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C O N F I D E N T I A L SECTION 01 OF 06 BERLIN 001176 
 
NOFORN 
SIPDIS 
 
STATE FOR EUR/CE, INR (KEETON) 
TREASURY FOR ICN (KOHLER) 
NSC FOR JEFF HOVENIER 
 
E.O. 12958: DECL: 09/22/2019 
TAGS: ECON EFIN EINV ENRG ETRD GM KJUS PGOV PREL
PTER, SENV 
SUBJECT: MERKEL VS. STEINMEIER? WHAT DO THE GERMAN 
ELECTIONS REALLY MEAN FOR U.S. INTERESTS? 
 
REF: A. BERLIN 32 
     ¶B. BERLIN 1002 
     ¶C. BERLIN 1136 
     ¶D. BERLIN 1138 
     ¶E. BERLIN 1162 
 
Classified By: MINISTER COUNSELOR FOR POLITICAL AFFAIRS GEORGE GLASS FO 
R REASONS 1.4 (B) and (D) 
 
SUMMARY 
------- 
 
¶1. (C/NF) This is not a "change" election.  The German public 
does not see the September 27 parliamentary elections as 
decisive, and on many foreign policy fronts, including 
Afghanistan, arms control, and Russia, we do not foresee 
significant or distinct policy differences between the two 
most feasible coalition options.  The most likely results of 
the elections are a CDU/CSU-FDP (black-yellow) coalition or a 
continued CDU/CSU-SPD Grand Coalition.  However, in some 
areas there may be changes, including on Iran, tax policy, 
and nuclear energy.  More importantly, there may be a new 
foreign minister who will likely need to get up to speed 
quickly on such crucial issues as Iran, Afghanistan, and 
NATO's strategic posture.  Leaders from the CDU/CSU and FDP 
promise a government more friendly toward the United States. 
The near certainty that Angela Merkel will remain chancellor 
argues for this, but the unpredictability of Foreign 
Minister-aspirant and FDP Chairman Guido Westerwelle may call 
for focused diplomatic engagement with the new FDP political 
actors (see REFTEL E for Post's comprehensive expose of 
Westerwelle).  END SUMMARY. 
 
BLACK-YELLOW (CDU/CSU-FDP)? 
--------------------------- 
 
¶2.  (C/NF) It is virtually certain that Angela Merkel will 
retain her position as Chancellor after this Sunday's 
elections.  But it is impossible to predict the final 
composition of the next coalition given that about a third of 
the electorate is still undecided and the polls show only a 
narrow parliamentary majority for black-yellow.  Chancellor 
Merkel has repeatedly voiced her preference for a 
black-yellow coalition and has promised to form one even with 
a one-vote parliamentary majority.  The FDP's Westerwelle has 
echoed this sentiment as its first choice as well. 
 
¶3.  (C/NF) The SPD has almost no prospect of leading a 
government and is only likely to remain in power as a 
weakened junior partner in another Grand Coalition, should 
the CDU/CSU-FDP come up short of a parliamentary majority. 
The SPD has failed to gain much momentum, although it has 
more recently risen a couple of points in the polls.  It 
continues to suffer from an inability to profile itself 
against the CDU (or even a lack of desire to break with the 
CDU in any significant way), with which it has been in 
government for the past four years.  Also unhelpful have been 
a string of losses in local, state, and the June European 
Parliament elections. 
 
¶4.  (C/NF) U.S. interests will not only be affected by the 
composition of the next coalition but also which parties are 
in the opposition.  A CDU/CSU-FDP coalition would bring to 
power a new set of top players at the Ministry of Foreign 
Affairs, Justice, Environment, and at either Economics or 
Finance (as well as probably at least one other FDP-led 
ministry with some turnover in CDU/CSU ministries as well). 
The extent to which policy will change is less obvious, 
however, because FDP Chairman and Foreign Minister aspirant 
Guido Westerwelle has promised considerable continuity with 
Steinmeier's approach to foreign policy.  In addition, the 
FDP's economic reform goals will face considerable resistance 
from the Bavarian CSU as well as parts of the CDU.  The lack 
of coordination and consistency, including between the 
Chancellery and MFA, that often occurs in German policy 
making will continue to be a challenge for the United States. 
 
 
¶5.  (C/NF) A black-yellow coalition will face a more united 
opposition led by an SPD that is likely to move left if it 
leaves government and seeks to profile itself against the 
Greens and the Left Party, based on the profiles of SPD 
leaders waiting in the wings for Steinmeier and SPD Chairman 
 
BERLIN 00001176  002 OF 006 
 
 
Franz Muentefering to leave.  German governments can operate 
with narrow majorities due to strict party discipline (which 
gets stricter the narrower the majority), but Merkel has not 
shown much courage in using her considerable personal 
popularity to push through policies that lack public support. 
 On Afghanistan, in particular, a black-yellow coalition may 
seek to simply roll over the ISAF mandate unchanged when it 
comes up for renewal in December, rather than risk a row in 
the Bundestag over an increase in the troop ceiling, which 
the Defense Ministry has concluded is necessary to deal with 
the growing insurgency in the German north. 
 
OR GRAND COALITION (CDU/CSU-SPD)? 
--------------------------------- 
 
¶6.  (C/NF) However, another Grand Coalition cannot be 
discounted, even though nobody professes to want it.  It is a 
historical fact that the center-right parties have not won a 
parliamentary majority since 1994.  Another Grand Coalition 
would almost certainly be even more difficult for the CDU/CSU 
and the SPD than the current one since both parties would be 
eyeing each other with distrust and the expectation that the 
government may not last an entire term.  Further, Merkel's 
position within her party would be weakened by what would be 
viewed as her failure to achieve a coalition with the FDP 
while the Free Democrats would continue to take advantage of 
conservative dissatisfaction with the Grand Coalition's 
disgruntled CDU voters. 
 
¶7.  (C/NF) The SPD leadership might be secretly relieved not 
to lose their government posts, but its continued partnership 
with the CDU/CSU would likely cause further bleeding of the 
party's more leftist supporters to the Greens and Left Party, 
further weakening its base.  In addition, the SPD left-right 
split might be exacerbated, with leftists tempted to 
prematurely rupture the Grand Coalition to build a majority 
red-red-green government where the SPD would hold the 
chancellorship.  CDU officials certainly believe -- and have 
told the Embassy -- that they expect the SPD would seek to 
replace a Grand Coalition with a red-red-green one some time 
during the term.  Even though Steinmeier has insisted that 
any coalition agreement would be for the entire legislative 
period, the distrust between the parties would remain.  Plus, 
if the SPD performs badly in the election, Steinmeier 
literally may no longer be in a position to keep his word. 
 
GERMANY'S NEXT FOREIGN MINISTER - WESTERWELLE OR STEINMEIER? 
--------------------------------------------- --------------- 
 
¶8.  (C/NF) The election's most obvious impact on bilateral 
relations will be in terms of a potential change in foreign 
ministers.  Our extensive experience with Steinmeier allows 
us to comfortably predict how a Steinmeier-led MFA would 
pursue German interests globally, and vis-a-vis the United 
States.  On the other hand, Westerwelle continues to remain 
an enigma who has been unable to establish himself as a 
significant voice on foreign affairs.  The FDP's foreign 
policy spokesman Werner Hoyer -- a well known foreign policy 
analyst in Germany and internationally, including in the 
United States -- has taken the lead here.  When we asked 
Hoyer this week what would change with Westerwelle, he 
struggled to say anything.  Westerwelle is a domestic 
political animal with little appetite for foreign policy and 
international affairs.  He will, therefore, continue to be 
dependent for foreign policy advice on his mentor, former 
Foreign Minister Hans-Dietrich Genscher as well as on Hoyer 
and whichever Ministry diplomats gain his trust (REFTEL E). 
 
¶9.  (C/NF) Westerwelle's attempt to position himself among 
Germany's foreign policy elite with a speech in May at the 
German Foreign Relations Council (DGAP) did not produce the 
intended results and instead revealed his limitations on such 
major issues as Middle East peace.  If Westerwelle becomes 
Germany's next foreign minister, his learning curve will be 
steep.  Germany's small foreign and security policy elite -- 
already skeptical of Westerwelle -- will resent his rise into 
the second most powerful political office of the land.  And 
we will be faced with the question of how best to approach 
someone who has clearly had a mixed relationship with the 
United States.  Despite Westerwelle's praise and respect for 
the current Obama Administration, we should not forget that, 
as part of the opposition, he has criticized the United 
States for the last eight years, while at the same time 
 
BERLIN 00001176  003 OF 006 
 
 
offering very few ideas of his own on how to solve 
international problems (see REFTEL E). 
 
¶10.  (C/NF) If Steinmeier is able to lead the SPD to a strong 
enough showing to force a Grand Coalition, he certainly could 
maintain his position as Foreign Minister.  He would also 
have the increased political clout provided by a mandate in 
the Bundestag and his success in blocking a CDU/CSU-FDP 
coalition.  Obviously, there would be a high degree of 
foreign policy continuity.  Unlike Westerwelle, Steinmeier is 
already on board with both sides of the U.S. approach to 
Iran, and he has told the Ambassador that he supports 
additional sanctions should Tehran fail to respond to U.S. 
overtures.  However, competition between Steinmeier and 
Merkel over control of foreign policy will not end with the 
election, and Steinmeier would likely try to focus on a few 
key issues where he could differentiate himself and his party 
from Merkel and the CDU, with arms control, Afghanistan, and 
Russian relations being likely choices.  Steinmeier wants to 
work closely with Washington on these issues and is less 
likely to surprise Washington than the Chancellery would be. 
 
¶11.  (C/NF) The goodwill that marked the first year of the 
Grand Coalition is unlikely to be repeated in a second term, 
particularly as Steinmeier contends with those in his own 
party who would prefer a leftist coalition.  If there is not 
enough support for a CDU/CSU-FDP coalition, then there would 
likely be a numerical red-red-green majority in the 
Bundestag.  The strained communication that currently marks 
Chancellery-MFA relations is likely to continue.  Both 
Steinmeier and Merkel are responsible realists, however, who 
understand the need to work together on the big issues, as 
was evident during the Russian invasion of Georgia, their 
approach to the Middle East, and their reaction to the 
international financial melt down.  If new crises arise, the 
two are likely to continue to put their own interests aside 
long enough to speak with a single voice. 
 
FOREIGN POLICY ISSUES IN BLACK-YELLOW AND GRAND COALITIONS 
--------------------------------------------- ------------- 
 
¶12.  (C/NF) AFGHANISTAN (Some Change): Westerwelle is one of 
the few German politicians who justifies the Afghanistan 
deployment on the basis of "German national security 
interests" and the FDP as a whole has been a consistent 
supporter of the ISAF mandate.  But with only a narrow 
majority in the Bundestag and facing an SPD opposition ready 
to accuse them of militarizing the German mission, a 
CDU-CSU/FDP coalition ironically might be less willing (and 
able) to push through necessary troop increases than a Grand 
Coalition.  On the other hand, there is likely to be no 
difference between the two on the support for police 
training, economic assistance and other civilian aid. 
 
¶13.  (SBU) ARMS CONTROL/NONPROLIFERATION (Little change): 
Westerwelle proudly says that the motto of the MFA under his 
leadership will be "peace through disarmament," thereby 
seeking to be even more pro-arms control than Steinmeier. 
Although Westerwelle has called for the removal of all U.S. 
tactical nuclear weapons from German soil by 2013, it is 
questionable whether he will manage to include this in a 
coalition agreement with the CDU/CSU given their likely 
resistance. 
 
¶14. (C/NF) RUSSIA (No change): Like the SPD, the FDP sees 
Russia as a "strategic partner" in addressing issues such as 
Iran, energy, and Afghanistan and believes engagement and 
assistance with modernization is the best way to address 
Russia's democratic deficits.  Like Merkel and Steinmeier, 
Westerwelle has pursued close ties to Russian leaders, 
including Foreign Minister Lavrov and Defense Minister 
Ivanov, both of whom gave him high-profile meetings in Moscow 
this past spring. 
 
¶15. (C/NF) IRAN (Some change): Steinmeier has been a steady 
supporter of US policy toward Iran -- both in terms of 
dialogue and the need for increased sanctions if necessary, 
while Westerwelle has spoken almost exclusively about the 
need for dialogue.  In addition, Westerwelle's FDP's 
pro-business orientation makes it particularly skeptical of 
sanctions and is also resistant to unilateral efforts to cut 
back trade.  Merkel will likely have to take a stronger role 
in this issue to keep Germany's position from falling back to 
 
BERLIN 00001176  004 OF 006 
 
 
the least common denominator. 
 
¶16.  (C/NF) TURKEY (Some change): A black-yellow coalition 
may result in a subtle, less favorable, shift in Germany's 
policy towards Turkey with the exit of the SPD -- Turkey's 
staunchest supporter -- from the government.  Although FDP 
foreign policy experts recognize that EU membership is an 
important factor in encouraging additional domestic reforms 
in Turkey, it has kept an open mind on the issue.  However, 
the FDP is more vocal than the SPD in its criticism of 
Turkey. 
 
¶17.  (C/NF) MIDDLE EAST (Little change): Westerwelle's views 
on Israel and Middle East peace may stem more from his past 
experience in addressing criticism against Israel and his 
interpretation of Germany's historical role toward Israel 
than from his own Middle East policy or strategic 
calculations.  Some attribute Westerwelle's current 
pro-Israel stance as the result of his having been burned 
politically both domestically and in Israel in 2002.  At that 
time, Westerwelle defended an FDP politician, Juergen 
Moellemann, who had published a brochure strongly critical of 
then Israeli Prime Minister Ariel Sharon's actions towards 
the Palestinians.  Some claimed the brochure was 
anti-Semitic.  While in Israel shortly thereafter, 
Westerwelle was questioned by then-PM Sharon about what 
Sharon referred to as a growing anti-Semitism in Germany and 
Europe.  In an August 2009 interview with "Der Spiegel," 
Westerwelle explained his decision to vote against Germany's 
participation in UNIFIL with his view that Germany cannot 
take a neutral position in the Middle East because of its 
past.  He noted that he had visited the Golan Heights in 
Israel as a young man and was impressed with the 
vulnerability of the country.  Even more so than Steinmeier, 
however, Westerwelle may seek a greater role for Germany and 
the EU in the Middle East.  In the "Spiegel" interview, he 
called for the EU to launch an initiative to establish a 
conference for security and cooperation in the Middle East. 
We could expect both Steinmeier and Westerwelle to hold to 
U.S. messages on the Middle East, with both competing with 
the Chancellery for the lead on this issue. 
 
¶18. (C/NF) GUANTANAMO (No change): Steinmeier would likely 
take a more accommodating approach toward Germany accepting 
some of the Guantanamo detainees than would Westerwelle, but 
the key ministry in deciding this issue will continue to be 
Interior.  In either a black-yellow or another Grand 
Coalition, Wolfgang Schaeuble (CDU) could continue on as 
Interior Minister, although there is some talk of his being 
named as EU commissioner.  Schaeuble has been very skeptical 
of accepting detainees from a security standpoint.  More 
recently, he told the Ambassador that Germany would only take 
detainees who will require no surveillance. 
 
¶19. (SBU) ECONOMIC CRISIS/INTERNATIONAL FINANCIAL REGULATION 
(Little Change): All potential government parties share a 
similar strategy; increase regulation and supervision of the 
financial sector with differences at the margin.  The SPD 
advocates taxing share trades over 1000 euros and monitoring 
private equity funds more closely, while the CDU/CSU and FDP 
propose concentrating financial supervision under the 
Bundesbank.  A black-yellow government would result in a new 
Finance Minister; if Karl Theodor zu Guttenberg remains at 
the Economics Ministry, then the FDP might be given the 
Finance Minister, with Hans-Otto Solms, an experienced and 
cautious financial policy expert, the most likely replacement. 
 
¶20. (C) CLIMATE CHANGE (No Change): There is little 
difference between the parties on issues in play at the 
upcoming UNFCCC's COP-15 in Copenhagen, and Merkel maintains 
strong control over German policy in this area.  There will 
be a new Environment Minister should a black-yellow 
government be formed, however, and it is unclear which party 
would then control the Ministry.  In previous CDU/CSU-FDP 
coalitions, the CDU ran it but if the FDP does as well as 
current polls suggest, it might make a play for the Ministry. 
 Current SPD Environment Minister Sigmar Gabriel has had a 
high profile in his party's Bundestag campaign and could 
remain in place in a Grand Coalition. 
 
¶21. (C) ENERGY (Some Change): The SPD insisted on 
continuation of the previous government's plan to phase out 
nuclear power plants during the last coalition negotiations 
 
BERLIN 00001176  005 OF 006 
 
 
and would stick to this position again.  In contrast, the FDP 
has been the party most open to nuclear energy, insisting 
that the phase-out itself should be at least slowed down to 
protect Germany's supply of energy.  The CSU/CSU also wants 
to extend the possible life of existing nuclear power plants, 
provided they are safe, during a "transitional" period to 
provide time for Germany to switch to greater reliance on 
renewable sources.  Recent controversies over the safety of 
some nuclear power plants have made Merkel and even the FDP 
less willing to press for reliance on nuclear energy. 
 
¶22. (C/NF) DATA PROTECTION (Little Change): Data privacy has 
been a second-tier campaign issue but does arise in debates 
on domestic security policy.  Another Grand Coalition could 
leave Justice Minister Brigitte Zypries (SPD) in place; she 
reluctantly agreed to the landmark data sharing initiative on 
serious crime and terrorism suspects (the Pruem-like 
agreement) due to privacy concerns.  A CDU/CSU-FDP coalition 
might return Sabine Leutheusser-Scharrenberger to the Justice 
Ministry, which she headed from 1992-96 in the last 
black-yellow coalition (she resigned her office after the her 
party agreed to wiretapping legislation proposed by the 
CDU/CSU).  She or any FDP Justice Minister would likely 
continue to see their role as the protector of civil 
liberties and therefore they would carefully scrutinize all 
bilateral and U.S.-EU data sharing initiatives. 
 
¶23. (C/NF) COUNTER-TERRORISM/LAW ENFORCEMENT (Little change): 
The CDU will likely remain in control of the Interior 
Ministry regardless of the coalition, and Schaeuble, although 
67, is likely but not certain to stay on for another term. 
He has brought U.S.-German CT cooperation to an unprecedented 
level, and no other German official has offered as much 
cooperation (except on the issue of resettling Guantanamo 
detainees where the focus on internal German security 
supersedes his desire to work with Washington).  Any possible 
replacement -- Chancellery Chief Thomas de Maiziere has been 
mentioned in the press -- is unlikely to have his authority 
or expertise but will likely continue his policies. 
 
¶24. (U) TRADE (No change): All five parties are committed to 
open market but the SPD, Greens, and The Left Party want 
environmental and social standards included while the CDU/CSU 
stresses the need for protection of intellectual property and 
the FDP worries about domestic subsidies and market access. 
None of the parties wants to restructure the German economy 
to reduce export-dependency and address global imbalances. 
Other U.S. interests, such as concluding the Doha round of 
trade negotiations, would not likely be affected by a change 
in coalition. 
 
¶25. (U) TAX POLICY (Some change): Tax policy is often cited 
as the area where a black-yellow government would produce 
change.  The FDP proposes a radical overhaul of the tax 
system to simplify the tax code and stagger the corporate 
rate.  CSU leader and Bavaria Minister-President Horst 
Seehofer has been critical of the FDP plan, which he says 
will run up the deficit and impose an excessive burden on the 
public budget.  Neither the CDU/CSU's nor FDP's tax proposals 
are realistic, however, in light of budget deficits that are 
expected to be more than 2 percent this year and 4 percent in 
2010, just as mid-term targets for Germany's balanced budget 
amendment kick in.  Some sort of tax increase therefore is a 
near certainty, perhaps in the form of an increase in the 
value-added tax. 
 
COMMENT 
------- 
 
¶26. (C/NF) Chancellor Merkel will continue to exert strong 
influence on German foreign policy in an attempt to create a 
political legacy in international affairs.  This will be true 
whether the MFA is led by Steinmeier or Westerwelle.  We can 
also predict that tensions between the Chancellery and MFA 
will remain based on different coalition partners controlling 
them.  If Steinmeier returns to office, he will be a reliable 
partner.  Westerwelle is a wild card; his exuberant 
personality does not lend itself to taking a back seat to 
Chancellor Merkel on any issue.  If he becomes foreign 
minister, there is the possibility of higher profile discord 
between the Chancellery and MFA.  This may demand focused 
diplomatic engagement by the USG with the new FDP political 
actors.  END COMMENT. 
 
BERLIN 00001176  006 OF 006 
 
 
Murphy