Election debacle

"Merkel has to start to think about how she can stay in power and make political decisions until the next federal elections in 2013," Gero Neugebauer, an analyst at the Berlin-based Otto-Suhr-Institute of Political Science, told Deutsche Welle.

Until now, the western German state of North Rhine-Westphalia was ruled by the same coalition of center-right parties that Angela Merkel leads in Berlin, the chancellor's Christian Democrats (CDU) and the business-friendly, liberal Free Democrats (FDP).

Sunday's poll is being seen as a damaging referendum on her government in its first electoral test since she won re-election last September. With both parties returning disappointing results, they no longer hold a majority of seats in the Bundesrat, the upper house of parliament.

Merkel's coalition is now in for tougher compromise negotiations with the Social Democratic and Green opposition at the federal level when it comes to controversial plans for tax and budget cuts and health-care reform.

Less room to maneuver

"Sixteen state governments and seven different types of coalitions - that hasn't been easy in the past, and it will become more difficult in the future," Neugebauer said, adding that the chancellor could also benefit from the election results.

"Merkel could use her party's defeat and that of her coalition partner's party to put more pressure on the liberals (FDP) to cooperate more closely than before." She could tell the liberals to "keep silent and reduce their demands."

First, however, Merkel may have to deal with critics from within her own party.

"The strategy of doing nothing has failed," Josef Schlarmann, head of the CDU's business wing and a member of the party executive told the Financial Times Deutschland newspaper.

The CDU premiers, Peter Mueller of Saarland and Christian Wulff of Lower Saxony warned that "business as usual" is not how the coalition government should proceed.

No more dithering

A Christian Democratic politician and former deputy defense minister has called for serious consequences: "Resignations are unavoidable to avoid a lingering decline," Willy Wimmer told the Leipziger Volkszeitung newspaper.

Merkel must rethink her style of governing, political analyst Neugebauer said.

"What she likes most is to sit in the middle and to try to mediate, to negotiate and to bring things together. What she has to learn is that she can't always prevent every crisis - crisis management, that is what has to learn."

The election debacle comes as eurozone members agreed late on Sunday to an unprecedented 750-billion-euro ($960 billion) safety net to ensure the stability of the euro currency. Merkel was scheduled to meet with all party leaders later on Monday to discuss the deal, which requires legislative approval.

Author: Dagmar Breitenbach
Editor: Chuck Penfold