German CSU threatens to quit Merkel coalition over euro

BERLIN Tue Jul 3, 2012 11:21am EDT

The leader of the Christian Social Union (CSU) party Horst Seehofer leaves the Chancellery after talks with the heads of the government coalition parties in Berlin, June 4, 2012. REUTERS/Thomas Peter

The leader of the Christian Social Union (CSU) party Horst Seehofer leaves the Chancellery after talks with the heads of the government coalition parties in Berlin, June 4, 2012.

Credit: Reuters/Thomas Peter

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BERLIN (Reuters) - The leader of Bavaria's conservatives threatened on Tuesday to pull out of German Chancellor Angela Merkel's centre-right coalition if further euro zone states secure bailouts, saying there were limits to how far his party was prepared to go.

Although burly Bavarian premier Horst Seehofer, who faces a state election next year, has a tendency to pick fights and talk tough, his threat highlights the pressure Merkel is under at home after last week's euro zone deal.

In what was widely seen as a defeat for Merkel, euro zone leaders agreed last Friday to let the region's bailout fund inject aid directly into stricken banks and to intervene on bond markets to support troubled member states.

Merkel relies on votes from the Bavarian Christian Social Union (CSU), sister party to her own Christian Democrats (CDU), in parliament and in theory he could bring down her government.

"At some point, the time will come when the Bavarian state government and the CSU cannot say 'yes' anymore," Seehofer told Stern weekly in an interview.

"And without CSU votes, the coalition has no majority."

In comments that will go down well with voters in his state who are generally more skeptical about Europe than CDU supporters, Seehofer said he was worried that financial markets might think Germany had taken on too much of a burden.

"That is what I think is the most dangerous point," he said.

The chancellor has been hammered by German newspapers for being outfoxed by the leaders of Spain and Italy.

Asked about Seehofer's comments at a joint news conference on Tuesday with the prime minister of Slovakia, Merkel said she had spoken at length with the Bavarian premier.

"I think that we will cooperate well in the coalition, not only on European issues," she said.

"ROUGH SEAS"

Merkel's pro-business Free Democrats (FDP), also traditionally more skeptical about Europe than the CDU, sprang to her defense.

"At the current difficult time for the euro and Europe, Germany needs a stable government which is capable of taking action," said FDP General-Secretary Patrick Doering.

"On rough seas, you don't question the course or the leadership," he told Handelsblatt daily, adding that the FDP would ensure Germany did not take on more liabilities in the euro zone without adequate controls.

Voters in Germany, which has effectively become Europe's paymaster, and several other northern European states, are fed up with footing the bill for what they see as profligate southern states such as Greece.

Seehofer's comments chimed with remarks from Slovak Prime Minister Robert Fico who warned that his country was not prepared to provide financial assistance to other euro zone countries if they failed to commit to reforms.

"The (Slovak) public's patience is wearing thin," Fico said at his joint news conference with Merkel.

Merkel faces an election in September 2013 and she is still one of Germany's most popular politicians. But the gap between her conservatives and the opposition Social Democrats (SPD) has narrowed in the last two months as the euro zone crisis has racked financial markets again.

(Editing by Gareth Jones)

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