A Bavarian Harbinger of a Difficult Election Year
for Angela Merkel
By Elmar Sulk

Last Sunday, the Bavarian conservative party CSU, one of Angela Merkel's allies in the grand coalition, encountered its "Waterloo" moment (Frankfurter Allgemeine Zeitung), because it received only a 43.4 percent share of the vote in the Bavarian state election compared with 60.7 percent five years ago. On the very same day, the chancellor's Christian Democratic Party (CDU) was not even runner-up in the local elections in the state of Brandenburg. In her home state, Chancellor Merkel's CDU came in third, behind the Social Democrats (SPD) and the leftist Die Linke, a blend of former communists and former Social Democrats dissatisfied with Gerhard Schröder's reform strategy, especially regarding labor market policy. It is unclear at this point whether this means that a coalition against Angela Merkel's CDU can be built after the federal election in September 2009. For now, polls show that at least another grand coalition together with the SPD could be the result.

But the outcome in Bavaria and Brandenburg has demonstrated that it is a distinct possibility that after the 2009 federal election the current governing coalition will be replaced by a center-left coalition with a different approach regarding transatlantic relations, a strategic partnership with the U.S., relations with Russia, and how to handle Germany's contribution in Afghanistan, the Black Sea region and other areas in the world. Clearly, this scenario would impact the relations between Germany and the U.S.

Angela Merkel will have to be vigilant. There is still time in the months ahead for successful governing and campaigning. However, if you talk to her staff members in Berlin's party headquarters, everyone does not seem to be 'fired up and ready to go.' In fact, their enthusiasm vanished over the summer. This did not happen because the economic upswing is ending and the U.S. financial crisis is spreading to Europe; it is because there are fewer and fewer voters who "psychologically identify" (James Q. Wilson) with the CDU and its sister organization, the Bavarian-based CSU. The core voters for the mainstream parties have begun to vanish.

Lessons from Bavaria and Brandenburg
The results in Bavaria and Brandenburg show a pattern emerging which contains some "red flags" for Angela Merkel:

• In Bavaria, where the conservatives have governed with an absolute majority for over 46 years, it was a never-before seen landslide loss for them. Despite excellent indicators for the Bavarian economy, the well-above-average wealth in Bavarian towns and cities, and an unemployment rate of only 3.9 percent, compared with 7.4 percent on the federal level, tens of thousands of CSU supporters stayed away from the voting booths. Turnout was at only 58 percent, which is very low for Germany, the land of order and discipline and where taking part in elections has always been on everyone's to-do list. So, the alarm bells should be going off for Angela Merkel because not even in Bavaria, where "Laptop und Lederhosen," a slogan for the successful combination of bedrock principles, social conservatism, and economic progress, did the Conservatives reach their goals. But, does what happens in Munich stay in Munich? No, because if the results are similar during the next federal elections in September 2009, Angela Merkel's chances of receiving 40 percent of the electorate could be very slim and in fact, most polls show her party capturing closer to 35 percent of the vote. Political analysts in Germany have crunched the numbers and predict that Angela Merkel will not be able to secure the chancellorship because of the poor results in Bavaria.
• The outcome in Brandenburg, a state that surrounds the German capital Berlin, might be a harbinger for the upcoming results in the other former east German states:
  1. On the state and federal levels, Die Linke might gain strength.
  2. In some areas this party has already become stronger than the SPD.
  3. The Christian Democrats cannot just hold their ground and expect to win. Furthermore, the smaller parties Bündnis 90/Die Grünen and the pro-business Free Democrats (FDP) are not a big help for either of the parties because they are generally too weak, with a share of less than 10 percent of the votes.

Electoral Appeal and Its Effects
As AICGS's Jack Janes and Tim Stuchtey pointed out recently in an article for the German daily "Der Tagesspiegel," in Germany you do not vote for a person but for a party. Even if there were a "German Obama," you would not see a growing movement to vote for this candidate. In addition, you do not elect the head of government directly. A voter in Germany elects the members of parliament, who then elect the chancellor. As a result, neither the high approval ratings of Germany's chancellor Helmut Schmidt (1974-1982) nor the relatively low approval ratings for Helmut Kohl (1982-1998) led to big wins or losses for the governing party. And this can happen with Angela Merkel next year. Whether her approval ratings, which have been as high as 65 percent, have a positive effect on the outcome is nothing more than wishful thinking. Again, except for a small period of time in the East German states after the wall came down, there is no sustainable connection between the electoral appeal of a candidate and the electoral prospects of a party. The advantage enjoyed by the chancellor in office ("Kanzlerbonus") is just not that important.

In general, a party is only powerful when its label has a strong appeal for the voters. In the United States independent candidates rarely succeed because the labels of 'Republican' and 'Democrat' have always had a very strong appeal. But in Germany it is very different nowadays:

• What we see is that the appeal of Angela Merkel's CDU, and its sister party CSU, has significantly weakened. This happened to the SPD in the last years of Gerhard Schröder's chancellorship, with no recovery to date. The result: both mainstream parties suffered losses in Bavaria. The winners were all the other parties.
• What we get is a system with five or possibly more parties represented in the parliament. And there is room for a sixth party on the right-hand side of the spectrum, potentially a mixture of disappointed conservatives and those with an extremist view of the world who could form a national conservative party. With five or more parties, coalition building in Germany is still not as difficult as, let's say, nation building for the UN, but it requires a lot of good will and political know-how to develop and mantain a stable government.

Middle Class Squeeze in Germany
One of Chancellor Merkel's strengths is that she never loses sight of what really matters. In Germany, federal elections play out against a background of national issues. It is different than during the Cold War, when foreign policy played a big role. What about the Georgian crisis? The German voter does not care. As to a strategic relationship (though not a partnership) with Russia? Not important enough to discuss this face to face with the voter - especially in a year when the chancellor and foreign minister are running against each other.

An analysis of the fourteen federal elections since 1957 demonstrates that each election is pretty much like the last election when it comes to the mainstream parties. With that in mind, we cannot rule out the possibility that Chancellor Merkel could build a coalition with the Free Democrats. But the polls show this will not happen. If she wants to stay in the chancellor's office, she will most likely have to build 'grand coalition 2.0.'

Why is that? Here is the short answer: Ronald Reagan's famous question, "Are you better off now than four years ago?" cannot be affirmatively answered in favor of the ruling coalition. Here are three reasons:

• Insufficient social policy reforms. The Grand Coalition was not able to implement a health care reform that would have saved money. Instead, the lukewarm reform of the health service  will be very costly. Contributions for almost everyone are going to increase -- from 14.9 percent to 15.5 percent of gross wages.
• Higher costs of living. Families in particular are hit by increasing energy and food prices.
• Inflation and income taxes. Let's say you are an employee in Germany. Last year, you received a wage increase of approximately 2.2 percent but as a result, you pay more income tax. At the same time, the inflation rate was higher than your pay increase, so you have less disposable income than you did the year before.

Economists say that the middle class in Germany did not benefit from the economic upswing of the last three years. On the contrary, the phrase "middle class squeeze" describes the situation where a lot of households have to work harder than ever to maintain their standard of living. It might not be easy for Chancellor Merkel to convince affected voters to cast their votes for her party.

So, what can Angela Merkel offer the middle class? Possibly tax breaks. The year 2008 has seen some discussions about tax reform. But with a weaker economy, it is becoming increasingly difficult to promise tax breaks for the middle class and make this issue an integral part of the election campaign. Merkel may try, maybe with a tax break campaign after the European Parliament elections in June 2009, but without money in the budget, it will be a delicate issue. Whether other campaign issues as education policy and immigration are sufficient to convince the voters to vote for the conservatives is a matter of opinion for now.

In conclusion, Angela Merkel's leadership qualities, as demonstrated at last year's G8 summit, and her high approval rates might help her avoid encountering another "Waterloo" like her Bavarian colleagues did. To do so she has to demonstrate further her ability to lead, especially regarding domestic policy issues, and convince alienated voters. If not, we might see another four years of a grand coalition which brings with it the danger of another four years of underperformance. A propos Waterloo: there is one German politician who is often compared to Napoleon because he looks like the former French general: Oskar Lafontaine, head of Die Linke. If he succeeds and gets his share of votes, we could encounter a worst case scenario for everybody who believes that Germany is central to global problem-solving - and that is a very unstable center-left coalition of SPD, Bündnis 90/Die Grünen and FDP, or even SPD, Die Linke and Bündnis 90.

Elmar Sulk is Senior Strategist at Lincoln Park Public Relations and a regular contributor to the Advisor.

This essay appeared in the October 3, 2008, AICGS Advisor.