Fourth-term election victory for Merkel, but surge for far-right
(AFP photo: German Chancellor and CDU party leader Angela Merkel addresses supporters with her party colleagues after exit poll results were broadcast)
(Bloomberg) Angela Merkel won a fourth term as German chancellor in a victory that was marred by her party recording its worst result since 1949 as voters lifted the populist AfD into parliament in a clear rebuke to her open-doors refugee policy.
Sunday’s federal election saw support hollowed out for the two main parties -- Merkel’s Christian Democrat-led bloc and Martin Schulz’s Social Democrats -- as votes flowed to the anti-immigration Alternative for Germany, or AfD, in a sign of the growing polarisation in Europe’s biggest economy. Six parties are now poised to enter the lower house, the Bundestag, for the first time since 1953.
The principal loser was Schulz’s Social Democratic Party, Merkel’s main challenger, which plunged to a postwar low. The party leadership immediately announced its intention to go into opposition and not renew the so-called grand coalition with Merkel’s party that has governed for the past four years.
The AfD out-polled the pro-business Free Democrats, the Greens and the post-communist Left to become the first far-right party in the Bundestag since the immediate postwar period, after it channelled voter rage at Merkel for allowing some 1.3 million migrants to enter the country since 2015.
"Clearly, we had hoped for a somewhat better result but we achieved the strategic targets of our election campaign," Merkel said at her party’s headquarters in Berlin. Apart from the challenge of the AfD, the task ahead is "first and foremost to ensure economic prosperity" and "to hold the European Union together and build a strong Europe," she said.
The result offers Merkel two possible routes to govern: The first is to add the environmentalist Greens to a coalition with the Free Democrats, her party’s traditional allies with whom she governed from 2009 to 2013, in a so-called Jamaica coalition -- so named as the party colours match those of the country’s flag. While it’s a combination previously untested at national level, such a government was formed this year in the state of Schleswig-Holstein, and the chancellor has kept tabs on the region’s progress ever since.
"Jamaica is doable," Annegret Kramp-Karrenbauer, the CDU state prime minster of Saarland, told broadcaster ZDF.
For all their ideological differences, both the Greens and Free Democrats want to be in power, so "will make an effort to agree," Famke Krumbmueller, a partner at political-risk consultancy OpenCitiz, said by phone. "If that fails, then the only option would be with the SPD. That would force their hand, since the only other option is a new election."
Even as she faces the most splintered parliament in modern German history, Merkel’s record-equalling fourth consecutive victory in a national election marks a revival of sorts of her political fortunes from the depths of the refugee crisis. If she can move to heal some of the divisions, Germany’s first female leader and the first from the formerly communist east may be on track to match former Chancellor Helmut Kohl’s record of 16 years in office.
All the same, the first task for Merkel, 63, is to forge a coalition that enables her to govern, a process that’s likely to take months. Once a government is in place, Merkel will face huge global expectations -- from shoring up the euro area together with France, to setting Europe’s tone in its dealings with the U.S. under President Donald Trump, and tackling the diesel-emissions crisis that threatens Germany’s dominance in producing luxury cars.
The prospect of a coalition involving the Greens might weigh on stocks in the auto sector at the opening on Monday, while lengthy talks to form a government could threaten to drag on the euro.
All the same, speculation that the FDP’s relatively hardline stance toward Europe could threaten efforts to work with French President Emmanuel Macron on euro-area integration "is often overdone," according to Holger Schmieding and Florian Hense at Berenberg in London, who said the party’s views would likely moderate over time.
"Jamaica is the best solution by a long way," Schmieding said in an interview. While putting together such a coalition wouldn’t be easy, he predicted that it wouldn’t materially alter Merkel’s policy on Europe.
Schulz’s defeat means the Social Democrats haven’t won an election since 2002. A former president of the European Parliament, Schulz, 61, appeared a formidable contender when the SPD pulled virtually even with Merkel’s bloc soon after he entered the race in January. But his surge quickly faded and he failed to convince voters to turn their backs on Europe’s longest-serving leader.
In the traditional post-election debate with the other party leaders on Sunday evening, Schulz said the SPD would form a strong opposition to the next government, which he said he was "sure" would be a three-way Jamaica coalition, since "Merkel will make any concession possible to hold on to the chancellery."
Merkel and other leaders rounded on the AfD’s Joerg Meuthen, who said the government had broken the law by allowing Germany’s biggest refugee influx since the war.
Founded as an anti-euro party opposed to financial bailouts for Greece and other southern European nations, the AfD narrowly missed out on Bundestag seats four years ago. With new leadership and a campaign focused on immigration -- its platform demands shutting the border to new asylum seekers and calls Germany’s Muslim majority "a great danger to our state" -- it succeeded in tapping into a well of discontent with Merkel’s policies.
The election outcome "is in a way a defeat for Merkel -- it’s a form of punishment," Carsten Brzeski, chief economist at ING-Diba in Frankfurt, told Bloomberg Television. "It shows that a lot of people weren’t very satisfied with Merkel. They wanted to teach Merkel a lesson."