MERKEL AFTER THE SUMMITS: THE WIND AT HER BACK

C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 001294 SIPDIS SIPDIS E.O. 12958: DECL: 07/02/2017 TAGS: GM PGOV PREL SUBJECT: MERKEL AFTER THE SUMMITS: THE WIND AT HER BACK REF: A. BERLIN 1284 ¶B. BERLIN 1253 ¶C. BERLIN 1251 ¶D. BERLIN 1093 Classified By: Deputy Chief of Mission John M. Koenig for reasons 1.4 ( b) and (d). ¶1. (C) Summary: After the successful conclusion of two high-profile summit meetings in June, Angela Merkel is at a high point of her Chancellorship. Her public support is rising after having negotiated a climate change "breakthrough" at the G-8 Summit and an agreement at the EU Summit to advance the Union's structural reform (Ref A). While she and the CDU are buoyed by encouraging poll numbers, the SPD and its leader, Kurt Beck, continue to falter, having failed to find an issue around which to rally and excite the German public. The end of the EU presidency marks the start of a new phase in the Grand Coalition, with elections (on the state level in 2008, at the federal level in 2009) on the visible horizon. Tensions in the coalition continue to increase. While leaders in both parties remain committed to the Grand Coalition through its 2009 term, they also are emphasizing their dissatisfaction with it, underscoring that they would prefer not to continue the coalition after the next election. An early dissolution still is judged very unlikely -- neither major party could be assured of a majority coalition with one of the smaller parties. After her foreign policy success at the G-8 and EU summits, Merkel faces challenges in domestic policy, where the SPD will seek to take the initiative in setting the agenda and use policy stalemates as future campaign issues. End summary. CDU Spin: Merkel Responsible for Summit Successes -------------- -------------- ¶2. (SBU) Having for the most part dampened expectations prior to both summits, Merkel and the CDU are now able to claim the summits as major successes, primarily because of progress with the U.S. on energy and climate change and Merkel's role in helping to avert a crisis over EU institutional reform. Her supporters attribute these victories to Merkel's command of detail, charm, persuasiveness, and persistence. She is seen as having navigated a rocky road, establishing herself as a key world leader -- one able to negotiate hard-to-achieve settlements. At the same time, she is seen by sympathizers as protecting German interests. She remarked, for example, after the G-8 Summit that, "we get along well with the United States. However, we do not check off everything the U.S. wants." Indeed, it appears that Merkel's leadership style is, in fact, in tune with the spirit of the times in Germany -- taking a cautious view about what Germany should do outside Europe, focused on economic and environmental issues, and committed to diplomatic consensus-building. SPD Spin: Merkel and CDU Out of Touch with Germans -------------- -------------- ¶3. (SBU) The SPD -- challenged from the right by the CDU/CSU and from the left by the new Left Party (Ref B) -- publicly viewed the G-8 Summit outcome much more critically. Within hours of the Summit's conclusion, SPD Chairman Kurt Beck accused the CDU/CSU of being "neo-liberal" and out of touch with the concerns of everyday Germans, adding that neo-liberalism runs contrary to the principles of the social market economy for which Germany stands. Beck was, as has been his style, attempting again to find an issue with public resonance at a time when Merkel appears to be solidifying her leadership position. The CDU dismissed Beck's criticism as evidence the SPD is simply "getting nervous." The SPD pitch fell flat and, after the EU Summit, Beck was more circumspect, saying simply that Merkel deserved respect and recognition for her success at the EU Summit. ¶4. (C) Beck continues efforts to strike a chord with the German public (Ref D),but he has been unsuccessful thus far and his personal popularity has fallen further. Only about one-third of SPD voters now approve of his performance as SPD party leader, according to a Rheinpfalz/ARD poll. Some of the disenchantment is likely due to backfired attempts to search for a winning issue. His attempt last year to appeal to the middle class -- by criticizing the long-term unemployed -- was soon thereafter mitigated by a need to cover the left flank after criticism by the Left Party. Beck got some traction earlier in 2007 with his categorical rejection of U.S. missile defense plans in Europe, but his more recent forays into foreign policy -- such as suggesting negotiations with "moderate" Taliban -- led some to deride him as an "amateur foreign minister." (The relative BERLIN 00001294 002 OF 002 popularity of Germany's real Foreign Minister, Frank-Walter Steinmeier of the SPD, further limits Beck's opportunities to distance the party from the Coalition on foreign policy issues.) German Public Strongly Supports Merkel -------------- ¶5. (SBU) Various polls reflect the benefits to Merkel of global diplomacy. The CDU/CSU has gained up to two percentage points (up to about 38 percent) in recent weeks, extending its lead over the SPD to a range of 8 to 12 percentage points. Merkel's popularity remains strong, according to the Forsa poll -- 54 percent of all Germans would vote for her as chancellor if direct elections were possible. In contrast, only 17 percent of all Germans would vote for Beck. (Note: because the Chancellor is not directly elected by the voters, the 54 percent figure is only illustrative of Merkel's popularity but not indicative of the likely outcome of a national election for the CDU/CSU. End note) These figures indicate significant crossover potential for Merkel. Indeed, among SPD voters, 40 percent say they would vote for Merkel, while only 29 percent would vote for Beck. Growing Tensions in the Grand Coalition -------------- ¶6. (SBU) Halfway through the legislative period, and with state-level elections approaching in six months, a new phase has begun, with many in both governing parties looking toward a post-Grand Coalition government. Volker Kauder, Chairman of the CDU parliamentary caucus, spoke out against the renewal of the Grand Coalition after its scheduled end in 2009, endorsing a future partnership with the FDP (Ref C). "In the interest of democracy, grand coalitions should only be an exception to the rule," remarked Kauder, adding, however, that an early end to the Grand Coalition was "unlikely." Similar statements by Beck and SPD parliamentary caucus chief Peter Struck reflect long-standing discontent with the Grand Coalition in the SPD, but also resignation that it likely will survive until 2009. Electoral math indicates that early elections would be a highly risky proposition for both major parties. At the moment, neither the CDU/CSU nor the SPD could form a majority coalition with a single smaller party. ¶7. (C) Comment: The path is not completely rosy for Merkel. After her successes at the G-8 and EU summits, Merkel is now expected to deliver on the domestic front, where (despite declining unemployment) other successes have been painstaking. The CDU likely hopes that Merkel's summit successes will provide a tailwind that will sustain her poll numbers, but foreign policy victories may prove fleeting, as public memory of the summits fades. The SPD will want for now to claim its share of the credit for Germany's recent success in international affairs, as it has already done in the case of the labor market, and Foreign Minister Steinmeier remains quite popular with the public. Our contacts at SPD headquarters suggest the SPD will try to take the initiative in setting the domestic agenda, using the lack of substantive progress on issues such as the minimum wage as an indictment of Merkel and the CDU/CSU, including in January 2008 state elections. End comment. TIMKEN JR