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Monday, January 16, 2012 2:53 AM


Timing the End of German Chancellor Angela Merkel and French President Nicolas Sarkozy


Neither German Chancellor Angela Merkel nor French President Nicolas Sarkozy is likely to survive the European sovereign debt crisis.

The timing of the demise of Sarkozy is easy to predict. Polls suggest he will be not win the May 6 election and he might not even survive the first round of voting on April 22. Please see "Let the Euro Die" Candidate Trails Sarkozy by Slight 2 Percentage Points; Will Sarkozy Survive the First Round Vote? Eurozone About to Become Unglued

The timing of the demise of chancellor Merkel is more problematic. Technically, her splintering coalition could fracture beyond repair at any time as a series of articles in Der Speigel suggests.

January 6
Merkel's Coalition Partner on the Road to Collapse

Germany's Free Democrats have been in freefall for months. But on Friday, the party, Chancellor Angela Merkel's junior coalition partner, hit a new low. Inner-party bickering led to the collapse of a state government and a new poll found that just 2 percent of Germans would vote for the FDP today.

Some 83 percent of those asked said that the FDP has not delivered on its promises. A further 72 percent say that it isn't clear where the party stands when it comes to the euro crisis. Just 15 percent of Germans think the party is credible.

It is a situation which has not made things easier for Chancellor Merkel. The FDP's periodic hand-wringing over Germany's outsized role in bailing out struggling euro-zone countries has occasionally led to speculation that her coalition could collapse prematurely. Furthermore, she has periodically provided some legislative concessions in an attempt to breathe some life into the moribund party.

Mostly, though, it is a situation that seems to indicate that Germany's party landscape no longer has room for the FDP. After all, even the Pirate Party, which focuses almost exclusively on Internet privacy issues, is doing better than the once mighty FDP. The Pirates managed 6 percent in Friday's poll -- numbers that the current FDP could only dream of.
January 9
Confidence Wanes in FDP Leader Rösler
Despite efforts to breathe new life into their faltering message, Free Democratic Party leader Philipp Rösler could be forced to step down soon. Should he fall, Chancellor Merkel could lose much more than a key political partner. Her entire cabinet could face a significant reshuffle.
January 9
Scandal 'Could Mean the End of Merkel's Government'
German President Christian Wulff refuses to step down amid a scandal involving a threatening phone call to a major newspaper and dodgy business dealings. German commentators warn that his resignation could cause Angela Merkel's government to collapse.

The scandal surrounding Christian Wulff gets murkier by the day, but the German president is refusing to resign from the largely ceremonial position, despite growing calls for him to quit. On Monday, his lawyer even went on the offensive.

At the crux of the affair is a message that Wulff left on the voicemail of Kai Diekmann, editor in chief of the powerful tabloid Bild, on Dec. 12. The newspaper claims that Wulff wanted to prevent the publication of a damaging story about a private loan that Wulff took out. Many Germans regard Wulff's alleged threats as an attack on press freedom. For his part, Wulff insists that he only wanted to delay the publication of the story. In a high-profile television interview last week, Wulff admitted he had made a "serious mistake" by phoning Diekmann but denied he had considered resigning.

Last week, Bild said it wanted to publish the actual message as support for its version of events, but asked Wulff for his permission to make the voicemail public. The president denied the request. But on Monday, Wulff's lawyer, Gernot Lehr, said in an interview with Deutschlandfunk public radio that the president was not afraid of the message being published. If Bild "wants to do so, then let them," he said. "It is Bild's business if they want to break this taboo."

In its new issue, published Monday, SPIEGEL printed lengthy extracts from the message, after obtaining a transcript. According to the transcript, Wulff did indeed ask the newspaper to delay the publication of the story. He also, however, threatened to take legal action, which observers see as a clear attempt to stop the article's publication.

Parts of the German political establishment have already turned to the question of what will happen if Wulff steps down. On Sunday, the leader of the opposition center-left Social Democratic Party (SPD), Sigmar Gabriel, offered Chancellor Angela Merkel help in a possible search for a successor. He said if the parties could agree on a joint candidate then the SPD would not put forward its own candidate. Merkel would probably be dependent on opposition votes in the Federal Assembly, the specially convened body that elects the German president, if it came to an election. The chancellor narrowly avoided a debacle in 2010, when her handpicked candidate Wulff needed three rounds of voting to get elected, despite the government's majority in the assembly.

"So what can she do? With her coalition holding an extremely thin majority of a maximum of four votes in the Federal Assembly, putting forward another candidate to replace Wulff would be risky. This would hold particularly true if the opposition Social Democrats and Greens were to put their former candidate Joachim Gauck, who lost to Wulff in 2010 but is widely respected, back in the running. A defeat in the struggle for Germany's highest office in 2012 would send a major symbolic message for the loss of power in Merkel's coalition government. Together with the collapse of the 'Jamaica' coalition in Saarland (comprised of the CDU, the FDP and the Greens), the general withering of the FDP and the possibility of a CDU defeat in state elections in Schleswig-Holstein in May, a formidable political headwind could form that the chancellor would then have to fight during the next federal election in 2013."
January 12
German President Blasted by Party Allies
German President Christian Wulff promised transparency in a television interview last week regarding questions about his personal finances. But since then, he hasn't delivered. Several members of Chancellor Merkel's Christian Democrats, the party which propelled Wulff into office, have turned on him.

CDU parliamentarian Karl-Georg Wellmann [suggested] Wulff should resign. "A horrible end is better than horror without end," Wellmann said, in reference to the likelihood that criticism will continue to dog Wulff if he clings to his office. "My personal advice to him would be to no longer subject himself, his family and his office to (the condemnation)."

Several other CDU politicians likewise have heaped censure on the German president this week, including powerful conservative parliamentarian Peter Altmaier, a close ally of Merkel. And Bundestag President Norbert Lammert, a senior CDU member, complained in newsmagazine Stern of the "massive, comprehensive loss of trust" in the president.

"On television, Wulff promised 18 million citizens that 450 questions would be answered and made public," Björn Thümler, CDU floor leader in the Lower Saxony state parliament, told the Norwest Zeitung newspaper. "I think we are all waiting for that and that is what must happen. There is no alternative."

As of Thursday, Wulff had not budged. Instead, he stood for hours before television cameras greeting his some 80 visitors. Not all, however, accepted his invitation to the new year's reception. Transparency International stayed away, as did the German Journalists Association. In protest.
Merkel's junior coalition partner is burnt toast and clearly she has other political problems as well. Moreover, Europe is heading into a massive recession and Germany will not be immune. Can she keep a working coalition intact until the 2013 election? I rather doubt it.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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