September 15, 2014
We have two main stories today – the inexorable rise of the German anti-euro party, and the Ecofin’s lacklustre response to Mario Draghi.
Last night, the AfD scored two important results in the elections in Thuringia and Brandenburg, following on from its success at the elections in Saxony two weeks ago. These were all eastern German states. In Thuringia, the AfD reached 10.6%, less than a couple of points behind the SPD. In Brandenburg it got 12.2%. In both states, the FDP failed to clear the 5% representation threshold. The party is now represented in only 6 of the 16 states, with no representation in the Bundestag, and only a small representation in the European Parliament. To all intents and purposes, the AfD has now replaced the FDP as Germany’s conservative-liberal party.
We are not focusing here on the complicated implications of these elections for the formation of governments in those states – which preoccupies much of this morning’s media coverage in Germany. More important for us are the ramifications for the eurozone. The party seems to have taken its votes from all established political parties, according to this article, not just the FDP. The specific problem of the FDP is that many of its former voters stayed at home, or wandered to the CDU. The AfD has received quite a few votes from the Left Party.
With the AfD now firmly establishing itself one of the top five national parties, and possibly overtaking the Greens and the Left Party to become the largest party, the implications for German politics will be profound. The AfD is likely to score well in the next two elections – in the small city states of Hamburg in February and Bremen in May 2015 where it has every chance to receive another round of double-digit successes.
For the established parties, the question is whether to confront the AfD by copying its policies, or by pushing it into a corner. Heike Goebel, the business commentator of Frankfurter Allgemeine, notes that the AfD does not only attract euro-critics, but conservatives in general. It is a classic conservative party (of the kind Germany has always lacked). The other parties should recognise that the AfD is not just going to disappear, the way the Pirates did.
Justus Bender writes in the same paper that the AfD poses a genuine dilemma for the established parties. If they take over the AfD’s agenda, they would secure the opposite result as the AfD will always be more credible as an anti-euro party. Yet, if they attack the AfD, that would only motivate the party’s grass roots. The only way out is to mobilise your own party grass roots (which is, of course, harder to do that to demand).
The other news we are focusing on today are, of course, the Ecofin and the point-blank refusal by finance ministers to endorse Mario Draghi’s plan for asset purchases; we have special reports on Syriza’s economic plan; on Nicolas Sarkozy's comeback plans, on Cyprus foreclosure laws, Ireland’s IMF loan, a rise eurozone industrial output and the creation of a people’s front in Spain; plus comments on the future of the eurozone and the EU.