Angela Merkel, Germany’s chancellor speaks during an event. (Photographer: Krisztian Bocsi/Bloomberg)

Merkel at Risk as German Coalition Crisis Enters Crunch Time

(Bloomberg) -- Germany’s crisis over migration policy is entering a critical phase with Chancellor Angela Merkel’s political future on the line and the ripples already being felt across Europe.

Merkel received crucial backing on Monday from senior members of her Christian Democratic Union ahead of a meeting in Berlin to discuss an ultimatum from Interior Minister Horst Seehofer, who leads her Bavarian sister party. Seehofer appears set to contradict the chancellor by issuing an order to turn away migrants at Germany’s border. Merkel and Seehofer have announced dueling press conferences for later this afternoon.

Seehofer’s party, one of three in Merkel’s coalition, is poised to hand Merkel a two-week deadline to get a European deal facilitating the return of migrants to countries in which they were first registered. Bavarian Prime Minister Markus Soeder showed little sign of ceding ground to the chancellor Monday, saying the Christian Social Union will give its backing to Seehofer’s 63-point “masterplan” of which “turning people back is an important part.”

The upshot is “the worst crisis of her almost 13 years in office,” said Holger Schmieding, chief economist at Berenberg in London. “If the Bavarian CSU does not agree to any compromise on migration policy, her current government may fall apart shortly.” He added, however, that he thought that scenario “unlikely.”

Merkel at Risk as German Coalition Crisis Enters Crunch Time

The two sister parties are holding separate gatherings in Berlin and Munich, with neither side indicating much willingness to budge.

“I think we’re sending a signal of decisiveness,” Soeder told reporters before a meeting of the CSU executive. The authorities can instruct Bavarian state police to tighten their patrolling of the border, although “of course it needs a few days to come into force,” he said.

Merkel must meanwhile decide whether to sack Seehofer for insubordination and risk an even deeper rift with the CSU.

“The CDU stands behind the chancellor; the CDU stands behind a European approach,” said Armin Laschet, prime minister of North Rhine-Westphalia and a deputy CDU chairman. “We will not accept abandoning the Schengen system on the borders with Belgium, the Netherlands, France and Luxembourg. We will fight for that, and on this point there’s no latitude for the chancellor.”

Sinking Support

As the dispute drags on, backing for the two parties is sinking. The CDU-CSU alliance fell 4 percentage points to 30 percent, the lowest level of voter support since September’s federal election, according to a poll by RTL/n-tv taken as the crisis heated up at the end of last week.

“Discord is the worst thing you can present to voters,” said Elmar Brok, a Merkel ally who’s a Christian Democratic member of the European Parliament. “I hope that reason returns and that they come to the realization about their shared interests.”

The deadline handed to Merkel by her smaller Bavarian ally shows how emboldened it feels as governments from Hungary to Italy, Austria and the U.K. adopt hard-line stances on protecting national borders. Even with a sharp decline in the numbers crossing to Europe over the Mediterranean, migration has surged to the top of the political agenda, with the proliferation of unilateral measures fraying the bonds of EU unity.

Migration is “a European challenge that requires a European answer,” Merkel said in her weekly podcast released Saturday. “I see it as one of the most decisive issues in holding Europe together.”

She insists that unilateral action by Germany would trigger a wider crisis, and will now use the run-up to a June 28-29 summit of EU leaders to try and forge some sort of agreement.

Italy Refusal

Italy’s Five Star-League government is already signaling its intention to defy international convention by refusing harbor to refugee vessels, in the process stoking tensions with France, Spain and Malta. Interior Minister Matteo Salvini upped the ante at the weekend, saying that Italy won’t allow two ships allegedly carrying migrants and asylum seekers from Libya to reach its shores.

The German chancellor will hold talks with Italian Prime Minister Giuseppe Conte in Berlin on Monday. Merkel will then discuss migration with French President Emmanuel Macron during a joint cabinet meeting at a government retreat outside Berlin on Tuesday.

Failure to reach a deal that can be presented as a breakthrough at European level could precipitate a full-blown crisis in Germany that might topple Merkel after almost 13 years as chancellor. Her demise would likely further bolster authoritarian governments in eastern Europe, undermine the new Spanish government’s humanitarian stance on migration and put at risk Macron’s plans for euro-area reform.

Bavarian Election

The CSU is defending its majority rule in Bavaria in regional elections in October and is fretting over the risk of hemorrhaging support to the anti-immigration Alternative for Germany. Still, given the stakes, a weekend of talks between the CSU and Merkel’s larger CDU resulted in a softening of tone on each side.

“No one in the CSU has an interest in toppling the chancellor, in dissolving the union of the CDU-CSU or to break up the coalition,” Seehofer said in an interview with Bild am Sonntag newspaper. Merkel’s two-week window would dial back a threat by Seehofer to turn away migrants as soon as Monday. It may only defer the inevitable, however.

©2018 Bloomberg L.P.