Merkel tries to calm party spat (FT)

For insights into the formidable challenge facing Angela Merkel as German chancellor and leader of the Christian Democratic Union, one had only to visit the lobby of Berlin’s Congress Centre on Tuesday.

There, the delegates – employees, entrepreneurs, trade unionists – gathered for the CDU’s programme convention were re-enacting a month-old debate that is threatening her authority within her own party.

At issue is the liberal revolution Ms Merkel, chairman since 2000, triggered three years ago when she weaned her party away from its social brand of conservatism and steered it down a pro-market path.

Given the chancellor’s disappointing election result last year – the vote was a draw and she had to form a “grand coalition” with her rival Social Democrats – and the party’s recent fall in opinion polls, many are asking whether the revolution went too far.

After the Leipzig congress of 2003 that endorsed Ms Merkel’s reformist turn with audacious tax and healthcare reform proposals, “we saw a technocratic drift,” says Ingo Gondro, a delegate from eastern Germany. “We are facing a dispute about our principles and our identity.”
Since Ms Merkel entered the chancellery last November, her most vocal in-house critics have been in the CDU’s pro-business camp, where many think she is not living up to the spirit of Leipzig.

Three weeks ago, however, Jürgen Rüttgers, state premier of North Rhine-Westphalia and deputy CDU leader, opened a second front when he urged his party to shed its “capitalist” image if it was to avoid another debacle at the 2009 election. His supporters want a revision of the Leipzig resolutions.

Since then, both sides have swapped heavy fire, dragging Ms Merkel out of her reserve on Monday, when she rebuffed the leftwingers, painting them as defenders of the status quo in the face of unavoidable change.

Her keynote speech on Tuesday struck a more holistic note. But she made clear conservatism, defined as the preservation of special interests and the refusal to alter the dense network of rules that organises but also cripples the German economy, was a dead-end.

“Justice and solidarity” in the era of cut-throat global competition, she said, could only be achieved through “more freedom and individual responsibilities.”

As the lively discussions at the convention showed, tempers are running high. A panel on economic policy descended into chaos when the audience realised no questions would be allowed. “Leipzig is valid, period,” fumes Günter Schork, a former banker and member of the Hessian parliament.

The CDU platform was last revised in 1994 and the current discussion will stretch over a year. But the dispute is not academic, for the new programme will feed into the next electoral platform and decide which line – pro-business or social – the CDU adopts ahead of the ballot in three years’ time.

“This is hugely important,” says Peter Heesen, chairman of the DBB civil service trade union and long-time CDU member. “This is about the balance between the interests of business and those of the workers (…) We should not forget who gives us our majorities.”

While Mr Rüttgers now leads the leftwing rebellion, such influential figures as Roland Koch, premier of Hesse, stand behind the supply-side reforms. Both camps have large grassroots organisations.

The problem for Ms Merkel lies in her role as head of the grand coalition. Unable to translate her radical reform ideas into policies palatable to her coalition partner, she has acted more as a moderator than a leader, thus testing the patience of the pro-business camp that had backed her before.

Gerhard Schröder, Ms Merkel’s predecessor, angered his own grassroots with tough economic reforms and had to relinquish the SPD’s chairmanship while in the chancellery. Should Ms Merkel fail to complete her revolution, she could find the conflicting demands of her two jobs cannot be reconciled.
Copyright The Financial Times Limited 2006