Merkel Tanks In German Polls As Critical Discussions Take Place With SPD

Angela’s Merkel’s ability to restore her power in Germany should be decided in the next few days, as talks take place with Martin Schultz’s SPD.

In the meantime, Merkel’s ratings have unexpectedly “tanked” in the latest German polls. More than half of Germans believe she should not run for office in a poll conducted for t-online.com, as the Daily Express reports.

Angela Merkel’s worries continue as the latest polls reveal the majority of Germans did not want her to run as a candidate for Chancellor again. The survey, carried out in the coalition talks breakdown, makes worrying reading for Angela Merkel. While Mrs Merkel said yesterday she wanted to stand again in any new snap election the German people appear to be turned off by the prospect.

Of those polled, 54 per cent said she should not run for office, according to the polling institute Civey for t-online.de. Only 38.5 percent of Germans would welcome a renewed candidacy of the chancellor. A breakdown of those views saw Mrs Merkel pick up 76.2 per cent support amongst the supporters of the Christian Democratic Union (CDU) and the Christian Social Union (CSU) which stood at 76.2 per cent.

 

Amongst supporters of the Greens, Mrs Merkel also seemed to gain a sizeable backing with 52.2 per cent wanting the current leader to stand again. Among the FDP supporters that was only about 30 per cent. Perhaps unsurprisingly supporters of the right-wing Alternative for Germany (AfD) do not want her to stand again with 88.5 per cent calling on her to step back.

There was little comfort for the German leader in another poll published yesterday in Der Spiegel.

The latest SPON poll indicated that support for the coalition between Mrs Merkel’s CDU and the CSU fell below 30 per cent to 29.2 per cent. This is believed to be their lowest ever level. The polling institute Civey, based in Berlin, indicated the fall is part of a downward trend for the two parties.

There was no joy though either for the main opposition party the Social Democrats (SPD) which also suffered a decline in popularity. Leader Martin Schulz saw the support for his party drop to 19.5 per cent, its lowest level since December 2016. A similar fate was suffered by the AfD which had been making progress in popularity recently. The latest poll shows the party has fallen by 1.5 per cent points since negotiations over forming a new coalition had failed. It is now at to 13.6 per cent.

The FDP, which ruled out a forming a “Jamaican coalition” with Merkel and the Greens, rose 1.7% to 13.3% and the Greens rose 1.5% to 11.9%. The co-founder of the Greens, Hans-Christian Strobele said recently.

"The end of the chancellorship of Angela Merkel has already been announced by the outcome of the general election. "Now Merkel"s political end can indeed come very quickly. In my opinion, Mrs Merkel will not be able to stay at the top of the government for much longer."

After the “Jamaican Coalition” talks broke down, Merkel indicated her preference for a new election, rather than ruling with a minority. However, we suspected it was a bluff to scare other parties back to the negotiating table. On this note there are signs of progress. Merkel’s former “Grand Coalition” partner, the SPD, has been under pressure support Merkel to secure Germany’s stability. According to Bloomberg.

Germany’s biggest opposition party is ready to begin talks with Angela Merkel on a minority government, offering her a way to restore political leadership in Europe’s biggest economy.

It’s the first sign the Social Democratic Party is ready to help the chancellor stay in office after her talks on forming a coalition with three other parties fell apart. SPD head Martin Schulz, who faces party pressure to go further and disavow his refusal to join a Merkel government, is meeting Germany’s president on Thursday for consultations on the way forward.

SPD officials are making positive noises about shoring up Merkel and German stability, which could include ditching Schulz. Bloomberg continues.

“Of course we want to help Germany and we haven’t ruled out anything,” SPD lawmaker Karl Lauterbach said in a ZDF television interview. That includes the option of a “grand coalition” with Merkel’s Christian Democrat-led bloc as a last resort, he said. Schulz, who led the SPD to its worst result since World War II in September, faces increasing pressure within the party to step aside, a move that might help clear the way for a grand coalition.

He is ready to hold talks with Merkel and is prepared to back her in a minority government, though he won’t offer another grand coalition, according to a person familiar with his thinking who asked not to be identified. Schulz will inform President Frank-Walter Steinmeier of his plan at their one-on-one meeting in Berlin, the person said.

Germany’s political establishment is in turmoil but, in its quest for stability, we can’t rule out a rapid resurgence in Merkel"s at the head of a reformed Grand Coalition, if Schulz is sacrificed. In the meantime, Merkel is almost making Theresa May’s position look stable.
 

Terror Cases In Germany Quadruple In One Year

More evidence revealing the ridiculousness of the centrist position on immigration – namely that refugees can be seamlessly integrated into European society without a spike in crime or terror – has emerged courtesy of the German newspaper Welt Am Sonntag which revealed Sunday that the number of terrorism-related cases investigated by German authorities has quadrupled over the past year.

Prosecutors have opened more than 900 cases so far this year, compared with just 240 throughout 2016, and 80 cases in 2013.

Germany’s federal police estimate 705 Islamist extremists willing to carry out terror attacks are active in the country, up from 600 during an estimate in February. Germany’s domestic intelligence agency recently said around 24,400 Islamists are active in the country but most of them don’t pose an immediate terror threat.

To be sure, the number of migrants applying for asylum in Germany plummeted to about 280,000 in 2016, about one-third the number from the prior year. But the increase in crime – coupled with the Christian Democratic Union’s embarrassing showing in federal elections last month – are slowly inspiring the country’s centrists to accept that more needs to be done to limit and control immigration in Europe’s largest economy.

According to the Daily Caller, Germany’s federal prosecutor’s office can’t keep up with the increase in the number of cases. To wit, nearly 300 cases have been transferred to the state level. Not all cases involve plans to carry out attacks. Migrants from Syran, Iraq and Afghanistan have been tried over alleged membership in terror groups without being suspected of planning attacks on European soil.

BKA chief Holger Münch told daily newspaper Frankfurter Rundschau in July that the danger from politically motivated far-right and far-left wing extremist is dwarfed by the threat posed by jihadis.

“In the left-wing scene, the [German] states have currently estimated a number that can be counted on the fingers of one hand,” Münch said. “In the right-wing scene, the number is in the low double digits.”

Frustration over this increase in crime manifested last month in the far-right Alternative for Germany party’s sweeping electoral triumph. The party, while still a minority, received 13% of the vote, earning it a place in Parliament – the first time a far-right party has held a spot in the legislature since World War II. It’s now the third strongest party in Germany, and has created a headache for Chancellor Angela Merkel by busting up her ruling coalition.

As Statista points out, perhaps key to understanding Germany’s tilt to the right is the indication that the majority of AfD voters say they made their decision not based on belief in the party, but rather as a reaction to their disappointment in the other parties – a dissatisfaction stemming from Merkel’s insistence on an “open doors” refugee policy that has been proven to be a failure.

Two years after the European Commission carried out the bidding of German Chancellor Angela Merkel by approving a plan to distribute migrants entering the Schengen area through Greece and Italy evenly across the European Union, the recent landslide victory of “Czech Donald Trump” Andrej Babis and his Eurosceptic and anti-establishment political party shows how disillusioned the people of Europe have become with “open doors.” Babis’s victory followed another important win by Austria"s young conservative star, Sebastian Kurz, who at 31 is now the youngest leader in Europe.

The reason for this populist surge? Well, it appears Europeans have begun to realize that Poland, Hungary and the Czech Republic – three countries that refused to accept migrants under the EU plan – have suffered far fewer terror attacks, as the map below shows.

Can you spot the gaps?
 

Germany's "Open Doors" Are Closing: Merkel Seeks New Limits On Refugees

After German Chancellor Angela Merkel admitted late last year that she had “lost control” of Germany’s refugee crisis after adopting an “open door” policy that fueled an unprecedented spike in crime, her weakened ruling coalition announced Monday that it would seek to impose new restrictions on the number of refugees admitted to the country.

Germany famously admitted nearly one million refugees from Syria, Libya, Afghanistan and other war zones in 2015, a five-fold increase over the previous year.

Migrants repaid Germany for its openness by committing 142,500 crimes during the first six months of 2016, including several high-profile sexual assaults.  

And now it seems Merkel has hit a wall and folded...

Merkel announced the policy change on Monday during a joint news conference with Horst Seehofer, leader of the Bavarian Christian Social Union - the more conservative partner to Merkel"s Christian Democratic Union – following discussions in which the two parties sought compromises on a number of issues following poor results in the federal elections two weeks ago, according to CNN.

"We will continue our efforts to reduce, sustainably and permanently, the number of people who flee to Germany and Europe, so that a situation like that of 2015 will not and cannot be repeated," reads a joint CSU/CDU position paper published Monday. "We guarantee that."

Last month, the Trump administration took steps to cap the number of refugees admitted into the US at 45,000 annually – a dramatic reduction. However, Merkel’s conservative allies pledged that nobody would be turned back at the German border, according to WSJ, while adding that the German Parliament could suspend the cap in the event of an international crisis.

The bloc agreed to limit to 200,000 annually the number of people allowed to enter Germany for humanitarian reasons. The conservatives pledged at the same time that people wouldn’t be turned back at the German border, expressing their support for the right to seek asylum in Germany and for the Geneva refugee convention, which states that countries should give protection to those who flee war and expulsion, and those who are politically persecuted.

“We continue with our efforts to permanently reduce the number of people fleeing to Germany and Europe in order to prevent a repeat of the situation such as in 2015” when Germany took in 890,000 asylum seekers, Ms. Merkel said Monday, presenting the agreement to reporters.

She said the parties agreed on measures that will ensure that the total number of admissions won’t exceed 200,000 people a year. These include dealing with newcomers seeking asylum in Germany in centralized centers where their claims will be quickly decided. Rejected asylum seekers will then be rapidly deported back to their home countries. With this move, the parties hope to speed up asylum proceedings and increase the number of deportations.

The limit of allowing up to 200,000 migrants entering the country every year could be amended by the German Parliament if an international crisis warrants it, the compromise said.

The stunning capitulation follows an embarrassing showing by Merkel’s Christian Democrats during September’s federal elections.  While the party again received the largest share of the vote, its support declined by more than 8%  from the prior election in Merkel’s worst-ever performance. Meanwhile, the right-wing Alternative for Germany (AfD) party secured an unprecedented 13% of the vote, enough for it to earn representative in parliament – the first time a far-right party had been voted into Germany’s parliament since World War II.

To be sure, WSJ says the policy change is purely symbolic, adding that it would likely be scuttled by the time Merkel’s party successfully forms a governing coalition. Instead of representing meaningful change, the announcement is largely a sop to more moderate-leaning conservatives.

The deal appears to be, however, a largely symbolic concession to Ms. Merkel’s Bavaria allies that may change little in practice, partly because the right to asylum is enshrined in Germany’s constitution.

Such an upper limit will also likely be hard to push through in talks to forge a nationally yet untested coalition government with both potential partners, the pro-business Free Democrats and the Greens. Ms. Merkel on Saturday said she would seek a coalition with those parties and would let an extraordinary party convention vote on any coalition deal.

Indeed, Merkel’s Bavarian allies have been calling for an annual limit of 200,000 on refugees since Germany opened its borders in the fall of 2015. In passing the rule, Merkel is acknowledging that her center right party has moved too far to the center, and must now sharpen its conservative credentials.

Ultimately, whether the policy survives the complicated process of coalition building remains to be seen. But if nothing else, Merkel’s reluctant reversal validates countries like Poland and Hungary, which were threatened with EU fines over their steadfast refusals to take in refugees. 

Eight Reasons Why The Dutch Election Matters

Submitted by Saxo Bank"s Martin O"Rourke via TradingFloor.com,

• The Netherlands" general election takes place on March 15


• Geert Wilders far-right Party for Freedom expected to emerge first


• Wilders path to premiership likely to be blocked by moderate coalition


• Support for Wilders" anti-immigration, anti-EU stance fits populist narrative


• Key lessons for Europe ahead of French and German elections


• Brussels looking for consolidation after Brexit and Italian referendum rockets

Now what is it about that Wilders fellow that seems so familiar?

If we needed any reminders that 2016 was the year when the anti-establishment phenomena broke through the glass ceiling, then this week"s Brexit-bill debate among the arch-establishment House of Lords institution was it.

The irony of the non-elected house discussing the bill that will eventually pave the way for the trigger of Article 50 before March 31 will not have been lost on many. It was, after all, the protest element of the Brexit vote that saw the UK electorate deliberately snub what their elites dictated they must do and establish the barricades between the establishment and the disaffected.

And that unleashed genie has gone on to cause havoc ever since. The victory of Donald Trump in the US and the rejection of Italian prime minister Matteo Renzi"s constitutional reform referendum in December struck a powerful blow at the heart of the establishment foundations.

Yet, the traffic has not all been one way. Austrian voters rejected the far-right Freedom Party leader Heinz-Christian Strache in December in presidential elections, and Marine Le Pen"s efforts to become the next president of France still look likely to be stymied at the second round in May despite a collapse in support for scandal-hit rival Francois Fillon briefly making her the race favourite.

The stage looks set, then. If 2016 was the year of the breakthrough, 2017 could see the status-quo fightback, with Europe likely to form the battleground ahead of pivotal elections. And, while next month"s general election in The Netherlands may not be the biggest showdown of the year, the outcome could set the tone for 2017.

The far-right PVV party, platformed on an anti-immigration, anti-European Union ticket, looks likely to emerge as the biggest party after March 15, but controversial leader Geert Wilders is almost certain to be snubbed when it comes to either the prime minister role or a top ministerial role. Nevertheless, a moderate coalition made up of numerous parties may find itself somewhat hobbled depending on the actual outcome.

We give eight reasons why the Dutch elections matter.

Dreamy Amsterdam could be facing a nightmare.

1. Setting the template (version 2.0)

If Brexit set the template for the anti-establishment mantra in 2016, the subsequent victories of Trump and the populist anti-EU movement in Italy have subtly altered the blueprint. The outcome of this election could see the template take yet another twist with French and German elections to follow.

Like a military campaign, the domino effect of Brexit through to Italy six months later was next to impossible to stem. But with a new year and a new start, there is a different mood.

While a poll of UK voters in December said 47% would still vote leave, 45% said they would go for remain and 8% were undecided. That"s a shift from the 52/48 divide of the June 23 vote and came at a time when the UK consumer was spending and the economy looked robust.

A slump in retail sales for January out of the UK may have shifted that sentiment further after a 0.3% fall dramatically undercut expectations for a 0.9% rise. Add that to a revision of the December slump revised to 2.1% and it is beginning to look like the post-Brexit party and big-ticket item splurge encouraged by the likes of Black Friday could be over.

"There is the feeling that the public brought forward a lot of spending, especially on big ticket items, in response to the weakening in sterling," said Saxo Bank"s forex chief John J Hardy on the February 17 From the Floor. "I think we need to keep an eye on sterling crosses for reaction."

With housing transactions also predicted to fall 11% in 2017, according to research conducted by The Times, this could be a trying period for sterling and UK confidence.

GBPUSD plunged to below 1.24 after the retail data release for January

Source: SaxoTraderGO

Some 15 weeks have also elapsed since Trump"s victory. With the president embarking on a campaign-style approach since his inauguration on January 20, that has led to a standoff with the mass media, a battle with his own judiciary, some embarrassing climb downs in foreign policy and disarray within his own hand-picked team.

The Dutch then have had some nine months to take on board the anti-establishment wave and what it potentially means. That includes the fallout.

How will they react? A reversion to the safety of the centre is a possibility. A lurch even further to the right can also not be ruled out. We"ll know in less than one month.

2. Anti-immigration reinforced

However Wilders" party fares next month, the anti-immigration platform is well established in Europe and looks likely to be reinforced. The UK turned its back on an agreement to take up to 3,000 child refugees fleeing war earlier this month and, though it has faced a backlash, is sticking to its guns.

The UK government"s strategy is twofold. It wants to clip the wings of Ukip (more of that later) and make inroads into the working-class defection from Labour that has alighted on the immigration issue as a rallying cause.

German chancellor Angela Merkel has also bowed to the inevitable and earlier this month set out tough new plans to repratriate asylum seekers designed to speed up the exit of those who have not earned asylum. A new Centre for the Support of Returns to be opened in Berlin is at the heart of the plan and marks a considerable contrast to the open-border policy that defined Germany"s immigration stance in 2015.

With Beppe Grillo"s Five Star Movement party in Italy firmly established on the back of the referendum result ten weeks ago and with the likes of Hungarian premier Viktor Orban threatening to round up asylum seekers and detain them in shipping container camps, there is a dehumanising aspect to the right-wing rhetoric that is frightening.

Wilders incendiary "Moroccan scum" comments on February 19 indicate the latitude that the far right has been granted by a lazy and complacent centre. It"s going to get worse.

However you spin it, there is a reason why thousands of refugees have fled to Europe and are willing to put up with degrading conditions.

3. Le Pen"s moment

Just as Trump was able to jump on the Brexit bandwagon last autumn when his campaign looked like it might be hitting the buffers, Front National leader Marine Le Pen will have her fingers crossed for a strong showing from Wilders party and a potential escalation of tensions on the streets of Amsterdam and Rotterdam.

Le Pen"s chances of victory in May are not great but getting through to the final round on May 7 after the initial vote on April 23 would be success in itself and demonstrate that the far-right group is truly established as a mainstream party.

To put that in context, the party has spent almost its entire political life since its formation in 1972 on the fringes of the political spectrum. Founder Jean-Marie Le Pen may have got into a runoff off for the presidency in 2002 but it is only since his daughter became leader in 2011 that the party has really made its breakthrough.

It would be tempting to say that this is due to the new leader softening the party"s stance to become more acceptable, but the reality is a corrupt and decrepit political establishment has made it easy for Le Pen to harvest voters disaffected with the ruling elites. The atrocities in Paris in November 2015 and Nice in July 2016 have bolstered her bandwagon and reportedly made her party the most popular among 18-34 year olds.

The long game remains her strategy. Brick by brick, she"s demolishing the establishment wall.

4. The Merkel paradox

Of all the establishment figures under threat this year, none matter more than the German chancellor. She is the symbol of European solidity, an immigrant champion, a veteran of the international stage and she has demonstrated time and time again that she is able to go toe to toe with some of the most formidable opponents you could wish to encounter, including the likes of Russian leader Vladimir Putin.

But, unlike much of the rest of Europe, Germans rather like the current status quo and even the far-right Alternative for Germany Party has seen support slip from around 15% in the summer of 2016 to less than 10%.

The reason for that is not Merkel but rather the rise of a rival within her own coalition, the social democrats" Martin Schulz. Schulz, like Merkel, is a pro-European Union, anti-protectionist who most definitely hails from the left of the spectrum.

The "junior" party in Merkel"s Christian Democratic Union coalition moved ahead in some polls this weekend ahead of the September election. It may be that Merkel"s sudden shift in position on immigration is less to do with the far right and more to do with delineating her platform from that of Schultz.

Merkel may be a politician of principle. She"s also not above opportunism.

And with Schultz breathing down her neck, it is already beginning to look like the greater public-speaking skills of the latter could land him the biggest prize of all come September. In that light, a better-than-expected showing for Wilders" party at next month"s election might tip the fine margins in Merkel"s favour, although it is clearly a double-edged sword and a gamble to change her stance.

Merkel won"t say it of course. But you can bet some of her strategists are thinking it.

5. The French/German bonds spread barometer

The spread in yields between French and German 10-year bonds has become a useful indicator of political risk in Europe.

It ran as high as 72 basis points when the Francois Fillion got himself into a terrible mess over nepotism earlier this month as it briefly threatened to propel Le Pen into the lead. That subsequently came back to the 65 mark after the immediate outcry receded but has once again jumped to 78 basis points on February 22.

This could spread yet further depending on Wilders" showing on March 15 and demonstrates that not only is Germany decoupling from the peripheral economies like Portugal, Italy and Spain but even from a Eurozone-core economy like France, as the latter"s fundamental structural problems combine with political tensions to deepen the uncertainty over its future direction.

French/German 10-year yield spread out to 78 basis points

Source: Bloomberg

6. The far-right splinter

The fate of Ukip should be instructive for all the far-right groups (or indeed any of the extremist movements in vogue) that are currently enjoying their moment in the sun on a platform of anti-immigration.

On the crest of a wave on June 24, Ukip"s progress since has been akin to someone wading through quicksand as the loss of a charismatic leader in the form of Nigel Farage has seen a catalogue of disasters beset the anti-EU party.

The 18-day reign of Diane James was an unmitigated disaster but replacement Paul Nutall has fared little better and has become embroiled in a false claims controversy relating to the Hillsborough disaster of 1989 when 96 football fans died that has seriously undermined his credibility.

Ukip does not yet look like a spent force but with Farage chasing the "dream" in the US, its direction and sense of purpose has ironically been undermined by successfully seeing through the single-issue strategy that gave the party its raison d"etre. With Brexit due to be triggered next month, it"s become a little bit of a rebel without a cause.

The mainstream — read May"s ruling Conservative party — has also stepped into the breach to effectively dilute the Ukip message by taking over some of their policies and pushing the hard Brexit stance that defined Ukip. It"s a mainstream fight back through latching on to policies (a strategy which Boris Johnson unsuccessfully tried to follow through last summer) that could help re-establish the status quo, albeit with a significant lurch to the right.

In the meantime, a key by-election on February 23 in the UK in the Brexit-supporting constituency of Stoke-on-Trent is a key test for Ukip. Nuttall"s party is favourite to take the formerly safe Labour Party seat (the problems that have beset the Labour Party also owe much to the Brexit vote and a lack of direction under leader Jeremy Corbyn) but a Conservative victory would be a remarkable result in the circumstances as a signal of the status-quo rebirth. It could happen.

The lesson for Wilders, Italy"s Five-Star Movement and Spain"s left-wing anti-establishment Podemos are clear. A single cause can most definitely unite disparate elements. But, the achievement of goals or an inability to break important electoral thresholds will unmask tensions. And, as Ukip is discovering, that"s a recipe for disaster.

Perhaps he knew it was a good time to look for something else.

7. The euro to come under pressure

Whatever the outcome of the Dutch election, the euro is likely to come into pressure as volatility stalks the continent in 2017.

The potential crisis in Greece once again, the upcoming French and German elections, the triggering of article 50 next month and the unnerving and unwavering hostility from the Trump administration to all things EU, means that EURUSD in particular is likely to feel the heat.

Trump may be pursuing a weaker dollar policy, but he might not get his wish granted in relation to the euro for some time. EURUSD has faced down the parity challenge on a couple of occasions already in the last few months but with the pair once again below 1.05 this morning, the debate looks set for some invigoration.

EURUSD breached 1.05 Wednesday morning

Source: SaxoTraderGO EURUSD was at 1.0500 exactly at 1037 GMT, February 22.

8. The Trump reaction

The Trump reaction is incendiary enough even when it turns out to be over something that is patently not true such as his ill-researched comment about Sweden at the weekend regarding a security-related terrorist incident that never happened.

It"s not surprising that someone with Trump"s ego then chose to go on the warpath with Stockholm instead of coming clean. Expect him likewise then to react to the Dutch election, especially if it"s another significant blow to the status quo. He is unlikely to let facts get in the way of his agenda either.

If nothing else, Trump will seek endorsement for his selective immigration ban against seven mainly Muslim countries and the opportunity to twist the debate towards the border with Mexico which remains the most controversial pillar of his foreign policy (despite considerable competition).

The oxygen of publicity. Trump can"t resist it — markets will be moved.

That"s the size of the immigration problem in Sweden... no France...i meant Europe. Obviously.