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O 300640Z SEP 09
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INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
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UNCLAS SECTION 01 OF 02 BERLIN 001206 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: GM PGOV
SUBJECT: MERKEL AND WESTERWELLE PLAN COALITION TALKS WHILE 
SOCIAL DEMOCRATS REEL FROM ELECTORAL DISASTER 
 
REF: BERLIN 01197 
 
 ¶1. (SBU) Summary:  Chancellor Merkel met on Monday, 
September 28 with her future Vice Chancellor and probable 
Foreign Minister Guido Westerwelle to plan coalition 
negotiations, with the goal of having a new government in 
place for the November 9 20th anniversary festivities of the 
fall of the wall.  The new Bundestag is expected to meet on 
September 27 and the coalition parties would like to be able 
to put a new government in place as soon as possible after 
that. Westerwelle was being cautious in his policy demands 
and refusing to discuss personnel issues altogether. Tensions 
are likely to arise, however, between Merkel's apparent 
desire to emphasize policy continuity and Westerwelle's need 
to show that that his Free Democratic Party (FDP) can be as 
consistent in government as it has been in opposition. 
Meanwhile, the Social Democratic Party (SPD) is reeling from 
the dimensions of its defeat on September 27 -- which cost 
the parliamentary caucus a third of its members.  Although 
chancellor candidate and soon-to-be ex-Foreign Minister 
Frank-Walter Steinmeier was elected Bundestag caucus 
chairman, more and more Social Democrats are demanding a 
thorough-going leadership shakeup and policy reorientation to 
win back the lost support.   End Summary. 
 
Merkel Taking Control of Coalition Negotiations 
--------------------------------------------- -- 
 
¶2.  (U) Looking self-confident and relaxed, Merkel made clear 
that she was in charge of coalition negotiations September 28 
and had a busy round of press appearances, including 
interviews on both major television stations that Monday 
evening.  Merkel said that she hoped a new government would 
be in place by November 9, and formal coalition negotiations 
are slated to begin on October 5.  She hosted Westerwelle at 
the Chancellery for an hour on September 28 and met with 
Bavarian Minister President and Christian Social Union (CSU) 
party chief Horst Seehofer privately the next day.  Seehofer 
is facing considerable criticism from within his own party 
after the CSU suffered its lowest Bundestag election result 
in history.  Merkel appeared to be downgrading the CSU's 
independent role within the coalition negotiations, saying on 
September 28 that the talks will not be between three parties 
-- as they were in 2005 --  "rather the Union will negotiate 
with the FDP."  She also noted that she did not plan to 
change her leadership style and would continue to reach out 
across partisan divides rather than present herself as the 
CDU party chief.  She also rejected a need for major policy 
change and  stood by Grand Coalition legislation that 
established a minimum wage in selected sectors of the economy 
and also rejected the need for privatization of health 
insurance.  Merkel would not be pinned down on when the new 
coalition would cut taxes but she did say quick action was 
necessary on reforming the inheritance and business taxes. 
 
¶3. (U)  Westerwelle looked happy but was unusually cautious 
in his public statements.  He continues to refuse to discuss 
personnel issues  -- although speculation on future cabinet 
positions is currently a chief preoccupation of the Berlin 
press  --  and he appeared to step back from earlier campaign 
demands for major tax reform.  While he told the press that 
he stands by his view that a "fair" tax system is the basis 
for sound government finances, he did not repeat his earlier 
claim to reject any coalition agreement that did not include 
major tax cuts and reform.  Westerwelle refuses to say 
publicly that he will become Foreign Minister, and the FDP 
Bundestag caucus, now 93 members strong and containing 
several politicians who never expected to be coming to 
Berlin, unanimously reelected him as caucus chairman to enter 
the coalition negotiations with the full support of the FDP. 
There seems to be no doubt, however, that he will become the 
next foreign minister, and the influential daily, Frankfurter 
Allgemeine, referred to FDP foreign policy expert Werner 
Hoyer as the future Minister of State at the MFA. 
 
The SPD in Disarray 
------------------- 
 
¶4. (SBU) While the CDU/CSU and FDP prepare for their new 
coalition, the SPD is in near complete disarray as the full 
dimension of its losses become clear.  A third of the members 
of the Bundestag caucus are without jobs, and party chief 
Muentefering's attempt to keep control over the transition to 
opposition has been overwhelmed by the desire to hold someone 
accountable for the party's historic defeat.  SPD General 
Secretary Hubertus Heil announced his resignation on 
September 27, Finance Minister Peer Steinbrueck said he would 
step down as vice chairman, and Muentefering will also have 
to make way for someone else at the SPD convention in 
mid-November.  Although Steinmeier was elected Bundestag 
 
BERLIN 00001206  002 OF 002 
 
 
caucus chief, he had to give up any claim to the party 
chairmanship.  Leftwingers in the party are demanding new 
leadership and a repudiation of former Chancellor Schroeder's 
Agenda 2010 reforms and the party's role in extending the 
retirement age to 67 during the Grand Coalition.  Current 
Environment Minister Sigmar Gabriel could be a compromise 
candidate for the party leadership, although leading 
left-winger Andreas Nahles is another less likely choice.  So 
far, Steinmeier's strong support for ISAF has not been a 
point of contention, but if a member of the left wing wins 
the party leadership, he or she could also try to alter this 
SPD position on this as well. 
 
¶5. (SBU) Comment:  The future coalition partners have 
considerable incentive to conclude coalition negotiations 
before Berlin hosts representatives from across Europe and 
the world on November 9.  Merkel appears confident of her 
ability to maintain control of her party and the coalition 
negotiations, despite the strong position from which 
Westerwelle and the FDP enter talks.  Westerwelle -- 
enjoying even greater control of his own party due to its 
tremendous success in recent years  -- will  be loathe to 
give up the hard-fought credibility he has won by sticking to 
a simple political message of lower taxes and the less 
government.  He will need to show his stamp on government 
policy to convince all the millions of new FDP voters that it 
is worth supporting the FDP, or he may suffer the fate that 
both the SPD and CDU/CSU has experienced in recent years, 
when the realities of government have forced them to adopt 
policies that have led to their recent decline.  End Comment. 
Murphy