Germany is now back as the world’s biggest exporter, but for a country that should be outward looking and confident after surviving the credit crunch and global recession, it’s losing its way.
And it’s being buffeted by growing concerns about nuclear power as the Fukushima crisis in Japan continues unresolved.
On Sunday the country got an enormous wake up call, or rather the conservative government of German Chancellor Angela Merkel did as it lost heavily in two state elections with The Greens huge winners as their share of the vote doubled.
There was no sign from post-election comment that these were protest votes from voters about the size of Germany’s support for the financial bailouts of Greece, Ireland, and the rest of Europe.
The election results will increase pressures on the euro, even though the European Central bank is heading towards an early rate rise next week.
Instead it was the upsurge in doubt about nuclear power in the wake of the Fukushima disaster in Japan that has tripped up the conservatives in Germany, along with Mrs Merkel.
Computer forecasts predicted a narrow victory for a centre-left coalition of The Greens and the Social Democratic Party (SDP) in Baden-Württemberg, a state that has been ruled by the Christian Democratic Union (CDU) since 1953.
If that happens (and it looks very likely), a Green will lead a German state for the first time ever
In Rhineland-Palatinate the result looks like being in favour of the SDP with The Greens.
But the stunning part about the results is that the anti-nuclear Greens will take control of the traditional and very conservative industrial stronghold of Baden-Württemberg — where names like Daimler, Mercedes Benz, Porsche and Robert Bosch are household names and the source of much local pride.
So a German industrial state, heavily dependant upon cars, fossil fuels and transportation for its growth, jobs and wealth, will now be led by a Green Premier.
The SPD looks like leading (retaining, actually) power and leadership in Rhineland Palatinate.
Now the rest of Europe, from broken Greece and Ireland, to imploding Portugal and austerity Britain, will look to Germany and wonder how long before Mrs Merkel is dumped as leader and her conservative government is forced from office.
The resignation of Portuguese Prime Minister José Sócrates last week and then the failure of EU leaders to agree to a full-scale “grand bargain” to rescue the euro area at the summit last Thursday and Friday in Brussels are worrying European financial markets once again.
Bond yields jumped last week, and Standard & Poor’s move on Thursday to downgrade Portuguese debt did not help matters, not did Moody’s downgrading of 30 Spanish banks as well.
Now Europe will watch Germany and Mrs Merkel’s government to see what next they propose to try and resolve the debt crisis once and for all.
The election results won’t help because she now has a very weak minority position in the German Upper House which has to ratify legislation. The composition of the Upper House is set by who controls the states. A majority of states are now in the hands of the SDP and The Greens.
So infighting and more confusion will be the order of the day on an increasing number of issues.
But on nuclear power, it’s a big message to a lot of countries that Fukushima has scared a lot of people in a German state.
In Barden Wurttemberg, Mrs Merkel’s CDU saw its share of the vote fall to 39%; (still the biggest party), but that’s down sharply from 44.2% in the last state poll, while the Free Democrats saw their share halve to 5.3% from 10.7%.
The SDP’s vote also fell in this state and in the Rhineland Palatinate, but nowhere near the extent of the drop in the conservatives.
By losing control in the heartland or German conservative support, Ms Merkel is certain to face criticism from her own party for failing to present a clear conservative agenda in government.
There were complicating local issues, a troubled rail project in the heart of Stuttgart cost the CDU votes, but the nuclear issue emerged after Fukushima and Japan’s terrible earthquake and tsunami.
Mrs Merkel tried to appease the concern about Fukushima and nuclear power by calling a three month moratorium on the decision to extend the life of Germany’s nuclear plants by 12 years past 2022.
They didn’t help her party in the elections.
It was the second big loss for Mrs Merkel and her CDU in a month after being thumped in the northern German city-state of Hamburg vote in February.
The rout, the party’s worst post-war result, cost the CDU three seats in the upper house.
The CDU more than halved, falling to around 21% from 42.6% in the last election in 2008.
The opposition SPD won 49.8% of the vote, up from 34.1% in 2008.
There are a total of seven state polls in Germany this year.
The CDU and Free Democrats will join with the SPD in a Grand Coalition to run the state of Saxony-Anhalt on March 20.
The nuclear power issue didn’t matter much there, but did in Barden Wurttemberg which was the shock result.
