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Article / 11 March 2016 at 11:00 GMT

Federal state elections threaten German shakeup

  • Conservative entrepreneurs turn to the Greens in wealthy part of Germany 
  • Corporations hope left-leaning government will bring stable business conditions
  • For the first time, a Green head of federal state is likely to be re-elected
  • Elections also upcoming in two other federal states
  • Angela Merkel's CDU sees its power base attacked from left and right
  • Anti-refugee party AfD is scoring high as many voters reject Merkel's stance
  • Forming a government might become challenging and endanger stability
Kretschmann Daimler
Spot the difference? On the left, the Green head of government, Winfried Kretschmann,
on the right Thomas Weber, Daimler AG executive. 
The green car is Kretschmann's
new Mercedes S-class hybrid. Photo: Staatsministerium Baden-Württemberg


By Clemens Bomsdorf

One thing is almost certain: One of Germany’s most conservative federal states, Baden-Württemberg, will after Sunday’s election have the leftish Green party in government. Again. While this is what business leaders only a few years ago would have feared most, they now almost long for it.

“I owe my vote to Winfried Kretschmann from the Greens. He did a very good job as prime minister of our federal state,” Wolfgang Grupp, owner of textile producer Trigema, told daily paper FAZ. His company is one of the many mid-sized privately run firms that Baden-Württemberg is so famous for. The federal state in the southwest is Germany's third most populated and also home to Würth-Gruppe and Stihl, both family-owned and leading in their fields, as well as listed carmakers  Daimler and Porsche, 

When black backbone turns green

The likes of Grupp were the backbone of Chancellor Angela Merkel’s conservative CDU party, just as Baden-Württemberg is the backbone of Germany’s economy, but are now supporting the Greens. 

Lake Constance
Meersburg at Lake Constance with its almost 6,000 inhabitants  
is also part of Baden-Württemberg. Photo: iStock 

That's because whatever the elections in three federal states on Sunday, March 13, bring, it won't be stability. Voting for Kretschmann could bring at least some predictability for Baden-Württemberg. Depending on the outcome, he might be able to continue doing his job with the Social democratic SPD or need to replace it with the CDU. But as it looks now, it could also be necessary to form a three-party coalition. Forming a government in the two other federal states, Rhineland-Paletine and Saxony-Anhalt, could become most difficult.

Three federal states and the whole country at a glance
3 German federal states at a glance

Source: German statistical office; Data from 2013, 2014, 2015

The German party system is undergoing a fundamental transformation, with the SPD — a party that was led by world-renowned politicians such as Willy Brandt and Gerhard Schröder — being reduced to one of the smaller parties. At the same time, polls show the right-wing populist AfD (Alternative fur Deutschland – Alternative for Germany) is supported by up to 19% of the electorate in the upcoming elections.

All they want is a bit of stability

The Greens rose to power in Baden-Württemberg in 2011, and since then have headed a coalition with the SPD. This shift of power has taken place in a federal state that for almost 60 years had been ruled by the conservative CDU. Grupp wants the party to form a coalition with the Greens. If the SPD is too weak, that might be an option.

But Merkel's party is expected to see its support slide to 28% from 39% five years ago in Baden-Württemberg, which is the third biggest of the 16 German “Länder” (by population).

Grupp
A Green in Black? Wolfgang Grupp, owner of textile producer Trigema. Photo: Trigema

Merkel needs a strong result also in Baden-Württemberg

If support for the CDU drops similarly in next year’s general election, it would seriously hurt the prospects of Merkel and her party to continue governing.

Elections will also take place in Rhineland-Palatinate and Saxony-Anhalt on March 13. In the former, the SPD governs with the Greens as junior partner, and the CDU's support is seen stable at 35%. There the Greens are expected to be the big loser and the AfD, with roughly 9%, is seen ahead of them. As no other party wants to work or govern with the AfD, forming a coalition might become difficult.

The same goes for Saxony-Anhalt, where the AfD is seen winning almost 20% of the votes and coming clearly ahead of the SPD, which now governs with the CDU, the latter being the bigger party. 

Yes, German politics are confusing, with certain parties big in one federal state, but only small players in others.

Gallup for upcoming elections (5% needed to get a seat in parliament)
Possible German election results Source: SWR, Bild am Sonntag

Migrants the battleground issue

Saxony-Anhalt is one of the federal states that had been part of the German Democratic Republic until the re-unification of Germany 25 years ago. The five new “Bundesländer” are still among those performing worst economically. With relatively high unemployment and low GDP per capita, Saxony-Anhalt is no exception. However, while brain drain and migration to the West were a problem for years, in 2014 more people moved to Saxony-Anhalt than left it.

Magdeburg, Sachsen-Anhalt
Election posters in Magdeburg, Saxony-Anhalt. Photo: iStock
 
Migrants, to be more precise refugees, are the main issue in the election campaigns – even though Saxony-Anhalt, like the other Eastern German federal states, has comparably few foreigners. But the unemployment rate is high, and that might be one reason for people voting for the anti-migration party AfD. Founded as an anti-Euro party, it is now attracts voters with its harsh and partly openly racist attitudes towards refugees (see here for an earlier Must Read on German refugee policy). 

The first point of the AfD's economic platform is to abolish the sanctions against Russia since those would "endanger" 500,000 jobs in Germany. AfD voters are said to admire Vladimir Putin's authoritarian policy and politics.

FT: Europe needs Merkel!

The election results for Merkel (and her coalition partner SPD) will be a warning. If voters' attraction to the AfD stays at current levels or even grows in the months to come due to dissatisfaction with her refugee policy, she would have a hard time forming a stable coalition after next year’s general parliamentary election.

If, one must add, she is still in charge then. After all, the CDU might think it wise to change the main candidate. If, one way or another, Merkel loses power in Germany, which economically somehow is still Europe’s powerhouse, it could be a blow to Europe, according to a recent commentary in the FT: “Over the past decade, in one crisis after another, she has shown more responsibility than other EU leaders for the greater European good.” Quite dystopian, however, is the picture painted in this Spiegel International essay by Dirk Kurbjuweit, looking a bit further into Germany's future.

And so far the polls for the Greens are not (yet) good enough on the national level for them to take the helm. If that changes at some point, it could mean stability. The social liberal daily "Süddeutsche Zeitung" after all has named Kretschmann "Merkel in Grün" (Merkel in Green).

Trigema
Production in the green - Trigema factory in Burladingen, Baden-Würtemberg. Photo: Trigema

— Edited by John Acher

Clemens Bomsdorf is a consulting editor at TradingFloor.com

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