Will Today's Elections In North Rhine-Westphalia Impact The Future Of Greece?

Auf Wiedersehen, meine Damen und Herren

Last week when the German right lost Schleswig-Holstein for the first time in decades, well... who cares. It's a small state way up flat against Denmark, used to be part of Denmark and is still filled with Danes anyway. Today's losses by Merkel's CDU in North Rhine-Westphalia is another matter altogether. It's the most populous state in Germany-- 18 million people-- and has 4 of the country's biggest cities, Cologne, Düsseldorf, Dortmund and Essen.

In 2010, the CDU-- Germany's center-right party, something like the Republicans here, but not as extreme-- started losing their grip on power. In that year's election for the state legislature they lost 22 seats and wound up in an exact tie with the Social Democrats (the center-left party). The Greens had a huge upsurge in strength, doubling their seats from 12 to 23 and the CDU's junior partner, the FDP won 13 seats. The left went into today's election as the governing party. And they trounced Norbert Roettgen, Merkel's environment minister, giving the SPD momentum going into national elections which are likely to topple Merkel and end European Austerity. Friday Roettgen himself declared that the election was a referendum on Merkel's austerity policies. "The election on Sunday also serves to finally give our chancellor full support from Duesseldorf ... for her national and European policies." That worked out badly.

Merkel's conservative austerity party was crushed in today's election, though every corporate media report talks about how it's not a referendum on her policies and about how popular those policies are.

She remains popular in Germany for her steady handling of the euro zone debt crisis, but the sheer scale of her party’s defeat leaves her vulnerable at a time when a backlash against her insistence on fiscal discipline is building across Europe.

According to first projections, the centre-left Social Democrats (SPD) won 38.8 percent of the vote and will have enough to form a stable majority with the Greens, who scored 12.2 percent.

The two left-leaning parties had run a fragile minority government for the past two years under popular SPD leader Hannelore Kraft, whose decisive victory on Sunday could propel her to national prominence.

Merkel’s Christian Democrats (CDU) saw their support plunge to just 25.8 percent, down from nearly 35 percent in 2010, and the worst result in the state since World War Two.

“This is not a good evening for Merkel,” said Gero Neugebauer, a political scientist at Berlin’s Free University.
“The SPD is strengthened by this election, which will stir things up in Berlin.”

...Roettgen ran on a platform of budget consolidation in a state that, with 180 billion euros in debt, is Germany’s most indebted. Kraft, on the other hand, advocated a go-slowly approach to debt reduction, emphasising the need to invest in cities, education and childcare.

In that sense, the result will be seen by some as a double defeat for Merkel. Voters in NRW not only rejected her party but also the austerity measures that she has forced on struggling southern states like Greece, Spain and Portugal.

And, as they did in Schleswig-Holstein last week, the Pirates made huge gains and won 7.6% of the vote, almost as much as the puffed-up Free Democrats, Merkel's partners in imposing a reactionary agenda on Germany (and Europe).

Now Der Speiegel, perhaps the most influential magazine in the country, is calling for Greece to be kicked out of the Eurozone.

"Acropolis, Adieu! Why Greece must leave the euro," reads the front-page headline of Germany's most influential magazine Der Spiegel, joining a chorus of voices in Europe's paymaster country suggesting an exit may now be the best option.

In a sign Germany is coming to terms with a possible Greek departure, senior players in both business and political communities said this week the euro zone could survive without Greece because the bloc is now more resilient to shocks.

But Der Spiegel, one of Germany's most respected news outlets, went one step further, arguing a Greek exit was the only way forwards now. Its front page depicted a splintered euro coin strewn across ancient Greek ruins at dusk.

"Despite all the scepticism, our editors have until now pleaded for Athens to remain in the euro zone," Der Spiegel wrote in its editorial column. "Since the parliamentary elections at the beginning of May, Spiegel observers have changed their opinion."

Citibank's Chief Economist Willem Buitar, who is horrified at the prospect (and who once described Citybank as "a conglomeration of worst practice from across the financial spectrum," explained the consequences-- for Greece, the European Union and the rest of the world. "[T]he bottom line for Greece from an exit," he wrote, "is therefore a financial collapse and an even deeper recession than the country is already experiencing-- probably a depression... For the world outside Greece, and especially for the remaining euro area member states following a Greek exit, the key insight would be that a taboo was broken with a euro area exit by Greece. The irrevocably fixed conversion rates at which the old Drachma was joined to the euro in 2001 would, de facto, have been revoked. The permanent currency union would have been revealed to be a snowball on a hot stove... A banking crisis in the euro area and in the EU would most likely result from an exit by Greece from the euro area."

The banksters thought they could get away with turning Greece into prey. We may see it turn on themselves now.