The Daily Update - German Election / Trump & Iran

One must wonder how the German chancellor Angela Merkel is feeling this morning, after her overwhelming, yet ultimately disappointing election result yesterday. Although Merkel’s conservative party took the largest share of the vote at 33%, this was down nearly 9% from the 2013 election, and the lowest percentage of the vote since 1949. Merkel’s coalition partners, the Social Democrats (SPD), also slumped to a postwar low of just over 20%, and have announced it will go into opposition.

However, the big news was the surge in support for the far right anti-immigration Alternative for Germany (AfD) party, which took 13% of the vote. It will be the first time a far-right party has entered the German parliament since the immediate aftermath of World War II. It looks as though Merkel lost votes to the AfD as many Germans voted against her decision to open Germany’s borders in 2015-16 to more than 1m asylum seekers. A leading candidate of the AfD, Alexander Gauland, gave a taste of what was to come after vowing to ‘hound’ Merkel as well as wanting to ‘get our country and our people back’.

If the SPD sticks to its guns and does go into opposition, Merkel’s coalition option would be to aim for a ‘Jamaica’ alliance, so called because it refers to the association of colours of the parties in such a coalition, the colours of the Jamaican flag. This would be formed of the Free Democrats (FDP) who won 10.7% of the vote and the Green Party, whose share of the vote was just under 9%. However, the negotiations to form the alliance could take months, with FDP leader Christian Lindner indicating a willingness to begin talks but adding ‘We want to organise a change of direction for our country’. The FDP is known to be against further euro integration, with Lindner also tweeting that the ‘EUR 60bln Eurozone budget flowing into France or Italy is inconceivable for us...a line in the sand’.

Also, after Donald Trump last week attacked Obama’s Iranian deal as ‘one of the worst and most one-sided transactions the United States has ever entered into’, adding it was ‘frankly an embarrassment to the United States’, the UK has penned a deal to deepen its economic relationship with the Middle Eastern country. The USD720m deal to develop a giant solar park is part of the Joint Comprehensive Plan of Action (JCPOA) nuclear accord, which caps Iranian nuclear activities in exchange for sanctions relief. In spite of Trump’s rhetoric, the other participants of the accord, China, France, Germany, Russia plus the UK announced that they’re committed to keeping the agreement. The UK trade with Iran alone rose 42% last year and so far 57% this year.

Earlier in the week 76 European leaders wrote in an open letter to the US president urging him to stand by the agreement, warning that if the US abandons the accord the other participants ‘would work to see the nuclear deal continued with Iran, even in the absence of U.S. participation, and that could include defending European companies and individuals from any re-introduced U.S. sanctions and supporting legal action to do so’.

The letter claimed that since the accord was signed, ‘Iran has dismantled two-thirds of its uranium enrichment centrifuges, capped enrichment by the remainder, shipped out more than 10,000 kilograms of uranium, halted work on its plutonium-producing reactor, exported the spent fuel and allowed unprecedented access to its nuclear facilities and supply chain’. As a result of these actions the outlook for Europe’s and the world’s security has ‘materially improved’ and saw the JCPOA agreement as ‘just a first step in a process which must increase the level of the security of all countries in the Middle East, Europe and beyond’.