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Cablegate: Merkel and Westerwelle Plan Coalition Talks While

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UNCLAS SECTION 01 OF 02 BERLIN 001206

SIPDIS

E.O. 12958: N/A
TAGS: GM PGOV
SUBJECT: MERKEL AND WESTERWELLE PLAN COALITION TALKS WHILE
SOCIAL DEMOCRATS REEL FROM ELECTORAL DISASTER

REF: BERLIN 01197

1. (SBU) Summary: Chancellor Merkel met on Monday,
September 28 with her future Vice Chancellor and probable
Foreign Minister Guido Westerwelle to plan coalition
negotiations, with the goal of having a new government in
place for the November 9 20th anniversary festivities of the
fall of the wall. The new Bundestag is expected to meet on
September 27 and the coalition parties would like to be able
to put a new government in place as soon as possible after
that. Westerwelle was being cautious in his policy demands
and refusing to discuss personnel issues altogether. Tensions
are likely to arise, however, between Merkel's apparent
desire to emphasize policy continuity and Westerwelle's need
to show that that his Free Democratic Party (FDP) can be as
consistent in government as it has been in opposition.
Meanwhile, the Social Democratic Party (SPD) is reeling from
the dimensions of its defeat on September 27 -- which cost
the parliamentary caucus a third of its members. Although
chancellor candidate and soon-to-be ex-Foreign Minister
Frank-Walter Steinmeier was elected Bundestag caucus
chairman, more and more Social Democrats are demanding a
thorough-going leadership shakeup and policy reorientation to
win back the lost support. End Summary.

Merkel Taking Control of Coalition Negotiations
--------------------------------------------- --

2. (U) Looking self-confident and relaxed, Merkel made clear
that she was in charge of coalition negotiations September 28
and had a busy round of press appearances, including
interviews on both major television stations that Monday
evening. Merkel said that she hoped a new government would
be in place by November 9, and formal coalition negotiations
are slated to begin on October 5. She hosted Westerwelle at
the Chancellery for an hour on September 28 and met with
Bavarian Minister President and Christian Social Union (CSU)
party chief Horst Seehofer privately the next day. Seehofer
is facing considerable criticism from within his own party
after the CSU suffered its lowest Bundestag election result
in history. Merkel appeared to be downgrading the CSU's
independent role within the coalition negotiations, saying on
September 28 that the talks will not be between three parties
-- as they were in 2005 -- "rather the Union will negotiate
with the FDP." She also noted that she did not plan to
change her leadership style and would continue to reach out
across partisan divides rather than present herself as the
CDU party chief. She also rejected a need for major policy
change and stood by Grand Coalition legislation that
established a minimum wage in selected sectors of the economy
and also rejected the need for privatization of health
insurance. Merkel would not be pinned down on when the new
coalition would cut taxes but she did say quick action was
necessary on reforming the inheritance and business taxes.

3. (U) Westerwelle looked happy but was unusually cautious
in his public statements. He continues to refuse to discuss
personnel issues -- although speculation on future cabinet
positions is currently a chief preoccupation of the Berlin
press -- and he appeared to step back from earlier campaign
demands for major tax reform. While he told the press that
he stands by his view that a "fair" tax system is the basis
for sound government finances, he did not repeat his earlier
claim to reject any coalition agreement that did not include
major tax cuts and reform. Westerwelle refuses to say
publicly that he will become Foreign Minister, and the FDP
Bundestag caucus, now 93 members strong and containing
several politicians who never expected to be coming to
Berlin, unanimously reelected him as caucus chairman to enter
the coalition negotiations with the full support of the FDP.
There seems to be no doubt, however, that he will become the
next foreign minister, and the influential daily, Frankfurter
Allgemeine, referred to FDP foreign policy expert Werner
Hoyer as the future Minister of State at the MFA.

The SPD in Disarray
-------------------

4. (SBU) While the CDU/CSU and FDP prepare for their new
coalition, the SPD is in near complete disarray as the full
dimension of its losses become clear. A third of the members
of the Bundestag caucus are without jobs, and party chief
Muentefering's attempt to keep control over the transition to
opposition has been overwhelmed by the desire to hold someone
accountable for the party's historic defeat. SPD General
Secretary Hubertus Heil announced his resignation on
September 27, Finance Minister Peer Steinbrueck said he would
step down as vice chairman, and Muentefering will also have
to make way for someone else at the SPD convention in
mid-November. Although Steinmeier was elected Bundestag

BERLIN 00001206 002 OF 002


caucus chief, he had to give up any claim to the party
chairmanship. Leftwingers in the party are demanding new
leadership and a repudiation of former Chancellor Schroeder's
Agenda 2010 reforms and the party's role in extending the
retirement age to 67 during the Grand Coalition. Current
Environment Minister Sigmar Gabriel could be a compromise
candidate for the party leadership, although leading
left-winger Andreas Nahles is another less likely choice. So
far, Steinmeier's strong support for ISAF has not been a
point of contention, but if a member of the left wing wins
the party leadership, he or she could also try to alter this
SPD position on this as well.

5. (SBU) Comment: The future coalition partners have
considerable incentive to conclude coalition negotiations
before Berlin hosts representatives from across Europe and
the world on November 9. Merkel appears confident of her
ability to maintain control of her party and the coalition
negotiations, despite the strong position from which
Westerwelle and the FDP enter talks. Westerwelle --
enjoying even greater control of his own party due to its
tremendous success in recent years -- will be loathe to
give up the hard-fought credibility he has won by sticking to
a simple political message of lower taxes and the less
government. He will need to show his stamp on government
policy to convince all the millions of new FDP voters that it
is worth supporting the FDP, or he may suffer the fate that
both the SPD and CDU/CSU has experienced in recent years,
when the realities of government have forced them to adopt
policies that have led to their recent decline. End Comment.
Murphy

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