Cablegate: German Grand Coalition Faces Strain of Upcoming

DE RUEHRL #0531/01 1160925
O 250925Z APR 08

C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 000531



E.O. 12958: DECL: 04/25/2018

B. 07 BERLIN 0674

Classified By: Deputy Chief of Mission John Koenig for Reasons 1.4 (b)
and (d)


1. (C) The German Grand Coalition will increasingly face
tensions created by the need for the lead candidates to
position themselves for the 2009 national electoral campaign.
Chancellor Angela Merkel and Foreign Minister Frank-Walter
Steinmeier both remain highly popular. Merkel, however,
faces political risks if the economy turns for the worse. In
the second half of this year, as the Social Democratic Party
(SPD) moves closer to a decision about its chancellor
candidate, potential candidate Steinmeier will likely face
scrutiny and criticism from his own party's left-wing. It is
too early to predict the likely coalition outcome in 2009 --
although Merkel's Christian Democrats (CDU) and the Christian
Social Union (CSU) are likely to come out ahead, they may not
have a better coalition option than continuing the current
Grand Coalition with the SPD. U.S. foreign policy is not
likely to play a central role in the campaign leading up to
Germany's national elections in fall 2009. Improved
U.S.-German relations under Merkel and German fascination
with the vibrant democratic process in the U.S. primary
elections have played significant roles in improving German
attitudes towards the U.S., thereby dampening the likelihood
that the SPD will use anti-American rhetoric to rally voters
as former chancellor Gerhard Schroeder did in 2002. End

Merkel's Possible Archilles Heel: The Economy

2. (U) Chancellor Angela Merkel (CDU) remains highly popular
among Germans, who view her as an effective leader with a
strong international stature. Her approval rating is 71
percent. In large part due to Merkel's popularity, the CDU
has held a commanding 8- to 14-point lead over the SPD in
polls over the last year.

3. (C) Although Merkel's high popularity is expected to
continue, she faces diffuse risks on economic issues. CDU
parliamentarians suggest that an economic downturn would be
the principal threat to Merkel's high popularity Economic
forecasts currently favor Merkel, with projections of 1.6 to
1.8 percent growth for this year (though slightly lower for
2009), but with no real evidence of recession despite the
global slowdown.

4. (C) Among CDU leaders there is a sense that the CDU may
have peaked (perhaps too early) and that caution is the
watchword. Merkel, who campaigned in 2005 on a program of
economic liberalization and watched a commanding lead in the
polls nearly vanish during the campaign, appears to be moving
toward the political center in an attempt to expand her base
and consolidate centrist support that the SPD is losing
because of its leftward shift. She is demonstrating
ever-greater focus on domestic policy and espousing popular
middle class enticements such as pension increases, a longer
duration of unemployment benefits for older workers, and
enhancement of nursing care insurance. While many consider
this move to be politically smart, some on the CDU's
right-wing have criticized the Chancellor for abandoning core
CDU values.

--------------------------------------------- -----
Steinmeier Could Get Roughed Up by SPD's Left Wing
--------------------------------------------- -----

5. (C) Social Democrats have speculated in recent months that
SPD Chairman Kurt Beck will eventually defer to the much more
popular Foreign Minister Frank-Walter Steinmeier as the
party's eventual chancellor candidate (ref A). SPD insiders
consider this a 50-50 proposition. Kurt Beck's recent
victory in guiding competing factions of the SPD to agreement
on privatization of the railway monopoly Deutsche Bahn may
help shore up his position (septel). It is uncertain whether
Steinmeier would choose to accept the SPD nomination at a
time when the SPD is hovering in the mid 20's in the polls
and its electoral prospects seem poor. Note: In any case,
Steinmeier will run for political office, a federal
parliament seat from Brandenburg City, for the first time in
2009. End note.

6. (C) Steinmeier would face some detractors in his own

BERLIN 00000531 002 OF 002

party. Deputy SPD Chair Andrea Nahles, the leading left-wing
critic of Steinmeier's centrist approach, told Political M/C
that she was unhappy that "the U.S. knows more about
Steinmeier than I do," referring to Steinmeier's role as
Chancellery Chief of Staff and Intelligence Coordinator under
Gerhard Schroeder. Nahles suggested strongly that the left
wing of the SPD could portray Steinmeier as too close to the
U.S. on intelligence-related issues, especially his role in
the Murat Kurnaz affair (ref B), thereby damaging his

7. (C) Nahles admitted, however, that the SPD likely would do
better at the polls with Steinmeier as chancellor candidate
(between 30 and 35 percent of the vote). This would mean
more SPD parliamentarians holding onto their seats -- a
consideration that could have an effect on the SPD's choice.
Nahles added that Steinmeier "has little experience in
managing the party, but he's a fast learner."

Grand Coalition Fated to Continue?

8. (C) Deputy CDU national chairman and Lower Saxony
Minister-President Christian Wulff (CDU) told the DCM that
another grand coalition is the most likely outcome in 2009 if
the political landscape does not change significantly in the
coming months. The SPD's Nahles agrees. While Merkel and
the CDU still prefer to govern with the Free Democrats (FDP),
the numbers may not suffice for a majority. Although
experiments such as the CDU-Greens coalition in Hamburg are
enticing, replicating them at the national level remains

9. (C) Comment: The CDU's fear of opening up its flanks to
SPD attacks -- and the SPD's self-obsession during a period
of turmoil in the party -- reveal a degree of caution on
policy issues that is remarkable even by German standards.
This is reflected in German caution on foreign policy issues
of interest to us such as Afghanistan and Iran. A particular
USG concern is whether the SPD or others will try to employ
anti-American rhetoric to curry voter support, much as former
chancellor Gerhard Schroeder did in 2002. Even SPD
left-wingers like Nahles tell us, however, that foreign
policy is not as great a consideration for German voters as
it was around the time of the Iraq war, and therefore will
not likely be a decisive factor in next year's national
elections. It is also important to note that German
attitudes towards the U.S. have improved over the past year
due to our improved bilateral relations and German
fascination with democracy on display in the U.S. primary
elections. The current improvement is evidenced by a recent
Harris poll which showed a dramatic 21 percentage-point
increase in the number of Germans who regard the U.S. as a
trustworthy partner. Also, the German federal election
campaign will occur during what is expected here to be an
extended popular "honeymoon" for the new U.S. administration.
Consequently, German politicians might perceive less
political advantage in a critical stance toward the U.S. End

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