Who will replace Merkel?

Annegret Kramp-Carrenbauer, who became the leader of Christian Democrats (CDU) a year ago, announced Monday that she is stepping down. Its decision came after mounting criticism of its approach to a dispute over the co-operation of CDU lawmakers in the eastern state of Thuringia with members of the far-right party, Alternative for Germany ( AfD) after the state elections with a narrow outcome.

I've been thinking about this decision” Mrs. Kramp-Carrenbauer said at a news conference in Berlin. Its brief term as party leader was accompanied by a series of gas and toxic divisions regarding the party's future direction, which reduced its authority. It plans to remain Germany's defence minister, but says it will not seek the nomination of the CDU as the party's candidate for Chancellors in the upcoming general elections, to be held in autumn 2021.

The removal of her successor, elected by Merkel herself for leading the party, has thwarted Merkel's pension plans and caused speculation that circumstances could arise for early elections in the spring of 2021. Merkel carefully placed Kramp-Carrenbauer as CDU leader to realise a regular transition, analysts say. Its departure now raises the question of who will succeed Merkel and how the various CSU fractions can reconcile.

The party has debated whether it will proceed with Merkel's centrist strategy or return to its more traditional conservative roots.

Analysts say the leaders are Friedrich Merz, a fiscal conservative and critical of Merkel, Jens Spahn, current Health Minister in Germany, and Armin Laschet, state prime minister of the North Rohine-Westpholia. All of them lost before Kramp-Carrenbauer in the race for party leadership in 2018 thanks to Merkel's approval of the woman she hoped would succeed her as the country's Chancellor.

Merz wants to take the CDU to a far right. His two rivals are close to Merkel's vision and favour centristism. They believe the CDU should be prepared for a possible coalition partnership with the growing Greens party following the 2021 general elections.

Emily Mansfield with Economist Intelligence Unit, says that all contenders to have Merkel face the challenge of eliminating divisions between state-level and federal CDU politicians and the “problem of balancing the tough competition from the AfD with the fact that the other CDU coalition partner is most likely to be with Green”.

Merkel's subsequent crisis comes at a difficult time for Germany. Fear of recession is increasing. German industrial production has declined to five out of the last seven months. The forecasts are for the country's economy to grow only 0.4 per cent this year and 0.9 per cent in 2021, but economists warn that Germany could easily slide into the territory of negative growth.

I'm pessimistic about the economic forecast, since Germany can experience a real storm”, told CNN Marcel Fratzcher, president of the German Institute for Economic Research. Among the dangers it points out are a slowdown in global trade, the influence of coronarys, geopolitical tensions, especially between Europe and the United States, and the potential economic stalemate from Brex.

“The CDU will again be preoccupied with discussing leadership and a more strategic discussion on how to deal with AfD,” Says Carsten Brzeski, economist for ING firm.

Brzeski says the “regular German policy transition in the post-Merkel era appears to be failing. The country will continue to face a more fragmented political landscape, where parties should reconsider the red lines of the past and potential coalition partners”.

He says time is inappropriate for Europe as a whole. “for the Eurozone, we can see a German policy with more attention from within the country than before and, therefore, less progress on any greater integration into the Eurozone.” EU central banks and policymakers have asked the German government to be less conservative in fiscal policies and to increase government spending, believing this will help boost economic growth in the Eurozone.

Other European analysts say the assumption of Berlin with domestic politics will force it to be unprepared for a future trade battle with Washington. On Monday, US President Donald Trump said he is giving his thoughts about rebalancing commercial relations more than $1 trillion with the EU, raising the prospect of a transatlantic trade war.

He told American governors: “Europe treats us very badly. Over the last 10, 12 years, there has been an extraordinary deficit with Europe. They have extraordinary barriers... So we'll answer. They know that”. European officials say they will retaliate if President Trump poses a threat to setting tariffs for European vehicles and other products. Washington and Europeans are at odds over airline subsidies, agricultural trade barriers and EU plans to start taxation of US digital companies. / VoA