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German Vote Looms in State Merkel Lost After First Greek Aid

Lawmakers in Germany’s most populous state voted down the region’s budget, signaling the probable collapse of the Social Democratic-led coalition in North Rhine-Westphalia.

Parliament members in the state capital, Dusseldorf, rejected the budget by 94 votes to 91 votes today. Hannelore Kraft, the SPD state prime minister who leads a minority government with the Greens, said before the ballot that she would let voters decide on the future leadership of the state of almost 18 million people if the budget failed, according to comments broadcast live on N24 television.

Fresh elections would offer Chancellor Angela Merkel a chance to recapture the state her Christian Democratic Union lost in May 2010 in the first of a series of regional ballot defeats that she blamed on the debt crisis in Greece. With the turmoil easing, Merkel’s personal ratings are at a record high, while polls show her CDU tied with the SPD in North Rhine- Westphalia, one of 16 German states.

“If it comes to new elections in North Rhine-Westphalia, then I think it’s good and proper that there’s no longer a minority government,” Merkel told reporters in Berlin. Voters should be able “to opt for a more stable administration that by pursuing a more solid budgetary policy thinks more about the future and doesn’t undermine its options by piling up ever more debt.”

Greek Aid

Kraft won North Rhine-Westphalia in 2010 days after Merkel backtracked and agreed to a first bailout in Greece, a result that deprived the German leader of her majority in the national parliament’s upper house, the Bundesrat, where states are represented. With just 90 of the 180 seats in the Dusseldorf parliament, Kraft has struggled to pass legislation since.

In March last year, Kraft denied that she planned to call early elections after a court ruled the 2010 budget to be unconstitutional. Then in July, her government was forced to amend a restructuring plan for WestLB AG at the last minute to secure the support of parliament for the proposal. North Rhine- Westphalia partly owns WestLB, a bank that was bailed out by its owners and Germany’s Soffin rescue fund after running up losses during the financial crisis.

Latest Poll

Merkel’s CDU and the SPD, the main opposition party nationally, were tied at 35 percent support in the state, little changed from May 2010, the latest Infratest poll of 1,004 voters for WDR radio showed Feb. 26.

The Greens had 17 percent, up from 12.1 percent, and the Pirate Party 5 percent, the threshold to win seats in the state parliament. The Left Party had 3 percent and the Free Democratic Party, Merkel’s junior coalition partner in Berlin, 2 percent after winning 6.7 percent in the last election.

The budget was defeated after it was rejected by the three opposition parties: the FDP, the Left and Merkel’s CDU, led in the state by federal Environment Minister Norbert Roettgen.

“Although the opposition defeated this bill, they’re likely to lose dramatically in the election,” Ulrich von Alemann, a professor of political science at the University of Dusseldorf, said by phone. With current polls suggesting the Social Democrats might be able to return at the head of a coalition that enjoys a majority, Kraft “lost the vote in the assembly today but probably won the election.”

State Ballot

Merkel faces another state ballot on March 25 in the western state of Saarland after her CDU ended its coalition with the FDP there in January, blaming squabbling within the local Free Democratic Party. Polls suggest that Merkel’s party and the Social Democrats will form a so-called grand coalition after the vote, mirroring Merkel’s first-term national government.

The Free Democrats will probably lose elections in both states, “speeding up their decline,” Ulrich Deupmann, a partner at management adviser Brunswick Group Inc. in Berlin, said in an interview.

“Merkel will stand by the FDP as long as they can give her a majority in the Bundestag. But if the party starts to fall apart and can longer do that, she’s not going to show them any consideration,” Deupmann said.

To contact the reporter on this story: Alan Crawford at acrawford6@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net.

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