Berlin: German Chancellor Angela Merkel told leaders of her conservatives on Monday that she will not seek re-election as party chairwoman, senior party sources said, heralding the end of a 13-year era in which she has dominated European politics.
Merkel, 64, has been chairwoman of her conservative Christian Democrats (CDU) since 2000 and chancellor since 2005. Party sources said Merkel wants to remain chancellor until 2021, when the next federal election is due.
The announcement, which effectively accelerates the process for the CDU to settle on and groom Merkel's successor, caused the euro to fall briefly and German government bond yields rose.
Stepping down as CDU chairwoman would further undermine Merkel's authority, which has already been dented this year by two regional election setbacks and a close ally losing his role as leader of her conservatives' parliamentary group.
Merkel has loomed large on the European stage since 2005, helping guide the EU through the euro zone crisis and opening Germany's doors to migrants fleeing war in the Middle East in 2015 - a move that still divides the bloc and Germany.
"We are witnessing a continuation of the pattern in place ever since Merkel’s mistakes in the 2015 migration crisis: the gradual but steady erosion of her political power," said Carsten Nickel, managing director at Teneo, a consultancy.
"Rather than outright instability in Germany and Europe, it simply means a continuation of the current leadership vacuum." Monday's news came as a surprise to CDU party officials, who had expected Merkel to seek re-election as chairwoman at a party congress in Hamburg in early December.
The shock move started the race in the CDU to succeed Merkel. It also raises questions about whether she can stage manage a smooth exit. Merkel is under pressure from her Social Democrat coalition partners to deliver more policy results and the centre-left party could yet pull out of the government at a mid-term review next year.
Germany's other leader CDU chancellors - Konrad Adenauer and Helmut Kohl - both had messy ends to their time in office.
Merkel standing down from the party chair would allow a new CDU chairman or chairwoman to build a profile before the next national election. Party sources said Merkel's favoured successor, CDU party secretary general Annegret Kramp-Karrenbauer, had announced her candidacy for the party chair. Party sources also said that Friedrich Merz, a former parliamentary leader of Merkel's conservative alliance, was ready to put himself forward for the CDU chairmanship.
Merkel's weakness at home may limit her capacity to lead in the European Union at a time when the bloc is dealing with Brexit, a budget crisis in Italy and the prospect of populist parties making gains at European parliament elections next May.
When Merkel came into office in 2005, George W. Bush was US president, Jacques Chirac was in the Elysee Palace in Paris and Tony Blair was British prime minister. Her decision comes on the heels of a second electoral setback in as many weeks for Merkel's conservative alliance.
In a vote in the western state of Hesse on Sunday, the CDU came out top but lost 11 percentage points in support compared to the last election in 2013. "With these latest results, it has simply become untenable that Merkel continues to lead the CDU," said Mujtaba Rahman, managing director at Eurasia Group, a consultancy.