined expectations that Germany should serve as an example as he formally appointed her government.
He said "these are testing years for democracy," with authoritarian alternatives gaining in confidence. He added that an "everyone against everyone else" mentality is spreading in world politics, including trade policy.
"The expectations of our friends and partners are huge, particularly in Europe," Steinmeier said. "Many hope we in Germany will show that liberal democracies are capable of acting and facing the future."
Merkel's first trip abroad will take her to Paris Friday to meet Macron. In comments published Wednesday by Germany's Frankfurter Allgemeine Zeitung, the French leader was quoted as saying that "if Germany doesn't move, part of my project is condemned to failure."
"I don't think for a second that a European project can succeed without or against Germany," he added.
Elsewhere in Europe, Italy has entered postelection political gridlock just as Germany's ends. And there are growing tensions between western nations and countries in eastern Europe, such as the nationalist governments of Poland and Hungary.
"There is quite a crisis of multilateralism, and the best answer is multilateralism in the form of the European Union, a united position of the member states," Merkel told ARD television when asked Wednesday about the Europe-U.S. trade dispute. She added that she's counting on talks but Europe should have "no fear" of taking its own measures if that proves necessary.
At home, Merkel will have to hold together potentially her most fragile governing coalition yet in what is widely expected to be her last term. Asked whether it is, she replied: "I always give the answer when it's necessary."
The new coalition contains the same parties as her last government - her Christian Democratic Union, its Bavaria-only sister party, the Christian Social Union and the center-left Social Democrats - but building the new administration has been unprecedentedly difficult after all three lost significant support in September.
Wednesday's parliamentary vote to re-elect Merkel came 171 days after the election, nearly double the previous record. The Social Democrats initially planned to go into opposition after crashing to their worst result since World War II, but Steinmeier nudged them into a reluctant about-turn after Merkel's talks with two smaller parties collapsed in November.
Merkel was able to take office only after two-thirds of the Social Democrats' members approved in a ballot the coalition deal clinched last month. With all the coalition parties keen to send signals of renewal, she leads a much-changed Cabinet.
At least 35 coalition lawmakers didn't support her in Wednesday's 364-315 vote, and Merkel won only nine votes more than the absolute majority she needed. Opposition leaders portrayed that as a blow to her authority, though the result was in line with those at the beginning of Merkel's two previous "grand coalitions."
She faces a deeply divided opposition led by the nationalist Alternative for Germany, which entered parliament in September after campaigning hard against Merkel and her 2015 decision to allow in large numbers of migrants.
"We aim to solve the problems of those who voted for this party in protest, and so of course we aspire to make it smaller and if possible get it out of the German parliament," Merkel said.
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