In Merkel's Twilight, German Greens Ride to Brink of Power

(Bloomberg) -- When the scruffy Greens marched into German parliament nearly four decades ago in jeans and sneakers, they were sidelined and ridiculed. Today, the party has a legitimate shot at governing Europe’s largest economy.

With Angela Merkel’s coalition hanging by a thread, the possibility of a Green chancellor is a hot topic in Berlin. The party overtook her Christian Democrat-led bloc in polls this month. Robert Habeck, the stubble-cheeked Green co-chairman, would defeat Merkel’s heir apparent in a contest to lead Germany.

That raises the question of how the nation would be run by a party that in 1998 proposed tripling gasoline prices and, in 2013, suggested banning meat in canteens every Thursday. Even though the Greens now are a mainstream party for urban professionals, many investors still get the jitters.

“The Greens are still in part a prohibition party that wants to use strict regulation to steer the economy,” said Carsten Brzeski, chief economist at ING Germany. “A Green-led government would be difficult for business to handle.”

Worryingly for Merkel, the Green surge mirrors the CDU’s decline. Support for the environmentalist party held at 27% in an Emnid poll published Sunday, while the CDU-led bloc declined 2 percentage points to 25%. Merkel’s Social Democratic coalition partner stayed at a historic low of 12%. Three other major polls in June also put the Green party ahead.

Habeck said on Monday that the boost in support is an incentive but that it is premature to discuss electoral strategies. Instead, his party would focus on its role as a pro-active player in the opposition, he said. "There are no elections, we’re in the middle of a legislative period that is tough enough," he told ZDF television.

A Green government could have far-reaching implications in transport, energy and other industries and would “want to accelerate the coal phase-out,” said Coralie Laurencin, an energy analyst at researcher IHS Markit. That could mean a growing reliance on gas imports from Russia.

The Green surge has been fueled by the party’s transformation from a group of eco-fanatics into a more palatable people’s party. They’re also benefiting from disillusionment with the governing parties dragging their feet on issues from gender and income inequality to climate.

Merkel’s protege and the CDU leader, Annegret Kramp-Karrenbauer, who is known as AKK, helped push centrist supporters into the Green camp when she played up conservative values to lure back voters from the far-right AfD.

Days after hundreds of thousands of people participated in #FridaysForFuture pro-climate rallies, she ridiculed the movement, saying her children wouldn’t be allowed to skip school to protest. She further antagonized young Germans by proposing tougher internet regulation in response to a 20-something blogger who got over 14 million views for a video bashing CDU policies.

Christian Democratic campaign strategists are concerned about a possible duel between AKK and Habeck, said a person familiar with the matter, who asked not to be identified by name because the discussion is private. Whereas the Green party leader is known as a down-to-earth speaker who connects with mainstream voters, AKK has suffered a series of public mishaps. In a TV debate, AKK would most likely lose against Habeck, the person said.

By now, the Greens also have experience showing they can juggle business with ecology. Between 1998 and 2005, they were a coalition partner in Chancellor Gerhard Schroeder’s government. And since 2011 Green Premier Winfried Kretschmann has governed in Baden-Wuerttemberg, a socially conservative state that’s the heartland of Germany’s auto industry. Now in his second term, he cooperates with the CDU as his junior partner.

Stumbling Blocks

The Greens still have a long way to go to be able to claim power. Merkel has pledged to ride out her term until 2021, and fall elections in the three eastern states of Brandenburg, Thuringia and Saxony could stall the party’s momentum. Above-average unemployment, reliance on coal and resistance to immigration create tough conditions for the party.

“There are still many stumbling blocks waiting for the Greens,” said Manfred Guellner, head of polling institute Forsa.

Still, the Greens are a force to be reckoned with and are likely to sway Merkel’s agenda. From family dinners to nightly talk shows, environmental topics have permeated public life in recent months and have become the number-one issue Germans care about, according to opinion polls.

Already there are signs the ruling party is reacting. In an unusual mea culpa, Merkel last week acknowledged her government had done too little to combat climate change. Only days after the Green party began targeting online retailers for the amount of returned goods they destroy, Merkel’s administration announced tighter regulation along the same lines.

Former Fringe

AKK took a different tack, reviving the alarmist strategy from years ago and underscoring concern about her suitability to succeed Merkel, whose centrist course has kept her in office for more than 13 years.

“Those dreaming of a new government and voting for the Greens, need to know they may wake up with a left-wing party,” she told Bild am Sonntag newspaper.

Yet it may too late to undercut the former fringe party.

“The current polls don’t allow a government without the Greens,” said Sebastian Dullien, an economist at the University of Applied Sciences in Berlin. “A Green chancellor has moved entirely into the realm of the possible.”

--With assistance from Brian Parkin and Vanessa Dezem.

To contact the reporters on this story: Raymond Colitt in Berlin at rcolitt@bloomberg.net;Arne Delfs in Berlin at adelfs@bloomberg.net;Birgit Jennen in Berlin at bjennen1@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Chris Reiter, Iain Rogers

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