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Cablegate: Hesse State Election Preview: Spd Gaining Ground?

DE RUEHFT #3022/01 1770812
R 260812Z JUN 07





E.O. 12958: N/A
SUBJECT: Hesse State Election Preview: SPD Gaining Ground?

REF: 06 Frankfurt 8092

1. SUMMARY. Six months before Hesse state elections (January
2008), both major parties have presented their economic programs.
Following an ambitious program from Social Democratic challenger
Andrea Ypsilanti, Hesse Minister President Koch has presented a
slightly populist program which is light on reforms. Enjoying a
surprising bounce in polls, the SPD has forced Koch to react on
topics that are not traditional CDU strengths: renewable energy and
climate change. END SUMMARY.

Ypsilanti 2008: Renewable Energy and Climate Change

2. In the SPD plan revealed in early 2007, Hesse would move quickly
away from nuclear and non-renewable energy. It would become
independent from nuclear energy by 2013, the year the nuclear power
plant Biblis B in South Hesse is slated for decommissioning. At the
same time, Hesse would lower its usage of coal, gas and oil, instead
relying on renewable sources of energy, including wind turbines,
solar cells, and water. According to the SPD, renewable energy
sources would create new job opportunities in rural northern Hesse.
Ypsilanti's opponents have characterized her program as unaffordable
and unrealistic.

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Koch 2008: Airport Expansion and Government Spending

3. In early June, Hesse Minister President Roland Koch outlined his
proposed economic agenda for a third term. He would hire more
teachers and policemen and abolish fees for kindergarten; he would
achieve a balanced budget by 2010; and he would further develop the
state's infrastructure. One of the key planks on the latter point
is construction of an additional runway for Frankfurt airport. Koch
argues that the enlargement of the airport is only possible with a
CDU government in Hesse. Popular belief is that the Greens would
block the project in a red-green government (the most likely left
coalition), even though Ypsilanti also supports airport expansion.
Green Party Chairman for Hesse Kai Klose recently told Pol/Econ
specialist that the party would have to accept airport expansion in
the event of a coalition with the SPD, however, he mused that it
would be politically expedient if it were enacted under the current
administration, thus absolving the Greens of responsibility.

4. If re-elected, Koch would support the development of alternate
energy sources, including nuclear energy. He has not yet explained
how he would pursue this policy without violating federal law
requiring a phase out of nuclear energy by 2020. 90% of the state's
energy sources now are nuclear or coal-burning power plants and CDU
officials predict Hesse will need nuclear power to ensure its energy
supply for at least the next 50 years. Koch pledges to ensure
affordable energy for Hesse, describing the SPD's "utopian" energy
policies as leading to higher prices.

Unexpected Challenge for Koch

5. Though Koch is considered the stronger politician when it comes
to economic policy, a recent study by two research institutes
(Initiative Neue Soziale Marktwirtschaft and Institut der deutschen
Wirtschaft) and the weekly magazine Wirtschaftswoche revealed that
Hesse ranks fifteenth in economic dynamism among German states,
ahead of only Brandenburg. The state of Hesse does not invest
enough in science, there are fewer applications for patents, and
unemployment has grown 1% in the last year compared to a national
rate of 0.2%. Balancing these findings is the indisputable fact
that Hesse is still the most productive state in Germany: its GDP is
Euro 33,614 per capita (average: 25,082) and labor productivity is
the highest in Germany. Koch ignores the study claiming that Hesse
remains the most dynamic state in Germany, but he must make his
claims credible to voters on the campaign trail to score points on
the economic issue.

Unexpected Openings for Ypsilanti

6. Though it is still early in the campaign, polls indicate a
tightening race. After the SPD state party convention in December
2006, the SPD polled 27%, far below the Hesse CDU at 43%. At that
time, the Hesse CDU felt confident of victory, due to the fact that
Roland Koch is an established, eloquent and successful minister
president. However, by making energy her central topic and
addressing climate change, Ypsilanti has found a weak spot in Roland
Koch's armor. In a late May poll, the CDU polled %40, SPD 34%,
Greens 11% and FDP 9%, giving a potential SPD/Green coalition 45%
and a CDU/FDP coalition 49%.


7. As surprising as it is that Andrea Ypsilanti could gain ground
on Roland Koch in a conservative stronghold like Hesse, the bigger
surprise is that she appears to be making inroads in an area that
has been his strong point - economic policy. Should the energy
theme prove a winner in Hesse, it may also become attractive for the
national SPD. After eight years of Koch in power (the last four

FRANKFURT 00003022 002 OF 002

without a coalition partner), the electorate may be tiring of the
current government; both the Green party and the Hesse SPD are
campaigning with the slogan: "Koch muss weg" (Koch must go).

8. This cable has been coordinated with Embassy Berlin.


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