Germany's Merkel beset by domestic turbulence

Just when she should be devoting all her energy to saving the euro, German Chancellor Angela Merkel is beset by political turbulence at home, in particular a crisis within her coalition allies. Junior partners in Merkel's two-year centre-right coalition, the Free Democratic Party (FDP), narrowly avoided disaster Friday when a bid by rebels to force the party to change its stance on Europe failed. A success for the eurosceptics could have thrown into doubt the survival of the fractious coalition already buffeted by FDP reluctance to support German aid for debt-wracked eurozone countries. "FDP is, and remains a clearly pro-European-oriented party," party head Philipp Roesler, who is also economy minister and vice chancellor, said after the internal ballot to oppose the eurozone's permanent bailout fund. But the victory does not erase all his problems. Far from it. Having slumped in polls to below five percent, the threshold required for winning a seat in parliament, the pro-business party this week abruptly lost its general secretary Christian Lindner. Merkel has brushed off questions so far about her coalition partners, who two years ago won nearly 15 percent of the national vote, stressing the government's work was not hampered. Joachim Koschnicke, director of the Forsa polling institute, said the FDP crisis "is not harming her" for the moment. A poll for Germany's public television channel ZDF revealed Friday that voter support for the FDP remained at just four percent. Merkel, on the other hand, reclaimed the title of Germans' favourite political personality after losing it last year. Neither does she appear to have anything to fear at the moment as far as the financial markets are concerned. Joerg Kraemer, chef economist at Commerzbank, said such domestic political problems "are not a major concern" from the markets' point of view. However analysts agreed that it could be a different story in terms of the electoral stakes for Merkel as she charts the coalition towards general elections set for 2013. "At the electoral tactics' level, it's another matter," Koschnicke said adding that "Mrs Merkel has a prime interest in the FDP recovering" by the next elections. And Oskar Niedermayer, political scientist at Berlin's Freie Universitaet, said: "It's going to be increasingly difficult for Mrs Merkel to govern because the problems of the Liberals (FDP) are going to worsen." But Carsten Koschmieder, a researcher at the same university, pointed out that the FDP knew if elections were held today it would no longer have any MPs "so it ends up always aligning itself" with Merkel. The chancellor also had to come to the defence this week of German President Christian Wulff, a member of Merkel's conservative Christian Democrats, who was forced to publicly "regret" keeping quiet over a private loan he received from the wife of a tycoon friend. "Who can the chancellor still have confidence in?" the German daily Tagesspiegel newspaper asked. Even the German central bank, the Bundesbank, whose independence Merkel has championed, is currently turning against her after it demanded that German lawmakers examine one of the euro-saving measures proposed at last week's European summit. It concerns increasing bilateral loans from European central banks to the International Monetary Fund to use in fighting the eurozone's debt crisis. For Germany, the bill would come to 45 billion euros. But the Bundestag lower house of parliament may be less than pleased to be presented with such a thorny issue in a country where public opinion already believes it has stumped up enough for its partners. The government prevented a meeting Wednesday between the head of the Bundesbank and lawmakers, according to the Financial Times Deutschland.