The Economist provides a explanatory graphic which shows why Germany's North Rhine-Westphalia state election matters so much to the Eurozone right now.
Should the ruling Christian Democrat/ Free Democratic Party (CDU/FDP) lose North Rhine-Westphalia, then they'll lose the slight majority they enjoy in Germany's national 'Bundesrat'. The Bundesrat is a legislative body similar to the U.S. senate, comprised of representatives from each of Germany's 'Lander' (states). Thing is, representatives from each Lander are obliged to cast their votes as a bloc. Thus, even a slight victory by the opposition in North Rhine-Westphalia can have a substantial effect on the balance of power in the Bundesrat.
Should the SPD manage to get enough votes on Sunday to form a governing coalition with the Greens, or should the FDP not be returned to power as Rüttgers' coalition partner, Merkel's majority in the Bundesrat would vanish.
And that would mean that Merkel would once again head up a governing coalition with little power to effect change.
Should North Rhine-Westphalia go against Merkel, The CDU might still be able to pull together a majority...
if the CDU-FDP coalition is unseated in NRW, the government that takes its place may take on an interesting hue. One possibility is a “grand coalition” between the CDU and the Social Democratic Party, of the sort that ruled Germany between 2005 and last year.
More unusual would be a CDU-Green alliance. Although political and cultural differences have historically kept the two parties apart, the gap between them may be narrowing.
(Graphic from The Economist)
But... a change of power for North Rhine-Westphalia could still weaken Merkel's hand even if the CDU manages to create a majority coalition. That's because a defeat in North Rhine Westphalia could likely be the result of German opposition to Merkel's stance of supporting Greece. This could make other politicians gun shy when it comes to future Eurzone bailout measures, since the result of this single Lander could signal where broader German sentiment is trending.
State elections in North Rhine-Westphalia have traditionally acted as a barometer for national political trends, Nick Matthews, an economist at Royal Bank of Scotland Group Plc, said in a report on May 5.
A YouGov poll found that 21% of voters said that they could change their vote due to Germany's stance on bailing out Greece. At a time when the Eurozone needs decisive action from its leading nations, an increasingly timid German government is far from ideal.
The election is happening now (08:00 GMT) and voting stations will close at 16:00 GMT.
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