Is it ‘Merkel for Majority’ over the EFSF reforms (in Germany)?

September is proving to be a crucial month for the EU and its biggest player- Germany. A political battle is waging in the German government prior to the formal EFSF reform vote on September 29th on those changes agreed at the EU Summit in July.

Below is the timeline for the month detailing all that info you need to know about what has happened recently and whats coming down the tracks…

Backbencher misgivings stem from a number of issues

  • Questions over the ECB bond buying programme
  • Questions over the Merkel ‘no collateral’ line over bail-outs (after Finland received once-off collateral assurances on 16th August)
  • Regardless of the vote, Merkel’s leadership is coming under strain over accusations of lack of leadership (foreign and domestic)
  • The SPD indicate they might not support the EFSF reforms if it means helping a weak Chancellor cling on to office and prolong the creation of a more stable government

It is likely the EFSF reforms will pass the Bundestag based on the united parliamentary strength of Merkel’s own CDU/CSU party and the main opposition counterpart the Social Democrats (SPD).  Even this comes with qualifications. If Merkel’s power continues to erode in her party, the SPD might find it tactically necessary to vote against the proposals or at least threaten to do so and undermine Merkel’s leadership even further. Her coalition partners, the business-friendly Free Democrats (FDP) are eager to follow the populist move of rejecting the reforms and even more hardcore measures such as a referendum on the issue (which the German constitutional court has already ruled as unnecessary). Using support from the opposition to pass any measure is usually a sign of a government in crisis and a potentially crippling turn of events for the real chief in the eurozone crisis.

A potential for a ‘Merkel for Majority’ situation arises where the SPD might indirectly demand a new Chancellor/CDU leader before voting. Her situation is looking increasingly tenuous. Critics of her  leadership are a broad church – from conservative loyalists within the party to former Chancellor (1982-1998) and CDU leader Helmet Kohl, a respected elder statesman who governed through the collapse of Communism and creation of a federal Germany.

Roll on September 29!


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