Merkel's Euro Strategy at Risk from Partner in Freefall

Spiegel
September 19, 2011

The pro-business Free Democrats, Angela Merkel's coalition partner, is in electoral meltdown, having scored just 1.8 percent in the Berlin election on Sunday. It is the latest in a string of crushing defeats and poses a big risk to Merkel and to the euro rescue. The FDP is resorting to populist euro-skepticism to save itself.

Europe is pinning its hopes for a euro rescue on German Chancellor Angela Merkel. But her power to take decisive action has been seriously curtailed by a series of regional election defeats for her party, the latest having come in Berlin on Sunday, and by growing euro-skepticism from her junior coalition partner, the Free Democrat Party, which is in electoral meltdown.

The pro-business FDP was humiliated in Berlin where its support slumped to just 1.8 percent, well below the 5 percent threshold needed to remain in the city-state parliament. The party has now crashed out of parliament in five of the seven state elections held this year -- a disastrous record that has sparked predictions of its demise and stems in part from its failure to deliver on its election pledges, especially tax cuts, since it re-entered government in 2009.

Its leader, Economy Minister Philipp Rösler, who is also Merkel's vice chancellor, has responded with a desperate campaign to regain votes by challenging Merkel's euro policy. The move comes just as the crisis is at risk of heating up once again with financial markets increasingly nervous about contagion, Greece falling short of its austerity pledges and Merkel facing a crucial euro vote in parliament later this month.

Rösler upset European markets last Monday by saying Greece may need an "orderly bankruptcy" to stabilize the euro. He was the first German cabinet minister to talk openly about that possibility, which contradicted Merkel's pledge that Greece should be kept afloat.

Merkel publicly rebuked him but the 38-year-old FDP leader reiterated his statements, well aware that his stance chimes with many German voters who are deeply worried about having to foot the bill for bailing out euro-zone nations struggling under mountains of debt.

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