A year ago, German Chancellor Angela Merkel opened the borders of her country to refugees and now, having reached her eleventh year in office, the spirit that had animated thousands of volunteers in the area has turned into an electoral defeat for her. Right from the land that gave birth to it, Mecklenburg Vorpommern, a resounding defeat came that sounds like an alarm bell for the federal elections next September 2017. The far-right of the Afd Alternative for Germany party wins 21% and crush Merkel's CDU in third place. The AfD's Eurosceptic positions earned this party successes at the regional level three years ago, but now it is on the question of migrants that they are making the difference, garnering 15% of the vote at the national level, according to a recent survey.
In two weeks in Berlin, the Grand Coalition between the centre-right (CDU) and centre-left (SPD) will be put to the test again, given that popular support has fallen close to 50%, and if Merkel wants to fight for a re-election, she will definitely have to change something in the its political strategy. Otherwise it will be difficult to stop the advance of a nationalist drift which is reaping widespread successes.
The slide on the EU's Turkish agreement which sees Germany as a staunch supporter of a pact with an increasingly authoritarian and ruthless government after the failed coup, together with the absence of those economic and demographic advantages at the basis of the government's reception policy of refugees known as "Welcome Culture" are not favoring the chancellor for now.
And if one looks at the small number of recruitments of migrants made by the 30 main corporates listed on the Frankfurt Stock Exchange, less than a hundred, the result appears merciless. Furthermore, the widespread attacks on a local basis have increased the sense of insecurity and skepticism about the effective benefits of integration. So the CDU triggered the reverse and Merkel assured that the emergency of 2015 will not repeat itself, supported by the Minister of the Interior De Mazieres, who even proposed sending the refugees back to Greece. In fact, since February the Bundestag has restricted the conditions for asylum seekers, suspending among other things family reunifications, and in July it approved a law drastically reducing benefits for those who refuse to participate in "integration courses".
The populists thus have the wind in their sails towards the next Bundestag, because the tacking of the Barge Merkel becomes decidedly more difficult with these rough seas. Added to this are the data for the third quarter on the German manufacturing sector which signal a slowdown in industry and widespread problems on banks and corporates which also saw suspensions of 2017 coupons on some subordinated securities linked to the decline in international trade flows. And if the auto sector should also support a recovery in manufacturing in the coming months, the rumors of a merger between Commerzbank and Deutsche Bank have created widespread discontent about the banks. Both are currently undergoing heavy internal reorganizations before resuming the threads of the speech and meanwhile both shares are down more than 35% since the beginning of the year.
And along the Austro-Hungarian axis, the winds of the nationalist right-wing blow incessantly as we await the result of the next elections in Austria on October 2nd, ordered by the Constitutional Court after the result of the second electoral round in May had been annulled amidst controversy. Polls assume the victory of the far-right party FPO over the independent candidate member of the center-left party Die Grunen.
Important elections will follow in the Czech Republic, Croatia, Lithuania and Romania by the end of the year. The Austrian government has always criticized the accommodating policy of the German neighbors on refugees and also the relationship with Turkey, so much so that at the end of August the Turkish government recalled its consul in Austria. And all this despite the bizarre proposal put forward by his economy minister and deputy prime minister for a "union of interests" between the EU and Turkey, known as the "Future Paper". A proposal that sees agreements outside the Treaty on safety, customs duties up to a Free Trade Agreement of a commercial nature with the EU.
In short, the post-Brexit debate has already begun on the basis of new alliances with an Eastern European bloc on one side, an Austro-German heartland on the other and in between the need to combine efforts on fiscal and security policy to avoid a drift economic situation far more irreversible than the current political one.
