CDU battle between Soeder and Laschet ahead of the election

German Chancellor Angela Merkel gestures as she sits down for the weekly cabinet meeting on April 13, 2021 in the Chancellery in Berlin.

JOHN MACDOUGALL | AFP | Getty images

LONDON – Finding a successor to Angela Merkel, Germany’s Chancellor for the past 16 years, would never be easy. But the race just got 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 the state of North Rhine-Westphalia. He was elected leader of Merkel’s CDU party in January and claims he wants to modernize Germany.

That was until Markus Soeder, of the Bavarian sister party, the CSU, threw in his hat. Soeder is arguably the most popular man in German politics.

“It has always been clear that the race to succeed Angela Merkel is going to be a long one and not a straight line. It may not be a blockbuster, but rather a political series worth binge viewing,” said Carsten Brzeski, chief economist at ING. Germany, said in a note on Tuesday.

Party leader or mister popularity

When it comes to federal elections, the CDU and CSU are working together – and so will only draft one candidate.

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

Elisabeth Motschmann, a legislator for the CDU, told CNBC’s Squawk Box Europe on Tuesday that she supports Soeder.

“For this very tough job, I think Markus Soeder will do his best and can win,” she said. “I don’t think (Laschet) would be difficult enough and he can’t decide like Soeder.”

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

Armin Laschet (L), Party Chairman of the Christian Democratic Union (CDU) and Prime Minister of Bavaria and Chairman of the Christian Social Union (CSU) Markus Soeder.

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Germany’s conservative party has seen its popularity decline since January, when the coronavirus pandemic in the country began to worsen.

The goal is finally to harmonize lockdown rules in an effort to contain a third wave of cases. This comes after the population was frustrated with how rules differ from region to region since the first outbreak of the Covid-19.

Vaccination boost

But things could be about to look up for the conservatives.

“Once the CDU / CSU’s official election campaign is fully underway and vaccinations increase, things will look better for them,” Naz Masraff, director of Eurasia Group consultancy, said in a note on Tuesday.

However, she stressed that it would likely become more difficult for Laschet to consolidate the CDU / CSU’s electoral base and reclaim centrist voters from the Green party.

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.

Naz Masraff

Director, Eurasia Group

“He will also have to work hard to change his image as a weak and ambiguous leader who has not taken as strong a stance on the pandemic or the corruption in the ranks of the party as many Germans had expected,” Masraff added. to.

Whoever the CDU chooses to be its candidate could ultimately have an impact on what kind of coalition 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.

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

What it means for markets

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

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

Yields on the 10-year German bond have risen since Soeder’s announcement on Sunday, suggesting some concern about political uncertainty.

On a hot day, people are in a park with temperatures of up to 23 degrees during the coronavirus pandemic on March 31, 2021 in Berlin, Germany.

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