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June 19, 2018

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A truce with a time bomb

It looks like a truce, but on one level the conflict between the CDU and CSU took a turn for the worse because both sides have now boxed themselves into a corner. Horst Seehofer, CSU chief and interior minister, said he will make preparations for an executive order, effective the first week of July, for the automatic return at the German border of refugees registered in other EU countries. Angela Merkel said if he does that she would fire him. She did not say those exact words, but used the phrase "competence on guiding principles", an Orwellian formulation that allows the chancellor to override the ministers in executive decisions. Helmut Schmidt used it all the time to override FDP ministers. But that coalition ended in bitterness, with an FDP walkout in 1982. It is the nuclear-bomb defence of a chancellor because it allows the chancellor to overrule their coalition partners. 

So this is not detente. Crucially, Merkel said there would be no automaticity between a failure in the EU negotiations and the migration decision. We have a separate article below on why these negotiations are not going to reach a conclusion in this narrow time frame. When Merkel rules any automaticity between her negotiating success and a German refugee policy, she is de facto acknowledging that the task set by Seehofer is impossible.   

This is the critical point. The CSU insists on an automatic link, and doubled down on this principle yesterday to such an extent that they can no longer extricate themselves from this commitment. This is especially as the timing coincides with the beginning of the Bavarian election campaign. 

CDU and CSU are playing a high-stakes political game. They both know that the one who triggers the crisis is likely to be damaged the most. The CSU is creating the situation in which Merkel herself would have to end the coalition by invoking her nuclear-bomb clause. The CSU said in a statement yesterday that the decision to return refugees would take effect in the first week of July if there is no effective solution agreed at the European Council. At that point, it will be the interior minister who will take the decision. Merkel would then have to respond either by firing him, or by overruling him. It leaves open a tiny bit of wiggle room: they didn’t say July 1, but the first week of July. With July 1 on a Sunday, that gives them a whole week of extra wiggle room. And they described the result they are seeking as "adequately effective". We are not quite sure what that means. We should probably not look at this as some kind of a legal phrase, but as cover to give some interpretative wiggle room. But in essence, the CSU has now put itself into a corner where there are only three outcomes: an EU deal that is sufficiently acceptable to the CSU; Merkel backing down; or Seehofer backing down. By the end of the week of 1st July, it will be one of the three.

A break in the coalition would not be a good outcome for the CSU because its share of the vote is likely to fall over time, but we don’t think that the CDU would be in a position to capture a large share of votes in Bavaria in such a rush. They would have to set up a party, get candidates, and organise an election campaign with no infrastructure in place - and no financial support. The public-sector media treat parties already represented in the state legislature with priority. And the vast majority of conservative Bavaria supports the CSU on this particular issue. Those who do not, tend to side with the SPD and the Greens, especially in urban centres like Munich.

We also noted a report in FAZ that the Green Party is already getting ready to step in as a potential coalition partner for Merkel. The most interesting aspect of this is that the Greens have much bigger problems with the SPD than with the CDU because of the SPD’s support for the coal industry. At the very least we would expect the Greens to insist on Germany paving the way for a trajectory to meet the Paris climate goals in 2030. This demand would be incompatible with the politics of the grand coalition, which is to discourage a ban on diesel cars, and to continue to support coal-fired power stations. 

We don’t see any chance of the FDP entering the coalition. The FDP agrees with the CSU on refugees, and Christian Lindner’s relationship with Merkel is no better than Seehofer’s. 

And finally, we note that the actual number of asylum application in the EU continues to fall. It was down by 44% in 2017, compared to 2016. A third of those applications are made in Germany. This only shows that the political effects of crisis often occur with a long time delay - take the political developments in Italy, for example.

Our other stories

We also have stories on why Angela Merkel's bilateral diplomacy is unlikely to please the CSU; on what remains for the Franco-German eurozone roadmap; on the rise in eurozone labour costs; on Pedro Sánchez' plan to stay in office until 2020; on forward guidance as political game theory; on the Irish economy showing signs of overheating; and on what the incarceration of the Audi chief implies.

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