CDU fight between Soeder and Laschet before the election

LONDON – It will never be easy to find a successor to Angela Merkel, the German chancellor of the last 16 years. But the race has just become even more complicated, with two rivals contesting the Conservative ticket.

The obvious Conservative candidate in the upcoming German elections would be Armin Laschet, the head of state of North Rhine-Westphalia. He was elected leader of Merkel’s CDU party in January and says he wants to modernize Germany.

That was until Markus Soeder, from the Bavarian sister party, CSU, threw his hat in the ring. Soeder is, without a doubt, the most popular man in German politics.

“It has always been clear that the race for Angela Merkel’s succession will be long and will not follow a straight line. It may not be a successful film, but rather a political series that deserves excessive viewing,” said Carsten Brzeski. , chief economist at ING. Germany said in a note on Tuesday.

When it comes to federal elections, the CDU and the CSU act together – and so they will register only one candidate.

CDU lawmakers will discuss who they should be on Tuesday and hope to make a decision this week. But it will be a difficult choice between their party leader and someone as popular as Soeder.

Elisabeth Motschmann, a CDU MP, told CNBC Squawk Box Europe on Tuesday that she supports Soeder.

“For this very hard job, I think Markus Soeder will do his best and be able to win,” she said. “I don’t think (Laschet) would be hard enough and you can’t decide as a Soeder.”

Jens Suedekum, a professor at the Institute of Competition Economics in Dusseldorf, told CNBC via email that “what characterizes Soeder is its unique degree of flexibility, you can call it opportunism, when it comes to political principles.”

The Conservative Party in Germany has seen its popularity decline since January, when the coronavirus pandemic began to worsen in the country.

Finally, it is set to harmonize blocking rules in an effort to contain a third wave of cases. This comes after the population expressed frustration with the way the rules differed from one region to another since the initial outbreak of Covid-19.

But things may be on the lookout for conservatives.

“Once the official CDU / CSU election campaign begins in force and vaccinations increase, things will look better for them,” Naz Masraff, director of consulting firm Eurasia Group, said in a statement on Tuesday. .

However, she stressed that Laschet will probably have a more difficult time consolidating the CDU / CSU’s electoral base and winning back the centrist voters from the Green Party.

“He will also have to work hard to change his image as a weak and equivocal leader who has not adopted as strong a line on the pandemic or corruption among the party as many Germans expected,” he said. added Masraff.

Whoever the CDU chooses to be its candidate for office could ultimately have an impact on the type of coalition that will emerge in September.

“Laschet’s candidacy would benefit the Greens and the Social Democrats. It would also increase the chances of a green chancellor after the September elections,” Masraff said.

CDU / CSU are currently leading the polls, with about 27% of the vote; The Greens, however, are gaining ground by about 21%. The party with the most votes will lead the coalition negotiations after the September elections.

Christian Schulz, chief economist at Citi, told CNBC Squawk Box Europe on Tuesday that as the September elections approach, investors will look at what the new government could mean for eurozone fiscal policy.

He said both Conservative candidates “say very little about what they want to do”, but added: “Soeder goes over has more Eurosceptic instincts, so it would probably be the worst outcome for markets at least in the short term” .

The yield on the 10-year German bond has risen since Soeder’s announcement on Sunday, indicating some concerns about political uncertainty.