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MNI (London)
Repeats Story Initially Transmitted at 18:36 GMT Sep 25/14:36 EST Sep 25
--FDP Coalition Could Hit Macron's Closer EU Cooperation 
--Thinktank, MP Tell MNI Macron Will Need Rethink
--Greens, FDP Still Far From EZ Agreement, Brexit Slips Down the Agenda
By Tara Oakes
     BERLIN (MNI) - Germany's election result is set to derail French President
Emmanuel Macron's pitch for closer EU integration, scheduled originally with
much fanfare for Tuesday. Angela Merkel's CDU/CSU coalition comfortably topped
polls on Sunday -- but the Chancellor cannot be the ally Macron hoped for in the
heart of Europe while she struggles to build a coalition at home. 
     One CDU MP, Kai Whittaker, who bucked the trend of disappointing party
results to take Baden-Baden, told MNI in an interview that the result would draw
politicians' eyes inwards to domestic policy. 
     "The question is, do we want a common European economic and finance policy
-- with EU taxes, EU budget, EU bonds and stuff like that -- or not?" he said.
"I presume Macron is going to push forward on that idea and after the election
yesterday, there is no appetite in Germany towards spending more money on
non-German issues," Whittaker added. 
     The SPD, junior government partners for the last 4 years, have thus far
ruled themselves out of joining another grand coalition after a dismal showing
nationally, indicating they want to rebuild the party in opposition. Unless they
change their minds, Merkel only has one option for a majority coalition
government: a so-called 'Jamaica' deal with the liberal FDP and the Green party.
     If Macron's big speech covers the ground expected -- closer eurozone
economic and monetary integration, including a possible Eurozone budget -- it
may fall on deaf ears across the border. 
     The FDP, whose return to the Bundestag is a triumph for main candidate
Christian Lindner, will likely demand the ousting of Wolfgang Schaeuble in order
to take the prized finance ministry into their own hands. 
     If they do, closer European economic integration will get a kicking not
just from a chastened CDU, but from a party that campaigned on the back of
public hostility to debt mutualisation and propping up southern Mediterranean
economies. If Macron is hoping to rally the EU's economic powerhouse to a
strengthened EMU, he may have to return to the drawing board. 
     "With Christian Lindner you really have someone who said no finance
ministry, no budget for the euro. I think he will be even tougher in the euro
negotiations," think-tank DGAP's Claudia Schmucker told MNI in Berlin Monday.
     "Everything Macron wants, the FDP does not," she added. What of the Greens?
They benefitted from a surprise bump in polls to finish on 8.9% and would be the
final party required for the 'Jamaica' trio.
     For Whittaker, economic compromise could be possible between the parties --
leading them not too far from where Schaeuble's position is at present. Creating
a European Monetary Fund, as mooted by Commission President Jean-Claude Juncker,
could be a place to start.
     "That could be some kind of compromise, saying that we integrate more, we
have some more shared responsibilities, but also be more rigorous and tougher on
economic reform and progress in the member states," Whittaker told MNI. 
     But for him the key was some true soul-searching on Germany's refugee
policy, which he believed had led to the disappointing result for Merkel's
party. Coalition talks will be drawn-out and drag Merkel away from the global
limelight she has enjoyed over her previous terms, at least for a number of
weeks. 
     A renewed domestic focus will also drop Brexit to the back of the agenda in
German political discourse, where it was already too insubstantial for German
voters to merit even a mention in the TV debate between Merkel and SPD
challenger Martin Schulz. 
     Schulz, who has said he is staying on a SPD head, is notably harder on
Britain than fellow German political leaders. 
     After the results came in Sunday, he railed against the idea of a two-year
UK transition. But despite the softer tone likely from the FDP, the brutal truth
is that no-one in the biggest EU economy much cares about Brexit when, with the
rise of the far-right AfD, they have their own problems to sort out.
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
--MNI Brussels Bureau; +44 203-865-3851; email: tara.oakes@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com
MNI London Bureau | +44 203-865-3812 | les.commons@marketnews.com

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