Saturday

23rd Jul 2016

Merkel suffers major defeat in German state vote

  • The result comes after Greek voters said No to austerity one week ago (Photo: consilium.europa.eu)

German Chancellor Angela Merkel's Christian Democratic Union (CDU) suffered a bitter defeat in a key regional election Sunday (13 May), in a result likely to make it more difficult for Berlin to continue to push austerity-only measures at the EU level.

Preliminary results for the parliamentary election in North Rhine Westphalia - the country's most populous state - showed that the centre-right CDU received 26.3 percent of the votes, roundly beaten by the Social Democrats who scooped 39.1 percent.

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The Green Party picked up 11.4 percent of the vote meaning that the socialist governor, Hannelore Kraft, should now be able to form a majority coalition, having ruled a minority government for the last two years.

"It is such a great feeling to be ahead again for the first time in 12 years," said Kraft, who pushed the state further into debt but through creating more police and teaching jobs. She said it was a "clear signal" to Berlin.

The result - the worst showing for the CDU in the state since World War II - is a major political blow for Merkel, who had tried to paint the local government as irresponsibly running up debt.

German newspapers and centre-right politicians are portraying the defeat as dire and "catastrophic" with state elections due to take place in September next year.

Statements by those from within the CDU had raised the stakes further. Norbert Roettgen, the CDU's candidate in the state, in the run-up to Sunday's vote drew direct parallels between the internal debate in North Rhine-Westphalia and that of the more general debate contrasting prudent Germany versus profligate Greece, which has needed two bailouts.

It was a parallel that interested many outside Germany too.

Berlin, the eurozone's paymaster, has for the last two years demanded that all member states impose austerity measures to cut budget deficits. The message culminated in the recently-signed fiscal compact treaty, which enshrines balanced budgets into national law.

Sunday's defeat is likely to reduce Merkel's political authority for continuing to impose Germany's view of fiscal prudence across Europe.

The result also comes just a week after the Socialist candidate, Francois Hollande, won the French presidential elections. During his campaign, Hollande rejected Germany's one-sided focus on budget cuts and higher taxes. On the same day, the overwhelming majority of Greeks voted for anti-austerity parties in the country's parliamentary election.

In Brussels itself, meanwhile, the European Commission is strongly pushing a message of budget "consolidation" plus targeted investment. The two prevalent ideas on the table are project bonds, involving the private sector in funding investment projects, increasing the lending capacity of the European Investment Bank.

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