Letter From Berlin: 'Knife-Edge' State Election Could Curb Merkel's Power

Chancellor Angela Merkel's government has effectively been on hold for months pending a regional election on Sunday, May 9, in Germany's most populous state, North Rhine-Westphalia.

Major domestic reforms of healthcare, the tax system and energy policy have been shelved because Merkel's conservative Christian Democrats and their coalition allies, the pro-business Free Democrats, have been at pains to avoid spoiling their chances of remaining in power in this key western state of 17 million inhabitants, home to the industrial Ruhr region.

In their jockeying for votes, the two parties have been trying to score points off each other. Their inactivity and persistent in-fighting in Berlin could end up losing them the election, which would rob Merkel of her center-right majority in the Bundesrat, Germany's upper legislative chamber. That means she would need opposition approval for any major policies. If North Rhine-Westphalia (NRW) doesn't go Merkel's way on Sunday, she will be considerably less powerful.

Some critics say Merkel spent weeks stonewalling on aid for Greece because she didn't want to take any unpopular measures to bail it out with German taxpayers' money before the NRW vote. In truth, though, the debt crisis hasn't been a dominant factor in the campaign, and the major opposition parties have not been campaigning against a Greek rescue.

Opinion polls indicate a neck-and-neck race between the center-right coalition of governor Jürgen Rüttgers, who has been beset by series of minor but damaging scandals in recent months, and the center-left camp of Social Democrats (SPD) and Greens. But the vote could lead to a variety of alternative coalitions including a tie-up between Rüttgers' Christian Democratic Union (CDU) and the Greens, or an alliance between the SPD, Greens and Left Party.

Vote May Seal Policy Logjam in Berlin

Nothing is certain at the moment -- apart from the fact that the May 9 election will change Germany's political landscape. For Merkel, it will mark the end of what has in effect been a domestic policy sabbatical ever since her re-election last September. "Waiting for NRW" has been the true leitmotiv of Merkel's center-right government. After May 9, she will have to show whether she wants to reform Germany -- if she still can. She will no longer be able to avoid the big issues.

The big question will be how much room for maneuver she will have left after Sunday. Her strategy could end up as a large paradox. She shied away from action because she was afraid of the voters. But the vote itself may deprive her of the power to take decisive action.

Her fate is now in the hands of the pale Rüttgers, who managed to end four decades of Social Democrat rule in the traditional SPD bastion of NRW in 2005 by riding a wave of opposition to radical welfare cuts imposed by the center-left government in Berlin at the time under Chancellor Gerhard Schröder.

Rüttgers has tried to keep disgruntled former SPD supporters on his side by espousing traditionally center-left policies, and he occasionally succumbs to controversial bouts of populism to spruce up his dull image. Last August he was heavily criticized for suggesting in a campaign speech that Romanian workers were lazy. In 2000, when he was campaigning against government plans for a Green Card to ease immigration restrictions for software engineers from countries such as India, he faced accusations of xenophobia for using the slogan "Children Instead of Indians" ("Kinder Statt Inder"). He had argued in favor of promoting homegrown talent.

CDU Funding Scandals

Rüttgers had hoped to score points by distancing himself from the increasingly unpopular infighting within Merkel's coalition in Berlin. But his lead over the SPD has crumbled in recent months amid allegations of irregular party funding. SPIEGEL broke the story in February that the CDU had offered local companies meetings with Rüttgers in exchange for money. He says he knew nothing of these offers, but the "rent-a-Rüttgers" controversy has overshadowed his election campaign.

Then, and potentially even more damaging, SPIEGEL reported this week that during the 2005 election campaign in NRW, the CDU funded the creation of a supposedly independent voters' initiative called "Voters for Change" which published large newspaper advertisements backing Rüttgers. The group collected donations from celebrities and prominent businesspeople in the state but not a cent of the money was listed as donations in the CDU's accounts, SPIEGEL reports.

Even close aides of Rüttgers think that the practice was in breach of Germany's party funding law. The matter is being investigated by the Bundestag, the country's lower house of parliament, and the party is bracing itself for a fine.

The irregularities that have whittled down the CDU's lead in a matter of weeks aren't just a sign of ineptitude -- they suggest that the CDU's leadership in the state has lost a sense of what constitutes acceptable political behavior.