Merkel CDU in Lower Saxony Cliffhanger Vote as FDP Slumps

Chancellor Angela Merkel’s Christian Democrats face a Lower Saxony state vote highlighting challenges she’ll face in a re-election bid in September amid collapsing support for her Free Democratic Party ally.

Merkel’s CDU leads the opposition Social Democrats in Lower Saxony, home to Volkswagen AG, in opinion polls. Yet her FDP coalition partner is at or below the 5 percent threshold needed to win seats and may be ejected from the chamber. This could put the CDU behind a combined SPD, Greens alliance. Elections will be held on Jan. 20. Both Merkel’s government and Lower Saxony’s coalition are Christian Democratic-FDP alliances.

“The minute the FDP don’t get into parliament in Lower Saxony it’s an issue for Merkel; it would hold up a mirror to the fragile outlook for her own coalition in Berlin,” said Carsten Brzeski, senior economist at ING Belgium SA, in an interview. “It’s a cliffhanger in the state and beyond.”

Three years into managing the euro debt crisis, Merkel’s national CDU is getting the best poll scores since she became chancellor in 2005. The FDP’s battle for survival could derail the re-election of Merkel, 58, for a third term through 2017. The pro-business FDP has plunged to 3 percent in national polls after winning 14.6 percent in the last general election in 2009.

Apart from casting a shadow over Merkel’s re-election bid, defeat for the CDU in Lower Saxony would create a so-called constructive majority for the SPD and Greens in the upper house of parliament in Berlin, the Bundesrat, allowing them to initiate legislation to challenge government policy.

‘Wrong Man’

“The FDP has done everything wrong that they could do wrong,” Peter Matuschek, chief political analyst at the Forsa polling institute, said in an interview. “Their leaders made very unfortunate impressions: Guido Westerwelle was the wrong man as foreign minister. The FDP has to stop trying to be a big tent party. They need to focus on people in small- and medium-sized industry who are their core voters.”

Lower Saxony CDU Premier David McAllister, 42, son of a Scottish father and German mother, is campaigning on a record of cutting state spending. Rallies open with his campaign song that blends rap music and a bagpipe melody. Scots are famed for financial prudence, he tells potential supporters.

‘Merkel’s Mac’

“I’m happy to be Merkel’s Mac,” he said in a campaign rally speech in Osnabrueck on Jan. 16.

The latest Lower Saxony poll shows a dead heat between the ruling CDU-FDP and opposition SPD-Greens. McAllister’s CDU scored 41 percent in the Jan. 14-16 GMS survey for SAT.1 television, with the FDP at 5 percent. That’s the same as the combined SPD score of 33 percent and 13 percent for the Greens.

The SPD candidate, Hanover Mayor Stephan Weil, 54, says he favors a coalition with the Greens rather than a grand coalition with the CDU, as in neighboring Saxony-Anhalt state.

Weil criticizes the CDU’s record on developing the state’s North Sea offshore wind power that’s integral to Merkel’s plan to shift 80 percent of German electricty need to renewables by 2050. Developers of sea-to-shore grids in the state have struggled to gain investors amid discord over financial liability linked to the projects.

“I fear an existential crisis of the young offshore industry if investors aren’t provided with security,” Weil said in a Jan. 8 interview in Hanover, the state’s capital.

Mittelstand Dominated

Lower Saxony, Germany’s second-biggest state by territory, is dominated by small- and medium-sized Mittelstand companies and farming. VW, Europe’s biggest carmaker, tiremaker Continental AG, tourism company TUI AG and steelmaker Salzgitter AG are the exception. VW employs about 86,000 people in the state and Salzgitter 23,500. Unemployment in Lower Saxony was at 6.4 percent in December compared with 6.9 percent nationally.

The state shows no postwar dominance by any single party. One constant is the support of state premiers for VW, on whose supervisory boards they sit as guardians of a 20 percent public stake in the carmaker.

Backers of Volkswagen’s global competition strategy include former SPD Chancellor Gerhard Schroeder, the state’s premier from 1990 to 1998, dubbed the “auto chancellor” by German newspapers. VW, reported a 14 percent drop in European sales in December.

McAllister hasn’t interfered in the way VW does business. Supervisory board chairman Ferdinand Piech “has never had it easier to push through his interests” at the company since the McAllister became premier in 2010, said a Frankfurter Allgemeine Zeitung newspaper editorial on Jan. 16.

Weil said he wouldn’t sell the state’s stake in VW if he becomes premier.

“VW follows a very smart company strategy with diversified products,” Weil said.

Lower Saxony polls close at 6 p.m. on Jan. 20 at which time exit polls will be released on Germany’s ZDF and ARD television. Results based on projections from partially counted ballots will be available from about 6:15 p.m. on both broadcasters with the preliminary official final result due around midnight.

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