Merkel offers ‘gratitude’ to Ireland and says reforms are paying off

Chancellor Angela Merkel has expressed her "gratitude" for Ireland's reform progress but vowed "no change" in her third-term strategy for overcoming the euro zone crisis.

After her Christian Democratic Union (CDU) won Germany's federal election on Sunday with 41.5 per cent, Dr Merkel opened the door yesterday to a second grand coalition with her Social Democrat (SPD) political rivals.

Dr Merkel was quick to dismiss speculation of greater flexibility on euro reform yesterday, citing Ireland's lower borrowing costs as proof reform measures demanded by the EU and IMF were bearing fruit.

'European strategy'
"Ireland didn't make this progress for Germany but after its own realisation that some things hadn't gone well in Ireland in recent years," she told a press conference in Berlin.

“I am grateful that my colleague [Enda] Kenny and his Government took up these reforms but my European strategy will not change on this point.”

She viewed her party's election victory –the best since Helmut Kohl's post-unification poll in December 1990– as voter endorsement of her demand for euro zone-wide economic reforms to boost competitiveness, secure European prosperity and guarantee the continent's voice in a globalised world. "Some 10 or 12 years ago we were the sick man of Europe but through reforms have developed ourselves into a stability anchor," she said.

"Others can manage what we did. Reforms are not [merely] a process of saving but of achieving competitiveness and solid budgets, building investor trust in our economies."

Partner of choice
The SPD, after scoring 25.7 per cent, said yesterday it was in no rush to talk to Dr Merkel.

Despite the second-worst result in its 150-year history, the SPD knows it is Dr Merkel’s partner of choice.

Party strategists plan to drive up the price of their co-operation, as memories are still fresh of how their last 2005-2009 co-habitation triggered a collapse in support for their party.

"We will hold open-ended talks, it's up to Merkel to secure a majority and say what kind of politics she wants," said SPD leader Sigmar Gabriel. "The coming weeks have to be about substance."

Five seats short of a majority, Dr Merkel told journalists she had called Mr Gabriel yesterday, but agreed that “thoroughness comes before speed” in coalition talks.

Dr Merkel's outgoing Free Democrat (FDP) coalition partners accepted their electoral fate yesterday: 4.8 per cent and the exit door of the Bundestag.

Their departure marks a break in post-war German politics for a party that was once coalition kingmaker for almost every post-war West German leader from Konrad Adenauer to Helmut Kohl.

“This was the biggest and worst defeat for the FDP since its foundation,” said FDP leader Philip Rösler, announcing his resignation .

His likely successor Christian Linder, the FDP leader in North Rhine-Westphalia, denied he would try a more critical euro line to counter a massive defection of voters to the new Alternative for Germany (AfD).

Like the FDP, the AfD polled 4.8 per cent and will not sit in the new Bundestag. But leader Bernd Lucke promised yesterday to run candidates in state and European elections next year.

“We’re not anti-European, we’re extremely pro-European,” said Mr Lucke, whose party demands an end to bailouts and a euro zone exit clause. Asked how she would meet the new challenge posed by the AfD, Dr Merkel said: “European politics is part of our core brand and we will continue that in spirit.”

Over at the Green Party, the entire party directorate announced it would resign at the next party conference after losing three points to poll 8.4 per cent.

Poll analysis showed the CDU won across all age groups – from one-fifth of 18-24 yearolds to half of the over-60 vote.

It won 40 per cent of the male vote and 45 per cent of the female vote with Dr Merkel pulling in voters from almost all other parties – in particular 2 million votes from the FDP.

Analysts described Sunday's poll as a vote for stability and an acknowledgment of strong economic performance and a low jobless rate in Dr Merkel's second term.

'Feeling of security'
"For the first time in a long time the big majority of people in Germany think the country is doing well," said Dr Richard Hilmer of the Infratest dimap agency.

“There is a feeling of security behind this positive result for the CDU.”

He suggested the result meant the long-heralded end of Germany's Volksparteien– large parties of broad appeal – no longer applied to a CDU led by Dr Merkel, practising her unassuming brand of leadership.

Germany's media were in rare agreement that the result marked the zenith of Dr Merkel's powers and, according to the Süddeutsche daily, opened the "era of Merkelism, of a power-oriented policy devoid of the visible trappings of power".