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03 June 2010

EZA 951 Report: GERMANY




Resignation of President creates further difficulties for Merkel

 

  • The resignation of Federal President Horst Köhler on 31May after being criticised for defending the role of German soldiers abroad came like a bolt from the blue for chancellor Merkel’s coalition.
  • It will be up to Merkel to nominate a new candidate for the post, who meets the conflicting criteria of coming from within the coalition whilst receiving broad cross-party support.
  • The resignation of former IMF director Köhler might also signal a shift of the German political agenda away from economic issues to social issues.

 

Horst Köhler’s resignation - Merkel loses an economic ally

 

On 31May Horst Köhler, German federal president announced his resignation with immediate effect. He cited a lack of respect for his office, following fierce criticism from the left after an interview in which he had made a strong case for the military being used to defend German economic interests. This remark (said to be directed at supporting German military action against pirates in east Africa rather than a comment on the military mission in Afghanistan) was attacked by the Left and Greens as justifying war as a means of supporting economic interests.

 

The harshness of the criticism and the absence of government support led to his resignation. This move is unprecedented in German history and poses significant challenges to Merkel in particular as Köhler, just re-appointed last year, was seen as a strong ally in terms of his economic views.

 

The challenge for Merkel – finding a moderate without provoking conflict

 

Merkel has signalled that she is looking for a moderate candidate from her party, who would also be acceptable to the opposition left. Clear candidates are current Finance Minister Schäuble or Bundestag head Norbert Lammert, but other ministers and State Premiers are in the running.

 

Although the position is regarded as mainly symbolic, the challenge for Merkel will be to present a popular candidate from her party, who shows the right mix of distance and support for her political views. Finance Minister Schäuble fulfils the criteria – having been considered for the post six years ago – but it seems unlikely that Merkel can do without him in government, given the challenges for fiscal policy ahead.

 

Merkel may therefore look towards ministers such as Ursula von der Leyen (Labour), Annette Schavan (Education) or outgoing State Premiere for North Rhine Westphalia, Jürgen Rüttgers.

 

For further information please contact:

 

Dr Michael Clauss: Politics / Economy / Equities Sectoral Analysis

Tel: +49 89 64254046

michael.clauss@eurozoneadvisors.com



© Eurozone Advisors Ltd

Documents associated with this article

EZA951.pdf


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