Political Disharmony Spying Scandal Ruffles Coalition

New allegations about German collusion with U.S. corporate spying in Europe have strained relations between conservatives and Social Democracts. With trust deteriorating, needed reforms may fall by the wayside.
Sigmar Gabriel and Angele Merkel aren't on the best of terms.

Only a year ago, Chancellor Angela Merkel seemed unequivocal in her support of the head of the rival center-left Social Democratic Party, the SPD, her coalition partner in government.

"The chancellor has full faith in her deputy and the economy minister," government spokesman Steffen Seibert said at the time, giving Sigmar Gabriel an official clean bill of health. The backing came at a key moment – the height of a child pornography scandal involving Sebastian Edathy, an SPD parliamentarian, and Mr. Gabriel's role in passing on information about it.

And today?

It's questionable whether the vice chancellor Mr. Gabriel still enjoys Ms. Merkel's unconditional confidence.

Doubts have emerged since the SPD's leading politician, who is eying his own run for Ms. Merkel's job, earlier this week placed the chancellor and head of the center-right Christian Democratic Union square at the center of the latest major surveillance scandal involving the German foreign intelligence agency, the BND.

The BND is said to have supplied intelligence data in up to 40,000 instances on companies and organizations in Western Europe, including Germany, over a 10-year period to the U.S. domestic intelligence agency, the NSA. The targets of this corporate espionage allegedly included Airbus, previously called European Aeronautic Defense and Space, or EADS, and helicopter maker Eurocopter.

Ms. Merkel's CDU insists the BND's espionage was only of activities by companies in crisis regions, and not in Europe itself. But the revelations have still proven a major embarrassment after more than a year of German politicians criticizing the United States for its security and corporate espionage activities, including Ms. Merkel sharply criticizing the U.S. for allegedly tapping her personal phone, without questioning whether the German agency had been complicit in any of the activities.

Mr. Gabriel said he had asked Ms. Merkel twice whether the BND had contributed to NSA's industrial espionage activities. "In both instances, she answered in the negative." Sigmar Gabriel, Vice-Chancellor and Economy Minister

The question on everyone's lips: Did Ms. Merkel know?

Mr. Gabriel said he had asked Ms. Merkel twice whether the BND had contributed to NSA's industrial espionage activities. "In both instances, she answered in the negative," he said, adding that he had believed her.

To supporters of the chancellor, Mr. Gabriel's remarks appeared to be a betrayal of confidence and could mark a turning point in the so-called "grand coalition" made up of the Christian Democrats and Social Democrats.

Critics said the vice-chancellor, who as economy minister is under pressure to clear up the corporate espionage scandal, had apparently places his own interests above a good working relationship with the chancellor.

Government officials were tight-lipped about the incident on Tuesday, but some second-tier politicians were more vocal.

"Vice-Chancellor Gabriel's moment of deceit is an embarrassing maneuver in the SPD's decline in the polls," said Andreas Scheuer, general secretary of the Bavarian Christian Social Union, the CDU's sister party.

Representatives from both the CDU and CSU accused Mr. Gabriel of playing politics at the chancellor's expense. They argued that his penchant for disseminating information she said in confidential conversations would make it almost impossible for the chancellor to confide in him again.

A senior Christian Democrat told Handelsblatt he expected Ms. Merkel to hold the economy minister's indiscretion against him.

How secure is his phone?


Volker Kauder, the CDU/CSU parliamentary leader, said from now on he would keep a close eye on "what the Social Democrats want from us in the future."

The reasons for Mr. Gabriel's attack are multifaceted. One reason is his party's consistently low approval ratings (see graphic), despite having backed popular legislation in the past year such as the minimum wage, early retirement at 63 and rent controls in major cities.

Another reason may be pressure from the SPD's left wing, which has urged the party to finally distance itself from the conservatives. In this difficult situation, party leader Mr. Gabriel's apparent strategy may to damage the conservatives' guarantee of success: the chancellor herself.

It's a dangerous game for the coalition and the country.

The Christian Democrats' parliamentary leadership spent an unusually long time discussing the BND scandal on Monday – not just because domestic policy experts were concerned about the BND agency's ability to operate effectively going forward, but also because the agitators in the scandal seemed to go beyond the opposition parties to include their very own coalition partner.

"Mr. Gabriel's frantic attempt to draw the chancellor into the investigation process is in bad taste and a desperate attempt by the SPD chairman to liberate his party from its 25-percent corset," said Christian Democrat domestic policy expert Hans-Peter Uhl, referring to the left-leaning party's low approval ratings. "What pettiness and simplemindedness."

The "attack on the chancellor," as another deputy parliamentary leader described Mr. Gabriel's remarks, would have consequences for the coalition, essentially destroying any harmony that had existed between the parties.

Mr. Gabriel has his own problems. Letters from companies concerned about industrial espionage are said to be piling up at the economy ministry that he leads. They are presumably the reason why Mr. Gabriel told the media the chancellor had assured him that industrial espionage was not an issue.

Mr. Gabriel's frantic attempt to draw the chancellor into the investigation process is in bad taste and a desperate attempt by the SPD chairman to liberate his party from its 25-percent corset. Hans-Peter Uhl, Christian Democrat domestic policy expert

But the spying scandal is not the only stumbling block that is threatening Germany's governing coalition. Other issues have also put the country's two largest parties at odds over the last few months.

"The mood is not improving," said Christian von Stetten, head of the conservatives' parliamentary committee focusing on small- and medium-sized business policy.

Labor Minister Andrea Nahles, a Social Democrat, is not cooperating with the CDU's demand for a flexible pension as a supplement to the retirement pension at 63. The Social Democrats and the Greens also intend to hold up the Bavarian CSU's plan to impose tolls on foreign drivers in the upper house of parliament, the Bundesrat, which represents the German states. And as economy minister, Mr. Gabriel is quarreling with CSU Chairman Horst Seehofer over the key issue of the Germany's shift away from nuclear power and toward renewable energy.

Even the coalition's biggest endeavor, a far-reaching reform of the financial relationships between states and the federal government, is now on the rocks. The normally reserved CSU regional faction leader Mr. Hasselfeldt, said that, if necessary, the solution involving the federal and state governments would be "postponed until the next election period," adding there would not be a compromise "at any cost."


Election polls CDU CSU SPD To No Avail-01


Things were not supposed to move this slowly. The coalition had initially intended to set the course on a series of key issues ahead of the next federal elections in 2017. Reaching big agreements would have justified its 80 percent majority in the German parliament, the Bundestag.

Manfred Güllner, head of the Forsa Institute for Social Research and Statistical Analysis, no longer believes this will happen. "We will see a chancellor who projects her usual presidential image to the outside world while remaining tough on the SPD behind closed doors," Mr. Güllner said.

Richard Hilmer, with Infratest Dimap, agrees. "We have apparently reached a point where all three partners are increasingly trying to boost their own profiles," he said.

The Social Democratcs continue to needle the chancellery, which is formally in charge of supervising the BND. The charge of industrial espionage makes Ms. Merkel look bad, said deputy SPD leader Ralf Stegner. Questioning the coalition is not the goal. "However, we also have to preserve our credibility within the coalition and push for complete clarification," he said.

That clarification could come this week, beginning on Wednesday when the Bundestag is set to discuss the scandal. The Christian Democrats want to make sure they are seen as representing national interests, Mr.Kauder is said to have communicated to party members internally.

After the Bundestag debate, the chancellor's chief of staff Peter Altmaier and Interior Minister Thomas de Maizière will testify behind closed doors before the parliamentary control committee.

A separate NSA investigation committee looking into the scandal will meet on Thursday. The Christian Democrats' line of defense is that the BND merely spied on targets in crisis zones, such as the Middle East and North Africa, from its listening station in Bad Aibling. If companies like Airbus appeared on the target lists, it was only because they were engaged in defense deals in the regions.

The party insists that this does not amount to industrial espionage. "It simply doesn't make sense to be searching for a company's crown jewels in communications between Afghanistan, Somalia and Yemen, on the one hand, and a company's offices outside Germany, on the other," said Armin Schuster, a CDU domestic policy expert.


Thomas Sigmund is Handelsblatt's Berlin bureau chief. Daniel Delhaes reports on politics, transport and airlines from the Berlin office. To contact the authors: [email protected], [email protected]