Merkel’s Tough Love Crisis Stance Key to 2013 Vote, Tillich Says

Saxony’s CDU Prime Minister Stanislaw Tillich
Saxony’s Christian Democratic Union Prime Minister Stanislaw Tillich said, “The people here are technology friendly.” Source: Saxony State Chancellery via Bloomberg

Germany’s second most-powerful politician from the formerly Communist East says Angela Merkel will win re-election next year because of her approach to Europe’s debt crisis.

Merkel, Germany’s first chancellor from the former east, is banking that her austerity-first policy toward indebted euro nations will play well with German voters in elections due in the fall of 2013, said Stanislaw Tillich, premier of the eastern state of Saxony. She is planning to use her tough love approach as a key plank of her campaign for a third term, said Tillich, a member of her Christian Democratic Union’s 20-strong executive board.

“She’s sharpened her profile with this and increased her level of voter support,” Tillich said in an interview in the 18th century St. Marienstern abbey in his hometown of Panschwitz-Kuckau in eastern Saxony state. “Out of principle, we’re forcing the others to make their own contribution to stabilization.”

With Germany’s economy growing amid euro-area recession and unemployment near a two-decade low, Merkel is insisting that Europe pursue a mix of budget austerity and steps to raise competitiveness while rejecting sharing liability for debts. Polls suggest it’s paying off domestically, with her CDU-led bloc as many as eight percentage points ahead of the main opposition Social Democrats, who advocate doing more to stem the crisis.

German Temperament

Public trust in Merkel, 58, is rising due to her insistence that she is prepared to help indebted euro nations, “but not without a quid pro quo,” Tillich said in the Oct. 12 interview.

“She knows her cautious euro policy matches the German temperament, at least up to now,” Bild, Germany’s best-selling newspaper, said Oct. 19 in an op-ed following her speech to lawmakers before a European summit in Brussels.

A member of Germany’s Slavic Sorbian minority, Tillich, 53, grew up like Merkel in communist East Germany before the 1990 reunification. He also has the chancellor’s ear in part due to the success of the CDU in Saxony, where a recent poll put the party’s backing at 44 percent, the highest level of support in any of the 16 German Laender, or states.

As she gears up for the election, Merkel will also stress traditional CDU values of freedom and individual responsibility, said Tillich. That signals she’s pushing back against lawmaker accusations that she has shifted the party’s ideological ground.

Banker Pay

“That means all of the steps that we took in the past years, for example to aid banks,” are “not measures that have significantly changed the course of the CDU,” Tillich said.

During the campaign, the party must also address themes “such as the very, very high executive and banker salaries,” he said.

That’s ground already occupied by Merkel’s first-term finance minister, Peer Steinbrueck, who was nominated this month as her Social Democratic Party challenger. Steinbrueck is calling for more aggressive bank regulation, including a separation of lenders’ investment banking and deposit businesses, and said Oct. 18 that “no rescue fund can be too big” to fight the crisis.

Support for Merkel’s CDU/CSU bloc rose a point to 37 percent in a weekly Forsa poll on Oct. 17, compared with 33.8 percent in the last election in September 2009. Steinbrueck’s SPD had 29 percent, down one point, though better than the 23 percent it took in 2009.

Leipzig, Dresden

Yet with backing for Merkel’s Free Democratic Party coalition partner having collapsed to 4 percent, she can’t rely on a rerun of her current government. Neither does the electoral math allow the SPD to form a coalition with its traditional Green Party ally, which had 11 percent support in the poll. That increases the likelihood of another “grand coalition” between the CDU and SPD. Five German states are governed by grand coalitions.

Ruled by the CDU for an unbroken 22 years since unity, Saxony has attracted factories from Bayerische Motoren Werke AG, Volkswagen AG, Porsche SE and Globalfoundries Inc. Leipzig Airport is the European hub for Deutsche Post AG’s DHL Express parcel-delivery unit.

Students in Saxon schools have some of the nation’s highest test scores and the University of Dresden is the only eastern German university to win extra federal funding as a “center of excellence.”

Injection Moldings

“The people here are technology friendly,” said Tillich, a trained engineer who says at that at home he can “repair the entire electrical system myself” and who worked for a company making injection molding machinery before going into politics.

A “passionate” horseback rider, Tillich is chairman of the abbey’s development association that takes care of the restored baroque church and complex which includes a school for the handicapped.

Saxony -- with the second lowest per capita debt of the 16 states after Bavaria -- and its frugal spending policies are “definitely” a model for southern Europe, Tillich said. States, like parents, must leave the next generation whatever inheritance they can with the debt paid off, he said.

“Everybody loves a party, the Saxons too,” said Tillich. “But the question is can you afford it or are you running up debt to pay for it.”

Before it's here, it's on the Bloomberg Terminal. LEARN MORE