Merkel’s Party Riled by Vice Chancellor’s Resistance Over Budget

Photographer: Krisztian Bocsi/Bloomberg

Angela Merkel, Germany's chancellor. Close

Angela Merkel, Germany's chancellor.

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Photographer: Krisztian Bocsi/Bloomberg

Angela Merkel, Germany's chancellor.

Chancellor Angela Merkel’s efforts to contain a cabinet split over European budget concessions have failed to soothe her party.

Sigmar Gabriel, the Social Democrat economy minister and Merkel’s vice chancellor, caused a furore last week by backing France and Italy on calls for more time to cut their deficits, contradicting Finance Minister Wolfgang Schaeuble. Gabriel’s comments in Toulouse on June 16 were not authorized by Merkel and show that cabinet discipline is fraying, said a lawmaker with Merkel’s Christian Democrat bloc.

“It’s not on,” Hans Michelbach, a lawmaker from the CDU’s Christian Social Union sister party, said by phone on June 20. Gabriel, 54, is “meddling too much in issues of the highest importance right now and its party-political ambition that’s driving him.

The CDU-CSU plan talks this week on how to rein in the Social Democrat, said Michelbach, a member of the finance committee and spokesman for small- and medium-sized companies. The vice chancellor’s support for France and Italy suggests that the SPD is growing impatient with the CDU’s grip on fiscal policy which is seen as key for Merkel’s voter base.

The SPD scored 23 percent in a June 17 Forsa poll, less than the 25 percent it scored in September’s federal election. That compares with 39 percent for Merkel’s bloc, down from 41.5 percent.

Photographer: Balint Porneczi/Bloomberg

Sigmar Gabriel, Germany's economy and energy minister. Close

Sigmar Gabriel, Germany's economy and energy minister.

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Photographer: Balint Porneczi/Bloomberg

Sigmar Gabriel, Germany's economy and energy minister.

Poll Slump

Merkel and Gabriel solved their spat last week, the chancellor said, adding that they ‘‘agreed” that the euro’s Stability and Growth Pact has enough leeway without tinkering with its deficit rules. “In fact, Gabriel caused a massive breach of confidence” in the coalition, Michelbach said.

“Slumping in the polls, it’s not surprising Gabriel’s launched a concerted grab at the CDU’s territory on fiscal policy,” Peter Matuschek, Berlin-based Forsa’s chief political analyst, said in a phone interview yesterday. “The only problem is Merkel and Schaeuble stand there rock solid already -- and German voters have an allergy to loosening the euro’s deficit rules.”

Gabriel has his party’s backing to keep pushing for changes to financial policy, said Ingrid Arndt-Brauer, chairwoman of parliament’s all-party Finance Committee and a Social Democrat said in a June 18 e-mail.

“Many budget and finance politicians from the SPD would have liked to control the Finance Ministry,” she said. In last year’s coalition talks, the SPD sought but failed to split off the euro policy unit of the Finance Ministry.

“We in the SPD have the impression that not much is happening in the Finance Ministry at the moment,” said Arndt-Brauer. “All that interests Schaeuble is a zero deficit.”

To contact the reporters on this story: Brian Parkin in Berlin at bparkin@bloomberg.net; Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Ben Sills

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