- The next political leader of Germany's largest national party, the Christian Democratic Union (CDU), and the country, is in focus.
- This follows the announcement Monday that Annegret Kramp-Karrenbauer, the head of the CDU, will stand down from the party leadership and not run for the position of chancellor.
- Kramp-Karrenbauer was widely seen as the chosen successor to Chancellor Angela Merkel, who is due to step down from the German leadership in 2021.
The next leader of Germany is in focus following the announcement Monday that Annegret Kramp-Karrenbauer, the head of the Christian Democratic Union (CDU), will stand down from the party leadership and not run for the position of chancellor.
Kramp-Karrenbauer was widely seen as the chosen successor to Chancellor Angela Merkel, due to step down from the German leadership in 2021, but a series of electoral misses, divisions over the party's direction and an apparent lack of authority prompted the CDU leader and defense minister to step down.
A leadership race is expected to take place in summer and there are already possible contenders for the role, including several that lost out to Kramp-Karrenbauer in the party leadership election in December 2018.
Friedrich Merz (who was narrowly beaten by Kramp-Karrenbauer in the leadership vote), current Health Minister Jens Spahn and the state premier of North Rhine-Westphalia, Armin Laschet, are seen as front-runners in a forthcoming leadership race.
Markus Söder, the head of the CDU's Bavarian sister party, the Christian Social Union (CSU) and the CDU's Daniel Günther or Raplhp Brinkhaus are candidates with an outside chance, analysts say.
Friedrich Merz, the pro-business, vice president of the CDU's Economic Council and a favorite for the CDU leadership, made no reference to the news of Kramp-Karrenbauer's departure but tweeted Monday that falling industrial production figures for Germany were a "warning sign" and that "now would be the right time to stimulate economic and financial policy measures," he said.
"The purchasing power of private households could be increased with a reduction in the tax burden, as could the investment power of companies," Merz, a corporate lawyer and millionaire, noted.
Florian Hense and Holger Schmieding, economists at Berenberg Bank, noted Monday that the favorites to replace AKK as party leader are Merz and Laschet.
Laschet's experience as state prime minister of North Rhine-Westphalia would make him well suited to lead a coalition with the Greens. "He would be a candidate of continuity – which could not only be an advantage. Many in the party may regard him as too close to Merkel, though," they noted.
Merz, meanwhile, they noted, is "well supported by those in the CDU base who look for a bigger change after Merkel's reign. Having come only narrowly behind AKK in late 2018, he may have a slight advantage over Laschet who did not run at the time. He may be better suited to take on the right-wing AfD than the other candidates."
Analysts note that Kramp-Karrenbauer, a protegee of Merkel seen as continuing her political direction, had failed to unite a party riven with division over whether to assert its traditional, Conservative values or to remain more centrist, as it has been under Merkel and AKK.
But Jens Spahn – aged 40, gay and staunchly Conservative (and a contender for the leadership) paid tribute to Kramp-Karrenbauer, saying he had "great respect for this unexpected decision" and that she had brought the party together.
"The separation of party leadership and chancellery was a difficult situation. It is AKK's credit for bringing the CDU and CSU together again. The cohesion of our party must now be our guiding principle," he said.
Assessing the top candidates for the CDU leadership, J.P. Morgan Economist Greg Fuzesi said that a "new CDU leadership election may produce a less Merkel-friendly and a more fiscally-conservative leader" such as Friedrich Merz, given that Kramp-Karrenbauer was essentially an ally of Merkel.
"But, in any case, the process of replacing Kramp-Karrenbauer will involve heated and divisive debates within the CDU about the party's direction and perhaps reduce the likelihood of significant new policy initiatives by the German government in the meantime. Other parties also still face pressures, with the new leadership team of the SPD having failed to have any impact on the polls. Hence, new elections cannot be ruled out at some point."
Franca Wolf, Europe analyst at global risk consultancy Verisk Maplecroft, said that Spahn and Laschet would likely continue Merkel's centrist direction, while victory for Merz would signal a return to the CDU's "more traditionally conservative roots."
The departure comes after a torrid time for the CDU, in a strained coalition with its sister party, the Christian Social Union (CSU) and Social Democratic Party (SPD). The CDU has seen its popularity decline, although it continues to lead voter polls, and a series of regional elections have highlighted divisions in the party and the fragile coalition which has come close to collapse.
The recent state vote in the small state of Thuringia, which prompted a political earthquake, was seen as a deciding factor behind Kramp-Karrenbauer's departure. The election had seen the regional branch of the CDU voted with the far-right, anti-immigration Alternative for Germany (AfD) party to elect a new state premier.
The regional CDU vote was seen as an open defiance of the party leadership in Berlin, and the breaking of a political taboo in Germany, to not associate with the AfD.
Emily Mansfield, principle economist at the Economist Intelligence Unit, said all the contenders would face "the same problem: how to reconcile differences between the state-level and federal-level positions of the party, and how to balance tough competition from the AfD (especially in east Germany) with the fact that the CDU's next coalition partner is most likely to be The Greens," she said Monday.
"The CDU is currently under to reinvent itself for the post-Merkel period while at the same time navigating an increasingly fragmented political scene, and the coalition-building difficulties that this leads to. The key areas of debate within the CDU as the election approaches will be immigration, defence and fiscal policy, and the party's positioning on these with respect to the AfD and The Greens."
Carsten Nickel, the deputy director of research at Teneo Intelligence, agreed that the Green Party could gain an advantage from the current disunity in the CDU.
"AKK's resignation takes the CDU to where it was some 18 months ago, when Merkel declared that she would not run again for the party leadership. As discussed back then, the structural question of the CDU's programmatic orientation post-Merkel will be more important than whether a representative of the traditional or the centrist wing presides over the party. In the meantime, the CDU's awkward balancing act leaves the Greens with the potential to take over the political center," he said in a note Monday.