Blog Carsten Brzeski

Germany: Merkel sunset postponed

The growing government crisis in Germany got a ceasefire today. However, the pure fact that the interior minister has given the chancellor a kind of ultimatum shows once again how stressed the situation is

It is probably an almost normal political phenomenon that the longer a politician is in office the higher the number of swan songs will get. German Chancellor Angela Merkel has survived and managed several difficult situations during her almost 13 years in office. However, most of these crises were at the European stage. The current one is at the domestic stage. And even worse, it is within her own coalition. Angela Merkel’s political survival has never been more at risk than currently.

What is happening?
To a large extent off international radar screens, the refugee crisis has returned to Germany. Scandals at regional offices of the Federal asylum agency, the murder of a 14-year old girl with an asylum seeker as a suspect and tough talks by Merkel’s Bavarian sister party, the CSU, have dominated media and political headlines for weeks. On the back of these returning tensions, a conflict between Merkel’s CDU and the Bavarian CSU has heated up. The CSU wants German police to prevent refugees, who are registered in another EU country, from entering Germany. Merkel blocked their plans, arguing in favour of a European solution. This debate has led to a damaging fight that is out in the open between Merkel and her interior minister and chairman of the CSU, Horst Seehofer.

Seehofer threatened to issue an order to implement his will. According to German law, ministers can introduce new policies in their respective domain, without the government’s agreement. At the same time, the chancellor can fire ministers. A clear deadlock and political gambling by the CSU with a high prize. It is hard to see how particularly the CSU wants to solve the situation without any severe loss of face or a collapse of the government.

Today, both parties agreed on some kind of ceasefire. Merkel and Seehofer, in two separate statements, announced that Merkel will try to find a European solution at next week’s European Summit, while Seehofer will prepare measures to prevent refugees from entering the German border until early July. Chancellor Merkel also stated that there was no automatism after the European summit, trying to play down that effectively Seehofer seems to have given her an ultimatum. In our view, this simply means that the conflict has only been postponed. It looks highly unlikely that European leaders will agree on details next week, common principles and intentions at best.

Any upside?
The only upside of this severe political crisis in Germany could be that Merkel will now be forced to give away more than currently expected on other policy areas to the rest of Europe. Her domestic fragility could mean that she will be somewhat more willing to push on with Eurozone reforms - even though it is questionable whether this would be in the CSU’s interest.

Merkel's worst crisis ever
Angela Merkel is currently going through the worst political crisis since she entered office almost 13 years ago. However, this does not necessarily mean that the government is about to collapse. The CSU is playing a dangerous game but looks unlikely to benefit from a collapse of the government. This would backfire for the Bavarian elections in October, also due to the fact that a possible splitting of CDU and CSU would bring the CDU to Bavaria and would cost the CSU votes.

Nevertheless, the political tensions will remain. An entire range of scenarios looks possible, ranging from a muddling through, CSU budging or a strengthened European Merkel to a fall of the chancellor, replaced by Wolfgang Schäuble, a full collapse of the government and new elections. We will not join current speculations but one thing is clear: the hope that a strong German government can lead further reforms in the Eurozone has taken a severe hit.