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CONFIDENTIAL CONFIDENTIAL//NOFORN SECRET SECRET//NOFORN UNCLASSIFIED UNCLASSIFIED//FOR OFFICIAL USE ONLY

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### Viewing cable 09BERLIN168, GERMAN ECONOMICS MINISTER THROWS IN TOWEL

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Reference ID | Date | Classification | Origin
--- | --- | --- | ---
09BERLIN168 | 2009-02-11 06:06 | CONFIDENTIAL | Embassy Berlin

`

    VZCZCXRO8118
    PP RUEHAG RUEHROV RUEHSR
    DE RUEHRL #0168/01 0420612
    ZNY CCCCC ZZH
    P 110612Z FEB 09
    FM AMEMBASSY BERLIN
    TO RUEHC/SECSTATE WASHDC PRIORITY 3262
    INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
    RUCNFRG/FRG COLLECTIVE PRIORITY
    RUEHRL/AMCONSUL DUSSELDORF PRIORITY 0187
    RUEHFT/AMCONSUL FRANKFURT PRIORITY 7859
    RUEHAG/AMCONSUL HAMBURG PRIORITY 0263
    RUEHMZ/AMCONSUL MUNICH PRIORITY 1988
    RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
    RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

` `

    C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 000168

    STATE FOR EUR/AGS(SCHROEDER), EEB/IFD/OMA, AND DRL/ILCSR
    LABOR FOR ILAB(BRUMFIELD)
    TREASURY FOR ICN(KOHLER) AND OASIA
    SIPDIS

    E.O. 12958: DECL: 02/09/2019
    TAGS: EFIN PREL PGOV GM
    SUBJECT: GERMAN ECONOMICS MINISTER THROWS IN TOWEL

    BERLIN 00000168  001.2 OF 002

    Classified By: CHARGE D'AFFAIRES JOHN KOENIG. REASONS: 1.4 (B) AND (D).

    ¶1. (C) SUMMARY.  The sudden resignation of Economics Minister
    Michael Glos (CSU) on February 7 caught Chancellor Angela
    Merkel (CDU) and her party off guard at a time when
    addressing Germany's economic downturn is paramount.  To
    minimize damage, the CSU quickly replaced Glos with its
    Secretary General Karl-Theodor zu Guttenberg, a decision
    which continues to draw criticism from other parties as well
    as from within the CDU due to thirty-seven-year-old,s
    minimal background in economic policy.  The shuffle reveals
    strains between the CDU and CSU, and presents an opportunity
    for Merkel's political foes to portray her as lacking control
    as the country tries to deal with its worst economic crisis
    since World War II.  END SUMMARY.

    INITIAL CONFUSION OVER RESIGNATION
    ----------------------------------

    ¶2. (C) Citing his age and intention to leave the cabinet
    after the September 2009 elections, the sixty-four-year-old
    Glos submitted his resignation as Minister for Economics and
    Technology on February 7.  Chairman of the Christian Social
    Union (CSU), the Bavarian sister party of Chancellor Merkel's
    Christian Democratic Union (CDU), and Bavarian Minister
    President Horst Seehofer named Karl-Theodor zu Guttenberg,
    37, as his successor.  Zu Guttenberg had been CSU Secretary
    General for only three months following a major party
    reshuffle.  Glos explained his departure would allow the CSU
    to campaign with a new minister in place, and help restore
    trust in the CSU following its poor showing in the Bavarian
    regional elections in September 2008.  The timing of his
    departure -- during the financial and economic crises --
    however, was awkward.  In addition, Glos submitted his
    resignation to Seehofer instead of Merkel, which the media
    has portrayed as a snub to the Chancellor.  (NOTE: Bavarian
    political reactions to be reported in ConGen Munich SEPTEL.)

    ENTER THE YOUNG TURK
    --------------------

    ¶3. (SBU) Under pressure to resolve an apparent power vacuum
    at a key ministry, Seehofer, who as CSU Party Chairman had
    the right to fill the slot, had to find a replacement for
    Glos quickly.  At a February 9 press conference announcing
    the choice of zu Guttenberg, Seehofer said that he chose the
    rising CSU star partly in order to have a minister
    representing the northern region of Bavaria.  He lauded zu
    Guttenberg's international contacts and his presumed ability
    to promote German exports.  Seehofer denied reports that
    before accepting the new post, zu Guttenberg had demanded the
    high-level position of CSU Bundestag Spokesman and CDU/CSU
    Caucus Chief in case the CDU/CSU lost the September
    elections.  For his part, zu Guttenberg welcomed the
    opportunity to take on the economics portfolio.  He described
    Germany's "social market economy" as the "guiding principle"
    of his economic thinking, and underscored the importance of
    free trade.  Zu Guttenberg also said he would work to lower
    taxes for small- and medium-sized companies.

    GLOS'S ROUGH RIDE
    -----------------

    ¶4. (C) Glos had always been an awkward fit for the Economics
    Ministry job, which he took on in November 2005.  Glos did
    bring intimate knowledge of federal politics to the job, but
    was not an economist and had never shown strong interest in
    the Economics Ministry's portfolio.  Chancellor Merkel
    instinctively turned to her Finance Minister Peer Steinbrueck
    (SPD) to coordinate the response to the financial crisis,
    sidelining Glos.  Glos's inability to overcome CDU and SPD
    objectives and get additional tax cuts into the stimulus plan
    may have cost the CSU the recent Bavarian elections, to the
    dismay of Seehofer and others in the CSU.

    ¶5. (C) A devastating profile of Glos a few months ago in "Der
    Spiegel," whose main points Ministry contacts did not
    contadict, portrayed him as weak, out of touch with the
    bureaucracy, bored with his job, and looking forward to a
    nice sinecure for himself after retirement.  In a farewell

    BERLIN 00000168  002.2 OF 002

    meeting with former Ambassador Timken in late November 2008,
    Glos appeared under great strain and confessed to tremendous
    frustration over his inability to influence Merkel on tax
    cuts as part of the stimulus package.

    NO LOVE LOST
    ------------

    ¶6. (C) SPD party stalwarts are giddy over perceived turmoil
    in the CSU and the perception that Merkel is not in control
    of developments.  Chancellor-candidate Frank-Walter
    Steinmeier (SPD) said the CDU/CSU lacked "orientation" in
    their management of the economic crisis and called for "party
    order and discipline."  A CDU staffer expressed irritation
    over Seehofer's handling of the shuffle, but she shed no
    tears over Glos's departure.  On zu Guttenberg, FDP economics
    expert Rainer Bruederle commented to us that "as far as
    economics is concerned, it seems to be enough these days for
    the CSU to find someone who can read and write."

    ¶7. (C) The business community has mixed views.  An IBM
    lobbyist told Econoff that she regarded Glos as the only
    "counterweight to Steinbrueck" on economic policymaking in
    the Germany government.  A contact from the German industry
    association (BDI) conceded that Glos was "not the strongest
    Minister in the Cabinet," adding that BDI had often wished
    for someone in the position who was "more outspoken."  On zu
    Guttenberg, he conceded the new Minister was well-versed in
    foreign policy and transatlantic issues, though young and
    inexperienced.

    COMMENT
    -------

    ¶8. (C) Glos's resignation caught the CDU/CSU party hierarchy
    off-guard at a time when everyone in Berlin and Munich was
    concentrating on the Munich Security Conference.  This
    high-profile resignation opens the door to criticism of
    Merkel,s handling of the economic and financial crises, as
    well as Seehofer's leadership style.  Zu Guttenberg's first
    challenge will be to help resolve the debate between the
    CDU/CSU and SPD over the stimulus package.  His appointment
    has been heavily criticized within the CDU, with some calling
    him a mere "place holder" until the September elections,
    raising questions about Merkel,s ability to steer her party
    effectively through a long &super8 election year. If not
    addressed, the SPD and the opposition FDP could emerge
    strengthened by the affair, which has come at a very
    inopportune time for Chancellor Merkel,s CDU and its sister
    party, the CSU. END COMMENT.

    ¶9. (U) This cable was coordinated with ConGens Frankfurt and
    Munich.
    Koenig

`