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Merkel's Coalition Disenchantment

Silvia Wadhwa|CNBC Europe Reporter

Suddenly the rest of the world – and that mainly means the Anglo-American world – has discovered that German Chancellor Angel Merkel has had a “difficult start” to the new year and that her coalition is “troubled by perpetual squabbling”. After “being swept into power” by last autumn´s elections, Frau Merkel has fallen from grace and her popularity ratings are slumping.

German Chancellor Angela Merkel
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Dear "Time" and all the other British and American journalists who have been so enchanted by Germany´s “Iron Lady”:

Frau Merkel had a “difficult time” from her first day in office the first time around. Four and a half years ago, after narrowly – very narrowly – beating then Chancellor Gerhard Schröder.

Her first government took six weeks to even come together and it was a coalition of losers. Her second government – the present government – took just as long to come together, and even in this coalition she and her party were among the losers. Never, not the first and not the second time, was she swept into power. The only thing that admittably changed from the last time around is this: when she returned for her second term last September, her personal popularity was still high, thanks to her commendable performance on the international stage.

Now even that has been dramatically eroded. But in any case, at home for domestic politics, her track record was never anything close to convincing. Her star only ever shone on the international stage and in the international press.

So, this perceived fall from grace never really happened.

Only now that the dust of global crisis and financial meltdown has settled, she is being measured once again by her political actions – or lack therof – at home. And here some harsh realities are setting in about a coalition that is far more prickly than anticipated. Because this was meant to be the match made in heaven. The political dream team.  After four years of a grinding, unwanted but unavoidable coalition with her main political opponents, the Social Democrats or SPD, German Chancellor Angela Merkel was returned to office last September to form a government with the one party she always wanted to govern with: the Liberals or FDP and Guido Westerwelle. But in never turned out to be a “match made in heaven.” More like a rather troubled wedding and more troubled marriage.

That in itself might have rather surprised Frau Merkel. After one term of  squaring the (political) circle, trying to reach a consensus between her own party and her traditional opposition, she had probably hoped for a more congenial way of laying down strategies. But Westerwelle and his Liberals proved more than prickly – on Afghanistan, on financial rescue packages and on taxes. From the word "go," the FDP behaved like the proverbial 800 lb. gorilla, flexing its muscle. Because the Liberals might be junior coalition partners and the by far smaller party to Merkels twin CDU/CSU, but they were the only one of the coalition parties that arguably really won last September´s elections

Both Merkel´s CDU and Horst Seehofer´s CSU were more than sore losers last autumn.

Where does that leave Germany? Probably with another four years where there is a lot of talk, but precious little real "do" on structural reforms and reshaping society (tax reforms are not what is most needed, but a very unpopular overhaul of the pensions and health care systems).

And where does that leave Frau Merkel? With another four years of a rather tricky, conflict-ridden government and possibly facing more and more headwind and criticism from within her own party. Because, let´s face it, after the election is always before the election. And her potential successors will soon enough position themselves and challenge her leadership. In fact, they have started challenging that already. And this is going to be the real crisis Angela Merkel might have to face as her term grinds on. Not about tax cuts or sending more troops to Afghanistan, but about her own lieutenants – such as Roland Koch from Hessen or Christian Wulff from Lower Saxony – rattling at the gates of the Chancellery because they would like to move in.