Germany's biggest political power finally chooses who will lead it into crunch election

• Pressure has been building on Angela Merkel's conservative alliance to select a candidate to represent the bloc in Germany's general election later this year.
• Chancellor Angela Merkel announced in 2018 she would not run for a fifth term in office.
• On Monday night, a majority of senior CDU party officials selected Armin Laschet to be the candidate for chancellor.

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• CDU-V

In the early hours of Tuesday morning, German Chancellor Angela Merkel's conservative alliance finally selected a candidate to represent the center-right bloc in the country's national election later this year, after months of uncertainty and delay.

Up until then, neither the center-right Christian Democratic Union (CDU), nor its Bavarian sister party, the Christian Social Union (CSU), had been able to agree on who should lead the conservatives into the election on Sep. 26. Merkel announced in 2018 that she would not run for a fifth term in office.

At a meeting of the CDU's board Monday night, however, a majority of senior party members voted to nominate Armin Laschet, the leader of the CDU and state-premier of North Rhine-Westphalia, as the candidate for chancellor for this year's election.

Some 77.5% (31 members) of the party's federal executive committee voted in favor of the party leader, according to reports from German news outlet Deutsche Welle and Reuters, citing sources, while his rival Markus Soeder, received just 9 votes.

Soeder, who heads the CDU's Bavarian sister party, the CSU, had said on Monday that he would respect the decision of the CDU committee. He had reportedly declined an invitation from CDU leader Armin Laschet to attend the virtual meeting on Monday evening, saying he did not want to "interfere," Reuters reported.

The CDU tweeted during the night that there had been "a long and intense debate among the members from the 17 regional associations, district associations and associations about people, election prospects and the mood at the party base" before the vote in favor of Laschet.

Party mood

The inability of the alliance to present a candidate thus far had been the source of frustration for CDU-CSU officials and had not been lost on opposition politicians who could become influential in forming a new government in September.

The CDU-CSU is ahead in various opinion polls but the Greens are not so far behind. Four polls conducted in mid-April in Germany put support for the alliance at around 28-31% while in the same polls support for the Greens stood at between 20-22%.

Strategists expect that the most likeliest outcome of the election is that the CDU-CSU will form a coalition with the Greens. Although there is a slim chance that, should the CDU-CSU perform very badly, then the Greens could form a coalition with other parties such as the Social Democrats or the Free Democratic Party.

On Monday, the Green Party confirmed that Annalena Baerbock will be its candidate for the next German chancellor.

Jürgen Trittin, member of the Bundestag and former leader of Germany's Green Party, told CNBC on Monday that the party now had an outside chance that it could even lead Germany's government come September.2

"I've never seen, in my political life, such a crisis within the conservative Christian Democratic party," Trittin said, arguing that the CDU-CSU's indecision over which candidate will lead the bloc into the election had been damaging to the alliance.

"Even if they decide now, the other side of the party is so hurt and damaged they will have a real problem in the election campaign and as a potential coalition partner for whomever."

Game of chicken

Ahead of Laschet's endorsement by the CDU overnight, Holger Schmieding, chief economist at Berenberg Bank, noted on Monday that the "game of chicken" between Laschet and Soeder appeared to be coming to an end and noted what a Laschet chancellorship could mean for Germany.

The choice between Soeder and Laschet "is about style, charisma and perceived electoral appeal rather than major differences on substance," he said in a note.

"Laschet is widely seen as the continuity candidate. He has usually supported Merkel on other policies including her handling of the 2015 refugee crisis. His somewhat unassuming style and penchant to moderate and bridge differences resembles Merkel's approach," Schmieding noted.

He added that Laschet was also likely to "go along with" some additional fiscal burden sharing in the EU and the euro zone.

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