Greek Debate Merkel's Rank-and-File Rebellion

Chancellor Angela Merkel aims to push through support for a third Greek bailout against opposition from her Christian Democrats and German voters. Her political legacy hinges on Greece remaining in the euro zone.
Angela Merkel needs her party members to vote yes on a third Greek bailout

This article was originally published on August 11, 2015, and republished without changes in February 2018.

Chancellor Angela Merkel, Germany's most popular leader since post-war reconstruction architect Konrad Adenauer, has it pretty good, politically speaking, in Berlin.

Seven in 10 Germans approve of her work, now in its 10th year, and as the unflappable, benign "Mutti,'' she's morphed into a kind of modern-day German caricature for effective, sustainable leadership, a display of soft power that finds resonance among voters.

Yet over the past weekend, her own party whip in the Bundestag publicly threatened members of her Christian Democrat party if they defied her in a parliamentary vote on the upcoming third E.U. bailout for Greece – another costly affair for German voters, who polls show would rather send the Greeks packing than lend them more money.

At 61, Ms. Merkel may soon be facing her biggest rebellion ever within her party's rank and file over Greece, a rare example of the German leader breaking with a largely adoring public over a pocketbook issue. As rebellions go, the upcoming legislative showdown over Greece this autumn is still not that big, Berlin insiders told Handelsblatt Global Edition.

There are obviously serious problems concerning Greece and some party members are wary about the path to success there. Franz Josef Jung, CDU Parliamentarian

But in recent months, Ms. Merkel's teflon armor has taken some hits as she has been forced to defend the integrity of the euro single currency over skeptics at home and, increasingly, within her own political party base, a mix of the old Christian Democratic Union party from former West Germany and its more conservative Bavarian offshoot, the Christian Social Union.

In the middle of her third four-year term, Ms. Merkel's conservatives are running the country as the majority partner in a coalition with Social Democrats, their perennial political foes who were forced in 2013 to accept second-billing in the third Merkel government over another four years of being largely out of the political loop.

The minority partners, who have managed to push through increases in early retirement and other social welfare benefits under Ms. Merkel, to the consternation of German conservatives, could again play a key role in helping the German chancellor get a third, politically unpopular bailout of Greece through the Bundestag.

Support for further Greece financial relief in the conservative's 310-member parliamentary faction has been waning as German parliamentary votes this year clearly show.

Last month, German lawmakers gave their go ahead for the euro zone to negotiate a third bailout for Greece, but a more-than-expected 60 lawmakers from Ms. Merkel’s conservative fraction voted against the move, in a blow to the chancellor. That was more than twice as many Christian Democrats as voted to reject a four-month extension for Greece’s second bailout in February.

Perhaps most troubling, German Finance Minister Wolfgang Schäuble has championed the dissenters. In July, he split publicly with Ms. Merkel for the first time, saying many in German government believe a “Grexit,” a Greek exit from the euro zone, "would or could be a better solution for Greece."

Every CDU vote will count. Dissenters could be headed for trouble.

 

Mr. Schäuble’s remarks echoed polls showing that the vast majority of Germans are also opposed to giving Greece more money.

Until then, the finance minister, who has disagreed with Ms. Merkel in private, had loyally toed the chancellor’s line in public.

It's “not surprising” for members of the conservative bloc “to question the direction Chancellor Merkel has been taking up until now and whether it is alright to continue in that direction,” Ingo Peters, a political scientist at Berlin’s Freie University, told Handelsblatt Global Edition. “The doubt of some party members is a healthy reaction.”

Some Social Democrats are playing down the talk of a divisive political dynamic in the fraction.

“There are obviously serious problems concerning Greece and some party members are wary about the path to success there,” Franz Josef Jung, a CDU parliamentarian, said in an interview. “I think on a scale of 1 to 10, the cooperation is at 7.”

But Ms. Merkel, whose political legacy hinges on Greece staying in the euro zone, isn’t taking any chances of encountering more unexpected dissent in the rank and file. She has dispatched Volker Kauder, the union’s parliamentary leader, to crack the whip and bring party members in line ahead of a crucial parliamentary vote on the bailout scheme later this month.

“Those who voted ‘no’ cannot stay members of (parliamentary) committees, in which it is important to maintain the majority, such as the budget or European affairs committees," Mr. Kauder said in an interview with the Bild newspaper published on Sunday.

The faction leader is known to reign in dissenters, especially for votes on key economic issues – and further aid for Greece is one of them. His move, not unsurprisingly, unleashed a torrent of criticism. Christian Democrat Andreas Mattfeldt complained that parliamentarian members in the union have the right to vote freely and shouldn’t be treated “like cattle” led to feed.

But many party members prefer to remain quiet on the issue. Egon Jüttner, who voted against additional support for Greece in the past, first accepted and later declined an interview.

The politicians have reason to be concerned: Those who cross Ms. Merkel often disappear from her circle of power in Berlin. Among them are Roland Koch and Friedrich Merz, who found jobs in the private sector, and Günther Öttinger who was bumped to Brussels for a position with the European Commission.

Negotiations to secure a third bailout deal by August 20, when Greek bonds owned by the European Central Bank come due, appear to have advanced after week-long meetings with officials from Athens and the country's creditors: the European Commission, the International Monetary Fund, the European Central Bank and the European Stability Mechanism.

Defaulting on the bonds would considerably complicate Greece’s ability to stay afloat by forcing the ECB to withdraw its extensive support for Greek banks.

Volker Kauder helps Angela Merkel keep the rank and file on course.

 

But a deal on the possible €86-billion ($94 billion) bailout by August 20 could be ambitious, as any agreement between Greece and the institutions overseeing the bailout needs the support of the euro zone countries. In Germany, the lower house of parliament, the Bundestag, must vote on the issue.

Germany is the euro-zone country that has already contributed the most to Greece's two bailouts since 2010 and whose support is seen as essential for a third bailout. Rumors of Athens already seeking more bailout money could further complicate talks.

Ms. Merkel's spokesman, Steffen Seibert, said on Monday that "comprehensiveness rather than speed" should form the basis of the talks, pointing to the number of reforms that have to be considered and the length of the proposed rescue plan, which is expected to run for three years.

That Ms. Merkel could fail to muster enough support in German parliament is unlikely, observers say, given the large majority of around 500 votes she already has in her grand coalition with the left-of-center Social Democrats.

Social Democrats and even some Christian Democrats view the dissenting votes on more Greek aid as tactical - to show voters the union is seriously concerned about the huge financial commitment.

“The 60 parliamentarians who voted against negotiating a third Greek bailout demonstrated their right to vote freely, but I doubt that all 60 would have voted this way if their votes would have damaged the government or Chancellor Merkel,” CDU parliamentarian Jürgen Klimke told Handelsblatt Global Edition. “

Lars Castallucci, an SPD parliamentarian, has a similar view. The votes against the bailout negotiations, he said in an interview, represented “no genuine dissent.”

Most of the parliamentarians who voted against Greece, Mr. Castallucci noted, would not have done so “if they had known their dissenting votes would have determined the outcome.”

Also, he added, Christian Democrats in both wings know whom to thank for helping them gain power in Berlin.

As the Greek drama enters the endgame, Ms. Merkel knows what is at stake for both Europe and her legacy.

If she is able to push through a reforms-for-loans agreement with Greece and prevent Athens from defaulting, she will go down in history as the leader who saved the euro.

If she fails and a Greek default triggers its euro exit, she will see the euro disappear as an irreversible driver of European integration. She has described the currency union as Europe’s common destiny.

Keeping the euro zone in tack, however, will require Ms. Merkel to do something she has seldom done – pushing through an important measure at odds with German public opinion. Many Germans view the €70 billion in loans to Greece as dead money.

She has insisted on German-style austerity measures and reforms on the rest of Europe, refusing to bow to pressure to flood the markets with more money – a position that has not won her few friends in many parts of Europe but praise and support at home.

Her 70-percent-plus approval rating is the envy of many world leaders, including President Barack Obama.

Until Ms. Merkel came along, Konrad Andenauer was viewed as Germany's most popular chancellor.

 

Konrad Adenauer is the only chancellor before her to have enjoyed such a strong public standing after a similar period of time in office. Ms. Merkel could well top him in an all-time popularity ranking, as she prepares to run for an unprecedented fourth term in an election she is expected to easily win.

However, Johannes Kahrs, an SPD parliamentarian, warns of the risks of having Ms. Merkel govern for a fourth-term.

“Her popularity is based on her ability to demonstrate stability but she hasn’t demanded too much from the German people in the way of forcing change, as former (SPD) Chancellor Gerhard Schröder did with his labor reform policies, which have benefitted Chancellor Merkel,” Mr. Kahrs told Handelsblatt Global Edition. “She guarantees that everything stays the same and that makes her popular.”

Her challenge with Greece is that things can’t stay the same. On the campaign trail, she'll have to convince worried voters that she's serious about change - for a change.

Sarah Mewes and Franziska Scheven, reporters at Handelsblatt Global Edition, contributed to this storyJohn Blau is a senior editor at Handelsblatt Global Edition. To contact the authors: [email protected], [email protected] and [email protected]