The political career of German Chancellor Angela Merkel, the world's most powerful woman for nearly a decade, enters a twilight zone in 2020, the penultimate year before her fourth and final term officially ends in 2021 even as Berlin faces major foreign policy challenges.

While the grand dame of Germany hopes to complete her full term, recent developments in domestic politics could very well hasten her departure if she doesn't play her cards well.

With her junior coalition partner SPD earlier in November electing a left-leaning leadership duo critical of working under the shadow of Merkel, a sudden collapse of her struggling government looked imminent.

This was avoided after a key SPD congress in December voted overwhelmingly in support of a plan by co-leaders Norbert Walter-Borjans and Saskia Esken to open "discussions" with Merkel's CDU/CSU conservatives on demands that will determine the fate of the alliance.

That the pair, nicknamed "Eskabo" by local media, didn't push to bring down the government has brought a momentary relief for the German leader, however analysts say that the coalition remains shaky with many younger, leftwing SPD members preferring to severe links with the Merkel era.

Merkel's spokesperson has said the veteran chancellor, in power since 2005, is "open" to talks about the demands. But if the new SPD leadership doesn't see adequate progress in the weeks and months ahead, it may still choose to walk away - potentially triggering snap elections that might very well see Merkel's premature exit.

Merkel, who turns 65 next July, meanwhile has given ambiguous signals about what role she might play in EU and world politics after her term ends.

Her political influence may be fading, but she still wields power over the fourth-largest economy in the world and the European Union's (EU) largest member state, making her the bloc's de facto leader. 

Variously described as the "Queen of Europe" and the "leader of the free world", Merkel has often remarked about her "responsibility" for Europe's future, prompting speculations that she may be open to an active role in European politics.

"Many people are worried about Europe, including myself," she told German daily Süddeutsche Zeitung. "This gives me an even greater sense of responsibility to take care of the fate of this Europe of ours together with others."

However, the veteran leader has also proclaimed that she "will not be available for any political office, no matter where, not even in Europe" after she steps down in 2021.

Foreign policy challenges

While Merkel's political future hangs in balance, Germany is faced with more foreign policy challenges than ever since the countries reunification in 1990.

These include an aggressive Russia, a rising China, a divisive relationship with Washington, and ongoing disagreements with France about the European Union's future, according to a report by Foreign Policy Research institute (FPRI), an American think-tank based in Philadelphia, Pennsylvania.

"The world's great powers are jockeying for influence with assertiveness unseen for several decades. Merkel's Germany is stuck in the middle, under pressure from all sides," it notes.

The FPRI report points out that there are "deeper contradictions" in Germany's ties with China, which surpassed the U.S. as Berlin's biggest trading partner in 2016.

Germany is planning an EU-China summit in Leipzig next year that should set the stage for the signing of a long-coveted bilateral investment treaty. Yet the German political elite is deeply divided about how to approach China's growing power and technological prowess.

"Is China a partner or a competitor?" the authors of the FPRI report ask, while also promptly concluding that "the answer will shape Germany's role in the world and its relationship with the United States."

Merkel will surely be among the most closely watched global leaders in 2020 as she tackles a host of foreign policy challenges while fighting a tough battle of political survival at home.