Balance of Power: Germany’s Iron Chancellor Looks Vulnerable

Deutsche Bank's Slok on Takeaways From Trump's Asia Trip

Over her 12 years as German chancellor Angela Merkel has become Europe’s preeminent leader, shaping the bloc with pragmatic policies as she tackled the financial crisis, Russian aggression and a historic influx of migrants.

But signs of trouble are emerging at home after a lackluster election campaign left her struggling to piece together a coalition to take power for a fourth term.

Almost eight weeks after the polls closed, negotiators are at loggerheads over key issues including refugees and climate policy — two of the themes of Merkel’s time in charge.

No one is writing her political obituary yet, but a self-imposed deadline is looming Thursday. If talks fall apart it would raise the prospect of a repeat election for the first time in the history of the federal republic. That would call into question Merkel’s future, and French President Emmanuel Macron’s plans to push through euro-area reforms with her help.

The chancellor looked secure when she announced her bid for a fresh term and polled strongly throughout most of the campaign. But a late surge by the far-right anti-establishment group, Alternative for Germany, left Merkel weakened. And reminded the rest of Europe that her chancellorship won’t go on forever.

Merkel arriving at Germany’s lower house for talks with members of potential coalition parties last week.
Photographer: ODD ANDERSEN/AFP

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Global Headlines

Trump Jr.’s Wikileaks tie | President Donald Trump’s eldest son admitted to direct communication with WikiLeaks before the 2016 election and Democrats say that's evidence of a proxy link between Trump’s campaign and the Kremlin. The news comes as Attorney General Jeff Sessions indicates he’s considering appointing another special counsel, but this time to investigate alleged unlawful dealings by the Clinton Foundation. Sessions is set to appear before a House panel today. 

Trump hails his Asia trip | The U.S. president called his 12-day tour “very successful” before he boarded Air Force One to head home and insisted that countries in the region understand the “rules have changed” when it comes to trade. But Asian leaders shied away from any formal pledges to boost their imports from the U.S. and the business deals that were announced during his trip were mostly tentative agreements that may not ultimately happen.

A joint foe for India and Pakistan | The nuclear-armed neighbors have a long history of acrimony but they’ve found a common enemy in the deadly smog now blanketing their countries, including India’s capital New Delhi. One culprit is farmers burning stubble in the Punjab breadbasket region that straddles the disputed border. Pakistan has called for combined efforts to tackle the pollution, but has yet to get a response from India. 

Brexit coin toss | As U.K. Prime Minister Theresa May’s most important piece of Brexit legislation goes to Parliament today, her plans for an orderly withdrawal from the EU hang in the balance. Brexit Secretary David Davis told European business leaders there’s only a 50 percent chance of a breakthrough in divorce talks by December. Without one, time will start to run short for officials aiming to negotiate a trade deal.

Crude bromance in trouble? | Long-time rivals Saudi Arabia and Russia set aside their political differences this year, forming an alliance to clear a global crude surplus and boost prices. The partnership proved so strong that Citigroup Inc's veteran analyst Ed Morse called it a “bromance.” But now Morse warns the union may be fraying and prices could tumble as Riyadh and Moscow disagree on how long to stick with their supply pact.

And finally... Public symbols of Christianity are banned in Saudi Arabia. So it was a remarkable sight when a Christian priest, openly wearing a cross, was greeted by one of the kingdom’s most influential ministers yesterday. The photos hint at the rapid change under way in the kingdom, although there’s been no indication the reforms led by Crown Prince Mohammad bin Salman will include greater religious freedom.

Bishop Boulos Matar, on right, is part of a delegation accompanying Lebanon’s Maronite Catholic Patriarch Beshara Al Rai on an official visit to Saudi.
Source: LBCI TV

— With assistance by Grant Smith, and Kathleen Hunter

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