Regional election defeat raises questions about Merkel's future

German chancellor Angela Merkel received an electoral shock over the weekend when her CDU party finished third in a regional election in the north German state of Mecklenburg-West Pomerania.

Her ruling coalition got 19% of the vote, compared to the Social Democrats, who won about 30%.  Finishing a surprise second was the nationalist AfD party with 21% of the vote.

The results raise questions about Merkel's future and whether she can remain viable leading up to national elections next year.

CNBC:

Although Merkel's open-door policy and leadership at the height of Europe's migrant crisis attracted praise from some quarters, there is growing disquiet with the policy in Germany's public and political sphere -- including within Merkel's own governing "grand coalition" made up of the CDU, Christian Social Union (CSU) and SPD, which is a junior partner in the governing alliance.

The political beating that the CDU took this weekend was not the first indication of public opinion souring towards Merkel's party with local elections earlier this year also showing a rise in support for the AfD.

Carsten Brzeski, chief economist at ING-DiBa, said in a note on Monday that the latest election was "another shot across the bow for the national government and Chancellor Angela Merkel."

He noted that the state of Mecklenburg-Vorpommern has around 1.3 million voters, the highest youth unemployment rate of all German states, a high poverty rate and that "the extreme right-wing party, NPD (National Democratic Party), has been member of the regional parliament for ten years".

"Therefore, yesterday's results are obviously not representative but they definitely are symbolic for Chancellor Merkel and the entire German landscape." The big test case ahead of the 2017 national elections will be next year's elections in North Rhine Westphalia, a state which has more voters than all eastern German states together, Brzeski noted.

In all, however, he said that Sunday's result would not "change Chancellor Merkel's stance on the refugees or the economy but the atmosphere in her own government and party will become rougher."

Another test of the CDU's popularity will be seen when Berlin's state election is held on September 18, however.

While Alavan's Newton said in his note, "let's see what happens in Berlin a fortnight from now (in the state election) before writing Merkel off," another analyst said the Berlin election could force the CDU into an uncomfortable position with the SPD – a party that, despite partnering the CDU/CSU in power, has criticized her migrant policy.

It won't take much for nervous politicians to begin abandoning the chancellor over her refugee policies.  And while Merkel has not indicated she will stand for re-election, it is generally thought that only a wholesale rejection by the voters of her refugee policies would cause her to either resign prior to the vote or refuse to run.

A few more terror attacks or high-profile sexual assaults will only feed the flames and boost support for the AfD.  Most Germans reject the AfD's agenda but are in sympathy with their policy on refugees.  As it stands now, the AfD will easily surpass the 15% support it needs to enter parliament.  That will alter German politics, forcing politicians to address the voters' concerns about the refugees.

German chancellor Angela Merkel received an electoral shock over the weekend when her CDU party finished third in a regional election in the north German state of Mecklenburg-West Pomerania.

Her ruling coalition got 19% of the vote, compared to the Social Democrats, who won about 30%.  Finishing a surprise second was the nationalist AfD party with 21% of the vote.

The results raise questions about Merkel's future and whether she can remain viable leading up to national elections next year.

CNBC:

Although Merkel's open-door policy and leadership at the height of Europe's migrant crisis attracted praise from some quarters, there is growing disquiet with the policy in Germany's public and political sphere -- including within Merkel's own governing "grand coalition" made up of the CDU, Christian Social Union (CSU) and SPD, which is a junior partner in the governing alliance.

The political beating that the CDU took this weekend was not the first indication of public opinion souring towards Merkel's party with local elections earlier this year also showing a rise in support for the AfD.

Carsten Brzeski, chief economist at ING-DiBa, said in a note on Monday that the latest election was "another shot across the bow for the national government and Chancellor Angela Merkel."

He noted that the state of Mecklenburg-Vorpommern has around 1.3 million voters, the highest youth unemployment rate of all German states, a high poverty rate and that "the extreme right-wing party, NPD (National Democratic Party), has been member of the regional parliament for ten years".

"Therefore, yesterday's results are obviously not representative but they definitely are symbolic for Chancellor Merkel and the entire German landscape." The big test case ahead of the 2017 national elections will be next year's elections in North Rhine Westphalia, a state which has more voters than all eastern German states together, Brzeski noted.

In all, however, he said that Sunday's result would not "change Chancellor Merkel's stance on the refugees or the economy but the atmosphere in her own government and party will become rougher."

Another test of the CDU's popularity will be seen when Berlin's state election is held on September 18, however.

While Alavan's Newton said in his note, "let's see what happens in Berlin a fortnight from now (in the state election) before writing Merkel off," another analyst said the Berlin election could force the CDU into an uncomfortable position with the SPD – a party that, despite partnering the CDU/CSU in power, has criticized her migrant policy.

It won't take much for nervous politicians to begin abandoning the chancellor over her refugee policies.  And while Merkel has not indicated she will stand for re-election, it is generally thought that only a wholesale rejection by the voters of her refugee policies would cause her to either resign prior to the vote or refuse to run.

A few more terror attacks or high-profile sexual assaults will only feed the flames and boost support for the AfD.  Most Germans reject the AfD's agenda but are in sympathy with their policy on refugees.  As it stands now, the AfD will easily surpass the 15% support it needs to enter parliament.  That will alter German politics, forcing politicians to address the voters' concerns about the refugees.