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