Merkel Faces Test as Germany Hit by Political Paralysis
November 20 2017 - 9:36AM
Dow Jones News
By Andrea Thomas
BERLIN -- Germany's Chancellor Angela Merkel on Monday was
scrambling to address the biggest political threat to her
leadership in 12 years in office, after the collapse of talks to
form a new government raised doubts about the stability of Europe's
largest economy and a push for an ambitious eurozone overhaul.
The lack of progress in Berlin means Germany could stay
politically rudderless for weeks to come, putting plans by French
President Emmanuel Macron to reform the eurozone back on hold. Ms.
Merkel and her party have signaled strong reservations about his
plans -- which include a call for a common budget for countries
that use the euro -- although the chancellor has avoided rebuffing
the French leader.
Analysts said the collapse of coalition talks had inflicted
heavy damage on Ms. Merkel's authority but noted that she remained
without a credible contender in her party. Pundits will be watching
opinion polls closely for signs that voters are rallying around --
or deserting -- Ms. Merkel, which could decide her future.
Ms. Merkel's conservative alliance had been negotiating for
weeks with ideologically divergent parties after its failure to
secure a decisive victory in September's election left it needing
to form a coalition to govern. But in the early hours of Monday,
the small pro-business Free Democratic Party broke off talks with
her conservative camp and the center-left Greens, saying they had
failed to bring the parties together.
Investors initially sold the euro and German stocks on the news,
although markets later recovered.
Facing calls from business leaders for a political compromise to
end the uncertainty, Ms. Merkel was meeting Monday with President
Frank-Walter Steinmeier to chart out her next steps.
Under Germany's constitution, the collapse of coalition talks
leaves a host of options that would be unpalatable to Ms. Merkel.
It is up Mr. Steinmeier to start the process toward figuring out
these options: chief among them a minority government -- a rarity
in Germany -- that could struggle to pass legislation or new
elections that would likely produce similarly muddled results as
two months ago.
The Social Democrats, the previous coalition partner of Ms.
Merkel's Christian Democratic Union, has ruled out being a
coalition partner and reiterated that position on Monday.
Martin Schulz, the chairman of the Social Democrats, said the
failed coalition partners had brought "Germany into a very
difficult situation."
"We aren't afraid of snap elections," he added.
Under Germany's constitution, fresh elections would take weeks,
or more likely months to organize, and they may not chart a way out
of the impasse: Recent opinion polls suggest new elections would
yield a similar result to those of two months ago.
Over the past four weeks, Ms. Merkel had tried to bridge
longstanding divisions among the conservatives, the Greens and the
pro-business Free Democrats on issues such as migration, climate
and the environment. One of the key sticking points was the Greens'
views on migration and the CSU's insistence on capping the
influx.
The parties had also struggled to agree on greenhouse-gas
emission targets ambitious enough to meet the goals set by the
Paris accords on fighting climate change without burdening
Germany's industry with excessive costs.
The Free Democrats, meanwhile, insisted on abolishing over the
next four years the "solidarity tax" added in 1991 to help fund
development in the former East Germany.
The Free Democrats said Monday the collapse of talks didn't
necessary mean that Germany would be headed toward snap elections
and that the party was willing to support a minority
government.
"If there are good initiatives, we will be available," the
party's parliamentary whip Marco Buschmann said. "We don't want
fundamental opposition but want to weigh in constructively."
Some analysts say that another election could benefit the
anti-immigration Alternative for Germany, which won its first seats
in national parliament in September. The party's leader called for
Ms. Merkel to step down.
"Ms. Merkel has failed and it's time for her to go as
chancellor," said Alexander Gauland, the co-leader of the party's
parliamentary group. "We believe that there is a conservative
majority [in the lower house of parliament], but for this the
Christian Democrats would have to change very much. We hope that
Ms. Merkel's failure will prompt the Christian Democrats to
rethink."
Ms. Merkel's conservative sister party, the Christian Social
Union, has pushed for a move rightward, suggesting that her move to
the center had left an opening for the anti-immigrant party among
conservative voters.
Write to Andrea Thomas at andrea.thomas@wsj.com
(END) Dow Jones Newswires
November 20, 2017 09:21 ET (14:21 GMT)
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