Merkel Defeated in Worst Postwar Result in Biggest State

Chancellor Angela Merkel’s party was defeated in Germany’s most populous state in an election that helped the Social Democrats tighten their grip on the country’s regional governments.

The SPD, the main opposition party nationally, increased its vote share in yesterday’s ballot in North Rhine-Westphalia, enabling Prime Minister Hannelore Kraft to return to power at the head of a government with the Greens in the state capital Dusseldorf. Merkel’s Christian Democratic Union suffered its worst score since World War II.

The result is a setback for Merkel after she headlined nine campaign rallies in 27 days in North Rhine-Westphalia in a bid to regain the state, the first her CDU lost in 2010 as the debt crisis erupted and voters rebelled against bailing out Greece. The SPD is now in power in 11 of Germany’s 16 states.

“This is a massive loss in local prestige for the party,” Gerd Langguth, a Merkel biographer and professor of politics at the University of Bonn, said by phone. Even so, Merkel “will do her best to ignore the result. As long as her party is ahead in federal voting patterns she can feel insulated from regional elections.” Merkel is due to give a press conference on the result at 1 p.m. in Berlin.

North Rhine-Westphalia, with almost a quarter of Germany’s 82 million people and an economy bigger than Switzerland’s, is Merkel’s biggest electoral test this year before the federal election in the fall 2013.

Anti-Debt Campaign

The chancellor began her campaign in April by attacking the state government based in the capital Dusseldorf for running up debt, contrasting that with her push to curb deficits in Germany and across Europe. Yet she resisted turning the vote into a referendum on her austerity drive, which polls indicate a majority of Germans support.

“Sunday’s election is an important state election for North Rhine-Westphalia, no more and no less,” she told the Ruhr Nachrichten newspaper in comments published May 10.

For all her campaign efforts, Merkel’s CDU took 26.3 percent, more than 8 percentage points below its score at the last election in May 2010, preliminary results showed. The outcome “exceeded our worst fears,” said Peter Altmaier, CDU chief whip in the federal parliament in Berlin.

The Social Democrats won with 39.1 percent, an increase of almost 5 points from 2010, while their Green Party allies took 11.3 percent, giving a majority to Kraft’s SPD-Greens coalition that ruled for two years in a minority government in the state.

SPD Strengthened

The result came seven days after the CDU suffered its worst showing in more than 50 years in elections in the northern state of Schleswig-Holstein in a vote that put the SPD within reach of forming a coalition. “This will naturally strengthen us in Berlin,” Andrea Nahles, SPD general secretary, said on ZDF.

The Free Democratic Party, Merkel’s coalition partner at federal level, took 8.6 percent and the Pirate Party that campaigns for Internet transparency had 7.8 percent, gaining seats in a fourth state assembly. The Left Party failed to reach the 5 percent threshold.

The result may embolden the Social Democrats as they align with French President-elect Francois Hollande in an anti- austerity front pressing for steps to spur economic growth to counter the crisis, according to Thomas Costerg, an economist at Standard Chartered Bank in London.

The opposition exercised its clout last week when Social Democratic and Green-run states used their majority in the upper house to block her plans to cut income tax and solar-power subsidies. Hollande is due in Berlin tomorrow for the first meeting with Merkel hours after his inauguration.

‘More Assertive’

The SPD have “the wind in their back to ask for more concessions and more measures to stimulate growth,” Costerg said in an e-mailed comment, adding that Merkel needs SPD support to pass Europe’s debt-reducing fiscal pact in parliament. The SPD “will probably become more assertive.”

North-Rhine Westphalia, home to nine of the 30 members of the DAX Index including Metro AG and Bayer AG had a gross domestic product last year of about 470 billion euros ($607 billion) in nominal terms, or about 20 percent of Germany’s total GDP. That put its economy 19th in global terms, one rank behind Turkey and ahead of Switzerland, World Bank data shows.

During the campaign, the CDU’s candidate Norbert Roettgen, the federal environment minister mentioned in German media as a possible successor to Merkel, declined to say whether he would serve as opposition leader in the state if he lost. That cost him support, with 59 percent of respondents to an FG Wahlen poll saying his refusal to commit to the state “damaged the CDU.”

Left Cold

The gap between the CDU and SPD, as little as 5 percentage points in the last poll of voting intentions published May 11, was due to Kraft’s popularity with voters compared to Norbert, who “left them cold,” said Langguth.

Bild, Germany’s most-read daily newspaper, blamed Roettgen for the defeat.

“This is a predictable CDU disaster that will also make things tough for Merkel,” Bild said in an editorial.

Merkel can still rely on “three pillars of strength,” including her personal popularity and the fact that other parties are divided, Jan Techau, director of the Brussels-based European Center of the Carnegie Endowment for International Peace, said by phone. In addition, her CDU’s weakness at the state level isn’t translating into a rise in SPD popularity nationally, he said.

Kraft’s emphatic win might even cause “new turmoil” in the SPD as former Finance Minister Peer Steinbrueck, ex-Foreign Minister Frank-Walter Steinmeier and the party chairman, Sigmar Gabriel, joust over who will face Merkel in 2013, Techau said. “The Chancellor question might even get more complicated.”

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

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

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