#DEvote? Majority of Germans want to restrict migration

The Swiss referendum #CHvote to cap the number of EU migrants has sparked strong reactions across Europe. But would other European people vote differently if they were to be asked?

An Infratest dimap poll for Deutsche Welle from Wednesday suggests that a relative majority of Germans would like to restrict immigration as well. 48% say they are in favour of capping migration, while 46% are not. A very close call.  Note though, that the question was about "immigration" in general rather than "EU migration".

When broken down by party affiliation breakdown, it's clear where these views are most concentrated: 84% of Alternative für Deutschland's  supporters say they want a cap on migration. 51% of Angela Merkel's CDU/CSU say the same. Meanwhile, the Greens are least keen, with only 29% supporting the cap.

Courtesy of Deutsche Welle

In France, the picture might be even more distinct. A TNS Sofres/Le Monde poll recently showed that 34% of French “agree with the ideas” of Marine Le Pen’s Front National. Greens MEP Danile Cohn-Bendit estimates that 60% of French would vote in favour of limiting immigration.

CSU calls for devolution of EU powers and new subsidiarity safeguards

Der Spiegel this morning reports that the CSU has started an "anti-Brussels election campaign" citing an internal CSU strategy paper which will form the basis of the party's campaign for the 2014 European elections entitled "Europas Zukunft: Freiheit, Sicherheit, Regionalität und Bürgernähe" (which translates as Europe's future: Freedom, Security, Localism and closeness to the citizens). The paper is certainly highly critical of many aspects of the EU but it also sets out concrete reform proposals which include:

The return of certain competencies to member states: The possibility of this was already hinted at by Angela Merkel during the recent election campaign but the CSU are going one step further by providing some additional details by specifying regional policy (as recommended by Open Europe and Open Europe Berlin) and "parts of the over-regulated single market". It is not clear what exactly would come under the latter category but it is possible that it could include areas like social and employment law which are not strictly part of the single market but which have come to be seen as ancillary to it.

A new EU "subsidiarity" or "competences" Court: Der Spiegel quotes the paper as saying that "We need a form of withdrawal therapy for Commissioners intoxicated by regulation". The antidote it would seem will be a new EU subsidiarity or competences Court - composed of national constitutional judges/legal experts - which would mediate in cases where the Commission has allegedly overstepped its limits. This option has been voiced in Germany before but it looks like the CSU will give it a serious push. If combined with new powers for national parliaments, such as binding 'red card', this could be an effective way of keeping the Commission's desire to accrue new powers in check.

The paper also strongly reiterates the party's support for referenda to be held on EU issues in Germany and for shrinking the EU Commission.

Given that Cameron has not enjoyed the best headlines in Europe recently this late Christmas present will be very welcome at Number 10.

What's happening in Germany? An update on the coalition negotiations

Which way will Angela Merkel choose?

A quick update on the German coalition government negotiations.

There has been a lot of posturing over the past couple of weeks from all sides about the willingness to do a deal and what is needed to secure one. So far though, things have basically followed our expected timeline with end of November still looking to be the likely date for a final agreement.

A grand coalition still remains the most likely outcome but a CDU/CSU and Green coalition (Black-Green) has increased in likelihood. Below we lay out the key developments in each party’s position:

CDU/CSU:

• Despite being the runaway winner of last month's elections, it has taken a relatively back seat in the recent public discussions (behind closed doors it is obviously leading things).
• Has kept the door open to formal talks with both the SPD and Greens, ensuring that the former knows it has a “serious alternative”. That said, some within the party have expressed unease about a Black-Green coalition, with CSU Chief Horst Seehofer notably saying he “would not hold talks” with them.

SPD:

• Has begun to lay out its terms for joining a coalition, focusing on higher taxes on higher incomes and a national minimum wage. Has also made overtures about renewing its push for a financial transaction tax of some form, possibly linking this to the proposed eurozone bank resolution fund.
• The spokesman of SPD’s conservative wing, Johannes Kahrs, told Die Welt it is “non-negotiable” that “the SPD appoints the Finance Minister”, although speculation over this has now gone quiet and seems unlikely to happen given how keen the CDU/CSU is to hang onto this ministry.
• There is clearly some hesitancy within the SPD however, with many still scarred by the effects of the previous grand coalition in 2009. The party leadership has also promised that any coalition deal will need to be ratified by the full party membership – this adds uncertainty to the negotiations.

Greens:

• Much of the party leadership has stepped down meaning it is in somewhat of a transition phase, with senior politicians divided in terms of their eagerness to conduct negotiations with the CDU/CSU.
• The party would likely want similar agreements to the SPD on tax but also some assurances on support for renewable energy. However, given the change in leadership of the Greens and the shifts in the CDU/CSU’s energy policy, the two parties are now much closer on both of these issues.
• That said, there are plenty of areas of discord, one being immigration and asylum policy, which came to a head in the wake of the Lampedusa tragedy. Interior Minister Hans Pieter Friedrich (CSU) said earlier this week, “It cannot be the responsibility of Germany or the EU to accept all the people who are not as well of as the people here”, and went on to hit out at those immigrants who come to Germany allegedly to only access benefits. Joint leader of the Greens Katrin Göring-Eckardt hit back saying, "The rhetoric of allegedly excessive demands in view of the terrible Lampedusa catastrophe is something we cannot and will not accept”. Some have speculated that the row is in at least in part tactical, so as to provide cover in case the negotiations fail.

As for the timeline from here, the CDU/CSU will hold final informal talks with the SPD and Greens on Monday and Tuesday respectively and will decide at the end of next week who to enter into formal talks with. If it’s the SPD, as seems likely, the party leadership will seek approval from the 'small' party convention on the 20 October, after which formal talks will begin.

Meanwhile, it looks the SPD and Greens have ignored the siren calls of Die Linke to use the three parties' combined parliamentary majority to force through measures such as the minimum wage.

One final interesting point, is that these negotiations are starting to cause tremors in other countries with the Irish Independent running the front page headline this morning, “German parties battle over our corporation tax”. Clearly the lines between national and EU politics are becoming increasingly blurred in the eurozone.

Row alert: Germany and the Commission clash head on over EU migration

The European Commission isn't winning many popularity contests at the moment. The Italians are furious, and the Dutch aren't happy with it either. A recent Open Europe/Open Europe Berlin opinion poll showed that, out of 13 EU and national institutions, Germans trust the European Commission the least.

As we've noted previously, one now hears more rude things about the Commission in Berlin than in London. And sure enough, Germany is now heading for an almighty row with Brussels over EU migrants' access to benefits. 

EU Commissioner for Employment and Social Affairs, László Andor last week told Der Spiegel that migration to Germany from Bulgaria and Romania "only involves benefits for both sides." The fuss over access to benefits - and potential cost to the welfare state of EU migration - is overblown, claimed Andor.

German politicians have responded with an unusual degree of fury. The CDU/CSU faction’s spokesman for interior policy, Hans-Peter Uhl, labelled the claim “an outrageous denial of reality” and a “first-class frivolity.” In case people didn't get the message, he added that some Commissioners are as far removed from reality “as the moon from the earth” (which is about 384,000 km, so a considerable distance).

German Interior Minister Hans-Peter Friedrich also weighed in, telling Die Welt that

freedom of movement is not the freedom to change country because of higher benefits...The Commission needs to take this concern seriously.

Following a meeting of Interior Ministers this morning, interestingly, Friedrich has now demanded

a clear statement from the European Union whether we can send back those people who come to Germany to surreptitiously obtain benefits and also to prevent their re-entry

There are similar noises coming out of the Netherlands - and of course the UK. Issues related to free movement of persons are on Interior Ministers' agenda this afternoon. Expect this one to run and run.

This is how Merkel could flunk the elections: enter the Far Left

Coalition politics combined with proportional representation and a fundamentally regionalised system can create the most fascinating potential outcomes – and do your head in. Like this: Merkel could still lose the German elections. Die Linke – the far-left party with a touch of DDR-nostalgia – could become the Kingmaker, paving way for a Social Democrat (SPD)-Green coalition.

This is how it could work:

The latest polls put the CDU/CSU at 41% and the SPD on 26% - with 59% of voters supporting Merkel as Chancellor compared to 30% who support the SPD’s Steinbrück. With the SPD and Greens still far off an absolute majority as a block, and with the FDP – Merkel’s current junior coalition partner polling at 5-6% ( the Bundestag threshold is 5%), it may seem as if Merkel has bagged it, either as part of a CDU/CSU-FDP coalition, or a CDU/CSU-SPD grand coalition.

However, this race isn’t over yet. If the FDP fails to make the 5% threshold, a lot can happen. The FDP could fail for two reasons: AfD could be nicking more votes from the FDP than expected, and ironically, the FDP scoring well in the Bavarian State elections on 15 September, could divert strategic CDU votes away from the FDP (voters who might vote strategically may have a false sense of confidence in FDP’s chances).

With the FDP out, the CDU/CSU is unlikely to get an absolute majority of Bundestag seats of its own, so it all becomes a matter of which constellation can reach a relative majority.

Enter Die Linke. The political divide between SPD-Greens and Die Linke is far too wide for them to actual joining forces in a coalition – in some SPD circles, Die Linke is, frankly, considered to be full of nutters. However, these parties do have one common interest: get rid of Merkel. So instead of SPD or Greens entering a very messy coalition arrangement with CDU/CSU (which no one wants, except the voters), they can strike a dirty deal with Die Linke whereby the former offer its passive support in the Bundestag on a policy-by-policy basis. A minority government with Die Linke’s blessing.

SPD/Greens would have to offer Die Linke something in return, of course, and the question if there’s any policy area where there’s sufficient overlap – or at least not outright conflict - between the parties manifestos for a deal to be struck. A new wealth tax perhaps? What’s clear is that Germany would take a quantum leap to the left.

What’s interesting is that though Die Linke leadership has previously hinted at this option being ruled out, the party never moved to rule it out completely. Die Linke head Bernd Riexinger said recently “If there is a majority against Merkel [after the elections], I will not exclude any option…only content will decide.” This is a clear invitation. However, we still hold this is as unlikely.

It would be interesting though to observe how Germany, governed by an SPD-Green coalition with Die Linke’s blessing, would continue its leadership role in the eurozone.

UPDATE: 6 September 2013

Speaking on the campaign trail yesterday, the SPD's Chancellor Candidate, Peer Steinbrück reiterated that "The SPD does not consider Die Linke appropriate as a coalition partner." It remains unclear, however, if  Steinbrück is rejecting cooperation with Die Linke until election night, or for the entire duration of the new government term.

Merkel caught in the middle between the Bundesbank and the ECB

In her traditional news conference following the summer recess, German Chancellor Angela Merkel walked a fine line in questions about the eurozone crisis, having to maintain a delicate balancing act with regards to different elements within her governing coalition.

For starters, she has to contend with the increasingly fractious rhetoric from the CSU – the Bavarian sister party of her own CDU – on the eurozone (see here and here for examples). The latest example being Bavarian Prime Minister Horst Seehofer’s argument that the €190bn cap on German liability imposed by the German Constitutional Court in its ruling on the ESM and fiscal treaty last week should apply to the euro-rescue effort as whole, including the ECB’s new OMT bond purchasing programme. However Merkel has rejected this interpretation on the basis the two are not linked. Speaking earlier today, she told reporters that:

“If the ECB determines that monetary transmission has become difficult, then it must take measures to ensure price stability - it is not up to us to set it limits.” 

Seehofer later confirmed that “this is the only issue which we interpret somewhat differently than in Berlin”, adding that it was nonsensical for the Court to cap Germany’s liability at €190bn only for “it to be suddenly increased by many multiples through other means”.

On the other hand however, Merkel did not issue a statement of blanket support for the ECB’s actions, adding that Bundesbank President Jens Weidmann’s recent interventions – in which he has been fiercely critical of renewed ECB bond-buying were “understandable and always welcome”, a statement widely interpreted in Germany as a subtle rebuke of Finance Minister Wolfgang Schäuble’s comments in an interview with Frankfurter Allgemeinen Sonntagszeitung yesterday in which he criticised Weidmann for his public dissent, arguing that “I'm not sure that making this debate semi-public helps to build confidence in the [European] central bank.”

Merkel is in a tough position because, having invested so much in the euro-rescue, she cannot afford to oppose the ECB’s ‘big-bazooka’ strategy. At the same time however she cannot allow Weidmann – whose views are widely respected and shared by the German public – to become completely isolated for fear this would provoke a substantial domestic backlash.

How long Merkel will be able to keep her fractious coalition together on one hand while also keeping the German public – whose support for the EU and euro has hit an all-time low – onside remains to be seen, especially in the event of unforeseen developments such as Germany actually suffering direct losses on its loans to Greece and/or losses on ECB holdings of Greek debt.

Germany's Summer of discontent?

Over the last few weeks, a range of German policymakers have fired broadsides against further German involvement in the eurozone crisis, and against further aid to Greece in particular. Referring to September’s troika report on Greece, Michael Fuchs – the deputy parliamentary leader of Angela Merkel’s CDU party – yesterday told Handelsblatt that:

“Even if the glass is half full, that won’t be sufficient for a new aid package. Germany cannot and will not agree to that. We reached the point where the Greeks must show they are capable of delivering a shift long ago.”

Last week, Horst Seehofer, Prime Minister of Bavaria and leader of the CSU, the Bavarian sister party and coalition partner of Angela Merkel's CDU (which has been getting increasingly agitated by the eurozone bailouts), proposed a series of referenda:

"We must involve the people... First of all: on the transfer of important competences to Brussels. Secondly: on the accession of new states to the European Union. And thirdly: on German financial aid to other EU states."

In particular Seehofer cited debt pooling such as eurobonds or a debt redemption fund, adding that "with the CSU there won't be any United States of Europe".

Merkel's other coalition partner, the liberal FDP, is also stepping up its rhetoric, with its leader and deputy Chancellor, Philipp Rösler and also its leader in the Bundestag, Rainer Brüderle, saying they were reconciled with a Greek euro exit. Bavarian Economy Minister Martin Zeil has gone even further arguing that: 

"...a country needs to leave the euro, when it doesn't fulfil its duties. If necessary, two or more [countries] could leave." 

From the other side of the political spectrum, former German Finance Minister Peer Steinbrück (SDP) last month stated that:

"in certain cases, I have increasing doubts whether all countries will be able to be kept inside the eurozone (...) I can see how certain countries will be unable to close their competitiveness gaps [with Germany]"

However, the SPD have also recently publicly come out in favour of eurozone debt pooling - albeit it with strict conditionality in terms of national financial policy-making.

Otmar Issing, former chief economist of the ECB, added his voice to the chorus, saying some eurozone member states might have to leave:

 "Everything speaks in favour of saving the euro area [however] how many countries will be able to be part of it in the long term remains to be seen."

The question is whether all of this is rethoric, or the beginning of something else.

Bavarians are getting increasingly restless over eurozone bailouts

Debt-pooling goes down less well in Munich

Its not just Spain that has a problem with its regions. Over in Germany, Bavaria is getting increasingly angry over the additional burdens imposed on Germany as a result of the eurozone crisis - both via the existing bailout funds and possible future burdens via eurozone debt pooling. This is because in addition to its strong regional identity, it is the wealthiest of Germany's 16 states; a bigger burden on German taxpayers therefore equals a bigger burden on Bavaria.




The day after Moody’s placed Germany as a whole on negative outlook, it placed Bavaria and five other German states on negative outlook as well. While the German government reacted quite stoically – saying it had “taken note” of the decision – the response from Bavaria to its 'outlook downgrade' was far more robust. The state’s Finance Minister Markus Söder told Süddeutsche that:

"The Bavarian finances are in top condition, we are paying back our debts. I would expect us to win a gold medal.”

The state’s Prime Minister, Horst Seehofer argued that the decision "ought to send a warning signal to the rest of Europe". Both politicians come from the CSU, the Bavarian sister party to Angela Merkel’s CDU, which governs Bavaria with the FDP as its junior coalition partner. In the German debate, the CSU has taken the hardest line on Europe’s so-called ‘debt sinners’; yesterday Söder became their latest senior politician to explicitly call for Greece to leave to eurozone – in contravention of the government’s official position, while in an interview last week the party’s General Secretary Alexander Dobrindt said that:

"With Greece we have reached the end of the road. There must not be any further aid. A country which does not have the will to fulfil the conditions, or is not able to do so, must get a chance outside the euro”. 

However, it is not just Greece that has attracted the ire of the CSU – in the same interview Dobrindt laid into the opposition SPD and Green parties, describing their positions on the eurozone crisis as a “betrayal of German interests”:

“We will defend the bastion that is Bavaria against the onslaught of the left… The [upcoming regional and federal] elections will be hard clashes with the opposition parties over major social issues: the SPD and Greens want German taxpayers’ money in exchange for eurobonds. They represent the interests of the Socialist International and not those of German citizens. They are preparing the ground – together with the French President [Hollande] – for a ‘eurosocialism’. Their egalitarianism comes at the expense of Europe’s top performers [and will] threaten the prosperity of Europe.”

Dobrindt’s intervention is noteworthy because it is the first time that a senior mainstream politician has explicitly called for the eurozone crisis - and longer term questions such as eurobonds - to be made into defining issues in next year's elections. Until now, despite accusing Merkel's government of poor political management, the SPD and Greens have broadly taken the same structural approach to the crisis - i.e. bailouts and savings/reform packages, albeit with additional emphasis on 'pro-growth' measures. It will be interesting to see if and to what extent Merkel and the CDU will heed Dobrint’s call to adopt a tougher tone.

Bavaria’s position in Germany can be seen as a microcosm of the eurozone as a whole – together with neighbouring Baden-Württemberg they largely subsidise public expenditure in the Western Länder and the former DDR – the latter via a statutory ‘Solidarity payment’ on top of general taxation. Given that many Bavarians are unhappy with this arrangement - the state government recently launched a legal challenge - their resistance to funding another ‘solidarity payment’ – this time for the Mediterranean bloc – should not be underestimated. Earlier this month, Seehofer warned that:

“Eventually, a point will be reached when the Bavarian government and the CSU can no longer say 'yes' any more [and] the coalition has no majority without the CSU's seats.” 

While this is unlikely to happen any time soon, the CSU’s resistance will severely restrict Merkel’s ability to place further eurozone rescue related burden on the German taxpayers in the remainder of the current parliamentary session and beyond.

As Germany as a whole faces the question of how it will respond to the crisis in the longer term – with a range of options running from a break-up to more political and economic integration – expect Bavaria to be at the forefront of the resistance to the latter option.

Quotes of the Crisis

The eurozone crisis can't be accused of one thing - providing good quotes from politicians or commentators, most notably some of the comments from Slovakian MPs when that country was debating whether to approve an extension of the EFSF.

This morning as part of our daily look through the European press we found another couple of examples that we thought were worth sharing with a wider audience.

Firstly, in the IHT, we have the ever outspoken Hans Werner Sinn, President of the IFO Institute, rebuking US politicians including President Obama for their stance during the crisis:

“Some critics have argued that Germany, having benefited from the Marshall Plan, now owes it to Europe to undertake a similar rescue. Those critics should look at the numbers…Greece has received a staggering 115 Marshall plans, 29 from Germany alone, and yet the situation has not improved. Why is that not enough, Mr Obama?”

Secondly, we have Alexander Dobrindt, the General Secretary of the CSU lambasting the leadership of the opposition SPD for travelling to Paris to meet with French President Francois Hollane in order to discuss a common approach to the eurozone crisis, who said that:

"This grotesque pilgrimage is certainly not the German interests, but at most in that of the Socialist International.”

Germans stick to their guns on data retention

As we've noted before, the Germans take privacy and civil liberties seriously, and have refused to implement the EU's Data Retention Directive (the first part of the Directive was meant to have been implemented in 2007 the second part in 2009). There's a lot of history here. Two years ago, the German Constitutional Court ruled the implementing law of the Directive unconstitutional, which in turn triggered the current stalemate.

As the Germans continue to drag their feet, the European Commission has now proposed that the ECJ impose a daily penalty of €315,037 on Germany until it implements the Directive. However, Süddeutsche reports that the liberal FDP Justice Minister Sabine Leutheusser-Schnarrenberger is sticking to her guns and is still refusing to implement the law - something which is increasingly straining relations within the German ruling coalition, with CDU/CSU MPs, and CSU Interior Minister Hans-Pieter Friedrich in particular, less keen to make a stand on the issue than the FDP.

This is becoming a very interesting test case for a potentially new-found German assertiveness in Europe, though it's not alone on this on this one. Sweden, Austria and Romania have gone into this Directive kicking and screaming, but it's definitely Germany that is offering the most resistance at the moment. More widely, of course, this is an interesting example of an EU member state unilaterally refusing to accept an EU law what it goes against the country's fundamental political and constitutional settlement.

Is this party over?

Yesterday's elections in the German region of Saarland saw a somewhat unexpected surge for Angela Merkel's CDU party, which won 35.2% of the votes, ahead of the Social Democrats (SPD) on 30.6% and the far-left Die Linke on 16.1%.

As Torsten Krauel comments in Die Welt, despite expectations of an SPD victory, “The CDU held its own. Angela Merkel will appreciate this when it comes to the formulation of further conceivable eurozone rescue packages”.

But perhaps equally significantly, Merkel’s junior coalition partner at the national level, the FDP, won only 1.2% of votes - a massive drop of 8% compared with the previous elections. In fact, the FDP only just beat the neo-Nazi NPD party by 267 votes.

This also means that in all the regional elections that have taken place over the last two years, the FDP has only managed to get re-elected its heartland of Baden-Württemberg, and even then they just about scraped in with 5.3% of the vote. Despite its history as a party of government (it has often played the role of kingmaker for either the SPD or CDU/CSU), it is literally being wiped off the map, having completely failed to re-invent itself.

As the party stares into the abyss, former party leader and one-time golden boy of German politics Guido Westerwelle (in our view increasingly marginalised as Foreign Minister) organises conferences looking at the prospects for fundamentally re-shaping the EU's constitutional architecture after the crisis, which although undeniably important in the longer term, can hardly be deemed to be a priority for voters concerned about the 'here-and-now' of the eurozone crisis and Germany's role in the bailouts.

Meanwhile, Germany’s young and swinging Pirate Party, which has been critical of the bailouts, came fourth with 7.4%, meaning it has secured seats in Saarland’s regional parliament for the first time. It also won seats in last year's regional election in Berlin and looks competitive in polls ahead of the impending elections in Nordrhein-Westfalen, Germany's most populous state. The Pirates are also contributing to a wider cultural change in German politics, for example pushing mainstream politicians to become more social media-savy, e.g. by joining Twitter, which the Pirates have utilised to great effect.

So as the FDP's star wanes (or more accurately comes crashing down to earth), the Pirates are definitely the ones to keep an eye on...