Angela Merkel, Germany’s chancellor and leader of the Christian Democratic Union (CDU) party. (Photographer: Krisztian Bocsi/Bloomberg)

Merkel’s Coalition Crisis: What Happens Next?

(Bloomberg) -- Angela Merkel is facing one of the riskiest moments in her 13 years as German chancellor as two coalition factions clash over migration policy. While that puts her fourth-term government at risk, it doesn’t mean her downfall is imminent.

Even if the Bavarian party that’s challenging her walks out of a seven-decade alliance, she could try to govern without a parliamentary majority or look for a replacement ally. In the immediate power struggle between Merkel and her interior minister Horst Seehofer, who heads the Bavaria-based CSU party that’s part of her coalition, it’s a question of who blinks first.

Merkel and Seehofer are due to meet on Monday at 5 p.m. in Berlin for a final bid to resolve their clash, which centers on Bavaria’s demand for Germany to start turning away asylum seekers already registered in another EU country. Here are some possible outcomes:

Her Antagonist Folds

Seehofer, 68, said Sunday he’s ready to quit as interior minister and CSU party head, and Merkel could call his bluff by refusing to back down. Seehofer’s resignation would give the chancellor an opening to save the alliance between her Christian Democratic Union and the smaller CSU by asking the Bavarians to name a new interior minister and stay in her cabinet. That would safeguard the CSU’s influence at the national level.

The risk for Merkel is that the CSU names another migration hard-liner to the cabinet. Facing a state election in October, the Bavarian faction has little incentive to back off the attacks on her open-borders policy that have poisoned Seehofer’s relationship with Merkel since the European refugee crisis in 2015 and 2016. Potential candidates to lead the party include two hard-liners: Bavarian premier Markus Soeder and CSU caucus head Alexander Dobrindt.

Compromise

The CDU and CSU could agree to go ahead with Seehofer’s plan to reject “secondary migrants” at the border, allowing the Bavarians to save face. That would require a climbdown by Merkel, who has rejected unilateral solutions and crafted a migration deal with fellow EU leaders during all-night talks on Friday. That scenario became less likely after the CDU’s national leadership almost unanimously backed Merkel’s stance on Sunday.

Breakup

Though the CSU says it doesn’t want a breakup, it could walk out of the joint parliamentary caucus with the CDU, which has led German governments for most of the time since World War II. That would leave Merkel’s CDU and her Social Democratic coalition partner two seats short of a majority in the 709-member lower house in Berlin. At that point, she could seek ad-hoc alliances with other parties, possibly including the CSU, to pass legislation. There’s also speculation Merkel might reach out to the Green party, which has more seats in the Bundestag than the Bavarians. Bonus fact: The CDU and CSU caucuses went their separate ways in 1976 after an election defeat, only to get back together when the Christian Democrats threatened to field candidates on the CSU’s home turf in Bavaria.

Confidence Vote

Merkel’s trump card is calling a confidence vote in parliament, forcing her coalition foes to come clean on whether they want to topple her. Given the six months of political deadlock before she put together a government after last September’s election, there’s little evident appetite for taking the plunge. If she gambled and lost, Germany’s president could dissolve parliament and possibly call an early election.

A World Without Merkel

Another election so soon after the last one would once have been an almost unthinkable scenario for Germany, Europe’s biggest economy and an anchor of political stability. Though she hasn’t said so publicly, Merkel might decide to step aside at that point. The bigger risk may be an increasingly fractious government -- Merkel has more than three years left in her fourth term -- and a slow-drip erosion of her authority.

©2018 Bloomberg L.P.