Will Merkel survive to lead an unwieldy coalition?

The recent Italian and Austrian elections have brought in populist parties and seem to be opening up cracks in the European Union, especially on immigration issues.

The same strains are now affecting the German coalition government and Merkel’s future after 13 years in office. With stakes for Germany and for the European Union that could not be higher, the fate of German Chancellor Angela Merkel will be decided in the next few weeks with far reaching implications for the Euro and European Central Bank policies.

German Interior Minister and Christian Social Union (CSU) leader Horst Seehofer, Merkel’s coalition party partner, has won the support of the CSU rank and file in a special party meeting to proceed with his unfortunately named “Master Plan” to sharply crack down ‎on immigration into Germany, including a refusal to allow entry by migrants who have already applied for asylum in other EU countries.

While the probability of success is still doubtful, as Interior Minister, Seehofer has threatened to proceed with a ministerial decree, in response to which Merkel would almost certainly sack him. That would, in turn, all but ensure a full rupture between Merkel’s Christian Democratic Union (CDU) and the CSU, and very likely trigger a collapse of her government.

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More likely, however, is a compromise in which Seehofer wins CSU support for his defiant showdown with Merkel, but with implementation delayed until after Chancellor Merkel goes to Brussels for the European Summit meeting on June 28 and 29, where she has promised to “do the utmost” to reach “bilateral agreements” with” the most relevant EU member states.”

Seehofer’s move may in fact give Merkel some tailwind in those negotiations, especially with the staunchly anti immigrant Italian leader Conte. But maybe not enough. If Merkel fails to win enough concessions in Brussels, she may be forced to return to Berlin to call for a vote of confidence for what she did bring home, which may be her last play left.

A majority of Bundestag deputies are probably fearful of losing their seats in a new federal election, especially in Bavaria where the CSU is facing a resurgent right wing German anti immigration party the AFD. But a loss of the confidence vote would mean asking German President Frank Walter Steinmeier to dissolve the Bundestag.

The asylum row

But even success on a compromise with the CSU as Horst Seehofer, has signalled he is open to giving more time to reach a deal with Germany’s EU partners over an asylum row that has threatened to bring down her government, or another in Brussels still would not mean an end to the German political crisis: Merkel still needs the backing of her junior coalition partner, the Social Democrats, who could still reject the compromise carved with the CSU and in Brussels; that too would almost certainly lead to a serious crisis, if not collapse of the Merkel-led government.

A vote of no confidence is the probable outcome - Merkel herself cannot resign per se but only leave office through a so-called “constructive” vote of no confidence on behalf of a challenger – is more likely than snap elections. In a lost confidence vote, President Steinmeier would be likely to grant the CDU as the largest party another shot at forming a new government before resorting to calling for new elections.

Just like in the Italian elections, when the populist parties choice of Finance Minister was blocked by the Italian President, the role of Bundestag President Wolfgang Schaeuble then becomes pivotal.

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Schaeuble gave a rousing speech to rally the CDU to Merkel’s side after the failure of a four person, near three-hour negotiation between Merkel and Seehofer who emerged from emergency talks with his CSU saying he had no intention of toppling Merkel.

But his conditions for staying with Merkel are clear – he wants police stationed at borders to turn back refugees and migrants arriving from other EU countries but signalled he would give Merkel two weeks’ grace to reach migration agreements with EU partners.

Seehofer has said these migrants should be turned away at the German border whereas Merkel has said this can only happen with the agreement of the relevant EU states. Merkel is only too aware of the fragility of European unity and that a full consensus is going to be a hard battle for her as the EU has been sorely tested over the refugee crisis.

She fears a situation in which people are sent from country to country, with countries like Greece and Italy continuing to bear the brunt of the crisis.

Defying Merkel

By comparison, Schaeubale would never openly defy Merkel, though interestingly, TagesSpiegel, an influential newspaper in which his daughter is a chief editorial writer, has been consistently taking a highly critical line against Merkel, for the sake of political neutrality of course.

There is the possibility that Schaeuble is positioning himself to step into the breach to replace Merkel as CDU party leader if she resigns or loses a vote of confidence, and to lead negotiations to form a CDU/CSU minority governing coalition with the Free Democrats.

The Free Democrats – under its leader Christian Lindner – has shifted to the right and aligned with the CDU right faction led by Health Minister Jens Spahn and the CSU’s Bavarian Prime minister Martin Soeder, who is the power behind Seehofer.

The threat for the CSU to join an “Axis of the Willing” with Austria and Italy that so bizarrely invoked not only the Nazi alliance with Italy in the Second World War but President Bush’s invasion of Iraq has added an almost surreal quality to the political crisis.

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But the warning lights have been there all along – ever since the elections last September it showed how fragile Chancellor Merkel’s government was going to be due to the strains to her right with the Christian Social Union and a minority faction within her own Christian Democrats.

That now seems to be playing out, although it has been somewhat surprising how quickly Seehofer’s gambit over the immigration issue has escalated into a political crisis.

Whether the Iron Lady of Germany will once again survive intact to lead an unwieldy coalition in the face of both inter European immigration issues or facing down President Trump on tariffs is an open question, although in a perverse way.

The latest Trump tweet criticizing European immigration policy, and implicitly Merkel, might give the German Chancellor some support from her countrymen.
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Dr. Mohamed Ramady is an energy economist and geo political expert on the GCC and former Professor at King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia and co author of ‘OPEC in a Post Shale world – where to next ?’. His latest book is on ‘Saudi Aramco 2030: Post IPO challenges’.