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Analysis
AKK's rise: France, euro repercussions

AKK's rise: France, euro repercussions

Coalition shifts and struggle for German power

by David Marsh in London

Mon 10 Dec 2018

Annegret Kramp-Karrenbauer, the new leader of Germany's principal governing party, faces a complex struggle to impose her will on her fractious Christian Democratic Union. She will pursue a more conservative path in key areas compared with still-Chancellor Angela Merkel. This has consequences for policies to stabilise the euro.

'AKK' is a long-time Merkel ally and, more recently, her designated successor. How well she masters her shorter-term tasks will have a crucial bearing on whether, when and how she takes over the chancellorship, possibly as early as next year in what would have to be a partly stage-managed transition.

The CDU's right has voiced unease over policies in the 19-member euro area. Yet French-speaking and -sympathising AKK is not expected to depart from Merkel's line of stepping away from firm backing for Jens Weidmann, the monetarily orthodox Bundesbank president, in the race to succeed Mario Draghi as head of the European Central Bank in November 2019.

Following Friday's narrow election win to become CDU chairwoman, Kramp-Karrenbauer quickly predicted that Merkel would remain chancellor until the next election in 2021. However, in Germany's kaleidoscopic political landscape, Merkel and AKK may find a way of propelling her to the front sooner. This will be a finely judged calculation where the CDU's female duopoly will have to react to shifts in the ruling Berlin coalition with the fading Social Democrats (SPD). The SPD may become increasingly discomfited by a rightwards move in Berlin's economic policies.

Germany's leading post-war CDU chancellors – Konrad Adenauer, Helmut Kohl and Merkel – have combined the job with the party leadership. Merkel may wish to boost her protégée by organising a consolidation of power. This would shore up AKK's position at what remains Germany's most popular party, despite attrition in the polls. But it could be accompanied by a change in the CDU-led Berlin coalition, as difficult and as far-reaching as the breakdown of Chancellor Helmut Schmidt's government in Bonn in 1982 that brought Kohl to power. 

The most important AKK skirmish will be to bridge the gap between Merkel-style 'continuity' and many CDU members' desire for a tougher, more market-orientated approach on economics and immigration. Securing her victory on Friday in a 52% to 48% party congress vote over Friedrich Merz, her business-friendly anti-Merkel rival, was relatively simple compared with coming trials. A former prime minister of the small western state of Saarland, AKK – CDU general secretary since February – has no Bundestag mandate and is virtually unknown abroad. She will need to engage fully with the party to establish her grip.

Merz, who has built a profitable career after leaving parliament in 2009, disappointed supporters at the weekend by edging away from further involvement with the CDU. Merz's uncompromising pro-market views, ownership of two private jets and links with investment firm Blackrock earn him acclaim from industry but distrust from many German voters. 

Jens Spahn, the economically hawkish Berlin health minister, defeated third candidate for the CDU leadership and leading proponent of party renewal, will play a major role on the CDU's ruling council. AKK on Saturday signalled empathy with defeated conservatives by proposing Paul Ziemiak, leader of the CDU's youth wing and a Spahn backer, as its new general secretary.

Merkel's continuation as chancellor will be electorally helpful for the far-right, fiercely anti-Merkel opposition party Alternative for Germany (AfD) as well as the liberal Free Democratic Party, which refused to join a governing coalition earlier this year because of antipathy to the chancellor. Yet if a post-Merkel CDU counters AfD and FDP headwinds by moving to the right, this could propel the SPD's Berlin coalition exit. 

This switch is less probable with AKK as CDU leader rather than Merz, but still seems a strong possibility over the next year or so. This could open the way for a new Berlin coalition between the CDU, Bavarian Christian Social Union, FDP and Green environmental party, perhaps after the May 2019 European elections. AKK is close to the Greens – but some recall her role in the breakdown of a coalition with the Greens in Saarland in 2012, caused by a spat with the Liberals. If the SPD quit, creating a so-called Jamaica coalition (black, green and yellow) in Berlin would be complicated. But it would be more likely than a premature election that nearly all sides wish to avoid.

David Marsh is Chairman of OMFIF.

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