ANALYSIS: Wulff's resignation plunges Merkel into political storm

By Andrew McCathie Feb 17, 2012, 15:56 GMT

Berlin - The resignation of the German President on Friday over corruption allegations could not have come at a more critical time for Chancellor Angela Merkel.

Christian Wulff's decision to stand down from the largely ceremonial post of president plunges Merkel into a domestic political storm just as talks over a debt deal to head off Greece declaring default enter a crucial stage.

Merkel was forced to cancel a trip to Rome for talks with Italian Prime Minister Mario Monti Friday as news spread that Wulff planned to resign after less than 2 years in office amid allegations of cozy ties to business figures, free flight upgrades and holiday invitations.

This came after prosecutors in the German state of Lower Saxony announced late Thursday that they were asking the national parliament to lift the 52-year-old Wulff's immunity.

The move was prompted by claims that Wulff, a member of Merkel's conservative Christian Democrat bloc and a former premier of Lower Saxony, had stayed in a luxury hotel with a film executive picking up the bill.

Never the most charismatic of politicians, Wulff was once considered a rival to Merkel as she edged her way to the top of the Christian Democrats during the late 1990's.

After a faltering start to dealing with the debt crisis, perceptions in Germany that Merkel might now have hit her stride in facing up to financial upheaval in Europe have meant that her own public approval ratings hitting a two year high of 64 per cent.

What is more, economists say the Wulff resignation is unlikely to have any direct impact on the move to resolve the debt crisis and the talks with Greece.

'However,' said ING Bank economist Carsten Brzeski 'domestic political pressure on Angela Merkel could increase again and will not make her life any easier.'

After all, this is the second time in about two years that Merkel has been forced to accept the resignation of someone she hand picked for the post of president - a post which is supposed to help set the nation's moral tone.

In May 2010, Horst Koehler, a former head of the International Monetary Fund, stepped down from the post after controversial remarks he made suggesting German international military missions could be used to drum up trade.

But while Koehler's exit from the presidency was relatively hasty, Wulff's departure has been more protracted.

The corruption allegations first hit the headlines in December following revelations that he accepted a 500,000 euro mortgage loan at favourable interest rates from an entrepreneur.

Indeed, as the almost daily allegations in the media rolled on, officials in the Chancellor's office in Berlin privately expressed dismay about the failure of Wulff's office across town in the 18th century Bellevue Palace to come to grips with the deepening crisis.

At the same time, however, the stream of allegations surrounding Wulff underscored the intense competition in the media, who have been falling over themselves to publish the next instalment of the Wulff affair.

At one dramatic moment in the affair, Wulff left a message on the answering machine of a newspaper editor last December threatening war with the newspaper's publisher.

But despite a series of contrite TV interviews, Wulff was unable to quell the sense of disquiet in the German public and confidence in him dropped. An opinion poll conducted earlier this month showed that 54 per cent of Germans thought he should resign.

The problems for Wulff, however, may have started much earlier in 2011 when he declared that Islam had a place in Germany - comments that triggered criticism from conservatives in the nation who are distrustful of multiculturalism.

In a parting shot, Wulff hit back in his brief resignation speech Friday saying: 'Germany can best develop its economic and social strength and make a good contribution to European unity when integration succeeds at home.'

Merkel has called on the opposition parties to join the effort to fill the vacancy at Bellevue Palace.

Among the possible candidates mentioned are Finance Minister Wolfgang Schaeuble, the parliamentary leader of the opposition Social Democrats, Frank-Walter Steinmeier and Labour Minister Ursula von der Leyen.

Also possibly in the running is the East German rights activist Joachim Gauck - the man Wulff defeated in the elaborate balloting system to elect a new president.