Merkel Says 'Painful' State Defeat Won't Affect Europe Policy

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Chancellor Angela Merkel acknowledged Monday that her party's heavy losses in a key regional German vote was a "bitter, painful defeat", but stressed it had no bearing on her belt-tightening policy in Europe.

"The work in Europe is not affected" by the historic defeat suffered by her Christian Democrats (CDU) in Sunday's snap poll in Germany's most populous state of North Rhine-Westphalia (NRW), Merkel told a news conference.

And she insisted that she saw "no conflict between solid budgetary policy and growth" after some attributed the crushing poll result to Merkel's tough stance on austerity.

The poll, in which the CDU took just over 26 percent, its worst ever score in NRW, compared with 39.1 percent for the main Social Democratic Party (SPD) opposition, had more to do with the parties' main contenders, Merkel said.

But the defeat marks a setback for Merkel, 16 months ahead of general elections in which she will seek a third term at the helm of Europe's top economy at a time of financial turmoil.

On Tuesday, she will host French President Francois Hollande for their first meeting which will likely be dominated by clear differences on the eurozone crisis with Merkel insisting on debt reduction and the new French leader calling for spending to boost growth.

The SPD has echoed calls by Hollande to place more emphasis on growth in the fiscal pact, a German-inspired accord, hammered out in March and signed by 25 of the 27 EU members for tighter budgetary rigor.

Merkel, who needs a two-thirds majority in parliament to ratify the fiscal pact and who will therefore require opposition support, also said she would discuss it with opposition parties.

"We will speak to each other and we will see what the mutual expectations are," Merkel told reporters.

Monday's newspapers were scathing about the CDU's regional defeat.

"Catastrophe for the CDU," said the mass circulation Bild which suggested that the result will "make things difficult for Chancellor Angela Merkel".

Die Welt newspaper suggested that "Merkel's CDU is trembling".

The SPD, under its popular NRW state premier Hannelore Kraft, looks set to renew its coalition government with the ecologist Greens.

Gero Neugebauer, of the Otto Suhr Institute for Political Science at Berlin's Free University, said that although Merkel had always denied the NRW vote was about support for her policy on Europe, it did leave her vulnerable.

Critics could argue that "she has a strong position in Europe but at home she can't ensure her party achieves a good result in an important state legislative election", he said.

The defeat in the Ruhr, Germany's old industrial heartland, also "makes it still clearer to her that she has to look for a new coalition partner in 2013" to stay in power, political scientist Juergen Falter, of Mainz University, said.

Although her current coalition allies at the national level, the pro-business Free Democrats, confirmed a reversal in their fortunes after a string of humiliating regional defeats, it took just 8.6 percent of the NRW vote.

Some editorialists blamed the CDU's NRW leader Norbert Roettgen, who is also Merkel's environment minister, for the regional defeat. "He did almost everything wrong in the campaign," said the Sueddeutsche Zeitung.

Kraft argued for public savings but also focused on jobs, education and nursery places, while Roettgen accused the SPD of running up public debt.

Roettgen's campaign ran into trouble when he failed to commit to staying in opposition in the region if he lost Sunday's vote. He later had to backtrack after reportedly irking party allies by saying the NRW vote was a referendum on Merkel's policy on Europe.

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