Rocked by defeat, could Germany's Merkel step down before 2017 election?

Merkel far from being replaced: Analyst    6:14 AM ET Mon, 5 Sept 2016 | 02:50

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• 02:50

  Merkel far from being replaced: Analyst   

  6:14 AM ET Mon, 5 Sept 2016
• 02:22

  Merkel suffers election defeat on home turf   

  2:00 AM ET Mon, 5 Sept 2016
• 03:02

  It is doomsday for Merkel: AfD’s Hansel   

  4:23 AM ET Mon, 5 Sept 2016

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After the latest blow to Angela Merkel this weekend, with her party coming in third place to an anti-immigrant party in a state election, analysts are questioning both how much longer the German chancellor's refugee policy can stay intact and how long she can stay in power.

"(The result was) a blow to the chancellor personally and sharpens the question over whether she will lead her party into next year's general election," Alastair Newton, co-founder and director of Alavan Business Advisory, said in a note Sunday.

"So far, Merkel has declined to commit to standing again for the role of chancellor in next year's general election … However, her diminishing personal popularity ratings do beg the question of whether she may choose to step to one side rather than risk a damaging internal challenge or even the CDU (Christian Democratic Union) being ejected from government under her leadership," Newton added.

Getty Images

German Chancellor Angela Merkel, French President Francois Hollande (L) and European Union Commission President Jean-Claude Juncker.

In elections in the north German state of Mecklenburg-West Pomerania on Sunday, the center-left Social Democrat (SPD) party won around 30 percent of the vote while the anti-establishment, anti-immigrant Alternative fuer Deutschland (AfD) party surprised by taking around 21 percent of the vote.

Meanwhile, Merkel's CDU party came third with about 19 percent of the vote, according to German public broadcaster ARD, marking the CDU's worst ever result on home turf (Merkel's constituency is within the state), Reuters noted. The blow inflicted on Merkel 's party yesterday is widely attributed to Merkel's controversial pro-migrant policies which enabled over a million refugees - many fleeing civil war in Syria - to enter Germany in 2015 alone.

Although Merkel's open-door policy and leadership at the height of Europe's migrant crisis attracted praise from some quarters, there is growing disquiet with the policy in Germany's public and political sphere -- including within Merkel's own governing "grand coalition" made up of the CDU, Christian Social Union (CSU) and SPD, which is a junior partner in the governing alliance.

Very down - but not out

The political beating that the CDU took this weekend was not the first indication of public opinion souring towards Merkel's party with local elections earlier this year also showing a rise in support for the AfD.

Carsten Brzeski, chief economist at ING-DiBa, said in a note on Monday that the latest election was "another shot across the bow for the national government and Chancellor Angela Merkel."

He noted that the state of Mecklenburg-Vorpommern has around 1.3 million voters, the highest youth unemployment rate of all German states, a high poverty rate and that "the extreme right-wing party, NPD (National Democratic Party), has been member of the regional parliament for ten years".

"Therefore, yesterday's results are obviously not representative but they definitely are symbolic for Chancellor Merkel and the entire German landscape." The big test case ahead of the 2017 national elections will be next year's elections in North Rhine Westphalia, a state which has more voters than all eastern German states together, Brzeski noted.

In all, however, he said that Sunday's result would not "change Chancellor Merkel's stance on the refugees or the economy but the atmosphere in her own government and party will become rougher."

Another test of the CDU's popularity will be seen when Berlin's state election is held on September 18, however.

While Alavan's Newton said in his note, "let's see what happens in Berlin a fortnight from now (in the state election) before writing Merkel off," another analyst said the Berlin election could force the CDU into an uncomfortable position with the SPD – a party that, despite partnering the CDU/CSU in power, has criticized her migrant policy.

"In the capital, the strength of the AfD could force the CDU out of the grand coalition with the SPD," Carsten Nickel, deputy director of research at risk consultancy Teneo Intelligence, said in a note Sunday.

"Though hardly a CDU home turf, the regional elections in Berlin could further add to Merkel's immediate headaches. The chancellor's job for autumn will be to reconcile the CDU party base with her own leadership," he said.

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