VZCZCXRO0462
OO RUEHIK
DE RUEHMZ #0324/01 3521413
ZNR UUUUU ZZH
O 181413Z DEC 09
FM AMCONSUL MUNICH
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5002
RUEKJCS/SECDEF WASHDC
RUEHZG/NATO EU COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RHEHNSC/NSC WASHDC
RUCNFRG/FRG COLLECTIVE

UNCLAS SECTION 01 OF 02 MUNICH 000324 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV EUN GM
 
SUBJECT:  Germany/Bavaria: Upheavals Threaten CSU Revival Hopes 
 
REF: Berlin 1601 
 
MUNICH 00000324  001.2 OF 002 
 
 
SUMMARY 
------- 
 
¶1.  (SBU) Accusations of misleading the public and mismanagement 
threaten the reputations, if not the jobs, of both Defense Minister 
Karl-Theodor zu Guttenberg and Bavarian Finance Minister Georg 
Fahrenschon, two young men on whom many in the Christian Social 
Union pin their hopes for the future.  Both are under great pressure 
for separate affairs that started well before they took office but 
which envelop them now.  While the Defense Minister continues to 
struggle with Bundestag (parliamentary) questions of war and peace 
and what really happened with the tanker truck bombing in Kunduz 
(REFTEL), there was tumult on December 15 in the Bavarian Landtag 
(parliament) over the BayernLB - Hypo Alpe Adria Bank fiasco that 
will cost the state 3.75 billion Euros.  The Bavarian SPD called for 
new elections, which seem unlikely at this point, but Minister 
President Horst Seehofer cited that threat in a CSU party meeting to 
get the attention of his cohorts, who are planning to start a 
campaign this spring across the state to reintroduce the CSU as a 
rejuvenated party.  End Summary. 
 
A Loss of Face for the CSU Youngsters 
------------------------------------- 
 
¶2.  (SBU) Defense Minister Zu Guttenberg and Bavarian Finance 
Minister Fahrenschon are accused of having suppressed information, 
albeit in two very different cases.  Zu Guttenberg is under fire 
over how he has handled the case of bombed fuel tankers in Kunduz 
(REFTEL).  Fahrenschon allegedly concealed reports that would have 
uncovered mistakes of fellow CSU members in the acquisition by the 
state-owned bank ("Landesbank") BayernLB of the already deadbeat 
Austrian bank Hypo Group Alpe Adria (HGAA).  In both cases, although 
many of the "mistakes were made" before the ministers took office, 
subsequent events have created fresh problems. 
 
Zu Guttenberg has Touched the Third Rail 
---------------------------------------- 
 
¶3.  (SBU) MP Seehofer and the entire CSU executive committee backed 
up zu Guttenberg after he reportedly gave a spirited defense of his 
efforts in the Kunduz affair at a closed meeting of the CSU board on 
December 14 in Munich.  CSU support in Bavaria might not help zu 
Guttenberg much on the federal level, but his popularity among 
Germans in general seems unbroken anyway.  In a survey of the ZDF 
TV, released December 11, zu Guttenberg still ranked first among the 
ten most popular German politicians.  Nevertheless, zu Guttenberg is 
in a perilous position, and his story is wrapped up in the larger 
question of whether Germany is "at war" in Afghanistan, perhaps the 
most difficult issue for the German public to debate. 
 
"3.7 billion Euros could have been 5000 teachers" 
--------------------------------------------- ---- 
 
¶4.  (SBU) Closer to home, the Landesbank investment disaster has 
Bavarians hopping mad over "what all that money might have bought." 
The loss represents about ten percent of the Bavarian annual budget. 
 Parliament almost erupted in fisticuffs on December 15 and the tone 
of the debate was more raw and personal than the Chairwoman, Barbara 
Stamm (CSU), could tolerate.  Finance Minister Fahrenschon, who was 
not involved in the original decision, is widely seen as the best 
economic and financial expert in the CSU stable but he has also been 
questioned about allegedly withholding inspection reports in the 
Landesbank affair.  Minister President Seehofer is speaking of 
personnel consequences and the media and public are focusing, for 
now, on members of the old Stoiber (CSU) administration, which 
approved the HGAA deal in 2007. 
 
Terrible Time to Launch a Renewal Campaign 
------------------------------------------ 
 
¶5.  (SBU) All this comes just as the CSU is planning a campaign to 
reposition itself as a younger, more relevant party in Bavaria. 
Senior CSU politicians and state government officials told the 
Consul General and Political Officer in a series of recent 
conversations of complex CSU plans to engage constituents and the 
general public in over 100 district town hall meetings, starting 
early this spring.  Senior CSU leaders would ask participants to 
suggest new ways to reach a younger and more heterogeneous Bavarian 
voting public.  The results of these discussions would inform a 
reform of the party's overall approach.  Ongoing, difficult 
Afghanistan and banking discussions could dominate and overshadow 
the meetings. 
 
COMMENT 
------- 
 
MUNICH 00000324  002.2 OF 002 
 
 
 
¶6.  (SBU) Zu Guttenberg and Fahrenschon seem unlikely to tumble, for 
now, but their so-far flawless careers have been tarnished by 
serious problems.  This could make it harder for the CSU to use them 
effectively in efforts to create a new, "youthful" image of 
competence and relevance.  Particularly the Landesbank disaster 
undermines the CSU's efforts to burnish its economic credentials as 
compared to its coalition partner FDP, but Finance Minister 
Fahrenschon is the CSU's only credible economic and financial 
expert.  Even if the major mistakes were made before their time, 
public opinion will connect the dots between the affairs and the 
ministers' names.  Should zu Guttenberg's and Fahrenschon's images 
suffer long-term damage, they might not be as attractive for future 
top positions in the CSU and then the CSU would have a serious 
personnel problem. 
 
¶7.  (U) Consulate General Munich coordinated this cable with Embassy 
Berlin. 
 
TRIBBLE