Germany's Merkel is facing a crucial test of one of her key alliances

  • Regional elections are being held in Bavaria in Germany this weekend and the results could mean more bad news for Chancellor Angela Merkel and her fractious coalition government.
  • The Christian Social Union (CSU), the Bavarian sister party of Chancellor Angela Merkel's Christian Democratic Union (CDU), is contesting the October 14 vote.
  • The CSU could lose its absolute majority amid both rising populism and anti-government sentiment.
Bad Feilnbach, GERMANY - OCTOBER 6: A cyclist rides past several election campaign posters on October 6, 2018 in Bad Feilnbach, Germany. (Photo by Andreas Gebert/Getty Images)
Andreas Gebert | Getty Images News | Getty Images
Bad Feilnbach, GERMANY - OCTOBER 6: A cyclist rides past several election campaign posters on October 6, 2018 in Bad Feilnbach, Germany. (Photo by Andreas Gebert/Getty Images)

Regional elections are being held in Bavaria in Germany this weekend and the results could mean more bad news for Chancellor Angela Merkel and her fractious coalition government.

The Christian Social Union (CSU), the Bavarian sister party of Chancellor Angela Merkel's Christian Democratic Union (CDU), is contesting the vote on Sunday but there are concerns the party could lose its absolute majority amid both rising populism and anti-government sentiment.

The CDU and CSU were once staunch allies but a very public spat over migration policy has marred the partnership in recent months and nearly brought about the coalition's collapse earlier in summer.

The CSU has been openly critical of Merkel's more open policy towards migrants and is wary of losing more of its native political ground to the right-wing, anti-immigrant Alternative for Germany (AfD), which did well in last October's federal election.

As such, there's more at stake than just Bavaria's political future, the national government could be further weakened by the vote if the CSU fares badly and its performance is blamed on leader of the CSU, and Merkel's Interior Minister, Horst Seehofer.

More than that, the vote is being seen as a referendum on the coalition government and Merkel herself.

Teneo Intelligence's Macro Research team believed the CSU will lose its traditional absolute majority, having a knock-on impact on the party leadership.

"The CSU will either require a coalition partner, or, depending on the magnitude of its losses, might even have to go into opposition," the team said in a note published Tuesday. "Rather than Bavarian Minister President Markus Soeder, the CSU will blame its leader, Merkel's Federal Interior Minister Horst Seehofer. Bavarian attempts to oust him have the potential to cause another protracted government crisis in Berlin."

'Bavaria matters'

Bavaria is an important voting ground as it is the largest state, and one of the richest, in Germany. It is the home to around 16 percent of the German population and accounts for 18.3 percent of the country's gross domestic product.

"Bavaria matters," one economist noted ahead of said Sunday's regional elections, adding that it "could become an important milestone, either imminently or in the future."

"Since the start of the new government in March this year, German politics have been hijacked by the forthcoming regional elections in Bavaria," ING economist Carsten Brzeski said in a note Tuesday.

"In a bid to defend its absolute majority in Bavaria, the CSU has been openly criticising Merkel, starting several inner-coalition conflicts which almost led to a collapse of the government," he noted. The fractious behaviour with the CDU could have backfired on the CSU, however.

"While the CSU tried to make the election a kind of referendum on Merkel's stance on refugees, the continuous nagging and trouble-seeking in Berlin, initiated by the CSU, has completely turned this around. According to the trend of latest opinion polls, the CSU's strategy to distance itself from Merkel in order to prevent a rise of the AfD in Bavaria seems to have been a double failure," he noted.

A poll published by German broadcaster ARD last week showed that support for the conservative CSU had fallen further, at 33 percent, down from a typical vote share of around 50 percent, according to Deutsche Welle.

The poll showed the Greens Party in second place, with 18 percent voter support, ahead of the Social Democrats (a coalition partner of the CDU and CSU in Berlin) with 11 percent and the far-right AfD with 10 percent.
If the polls are borne out in the results, the CSU could see its worst performance on Sunday since 1950, when it received 27.4 percent of the vote.

The CSU conundrum

The declining popularity is not only due to losing more hard-right voters to the AfD, analysts note, and the rise of the Green party shows that the region is not necessarily lurching to the right.

"The CSU has typically had absolute majorities in Bavaria but is finding it much harder to fulfil this inflated and somewhat outdated ambition," Greg Fuzesi, an economist at JPMorgan said in a note Tuesday. "This is not just because of the AfD, but also reflects the changing population in Bavaria, with significant numbers of Germans from other states moving to Bavaria in recent years. These voters do not have the same traditional affinity towards the CSU."

Fuzesi remarked that the vote is a test for Merkel too. "The election will also set the tone for further CDU-CSU cooperation at the federal level and could put further pressure on Merkel herself."

He noted that JPMorgan sees Merkel's position as secure, for now. "A test could come at the CDU party conference in December, when Merkel is likely to stand for re-election as leader of the CDU. At this stage, it is unlikely any high-profile candidate would run against her, but this will be another test of her authority."