German chancellor Angela Merkel faces a serious new threat in her bid to stay chancellor of Germany for a fourth term.

European parliament president Martin Schulz announced today that he would stand down.

This unexpected announcement sets up a return to German politics and a potential run for chancellor as candidate of SPD.

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The Financial Times reports EU Parliament Chief to Quit, Setting Stage for Merkel Challenge.

Martin Schulz, president of the European Parliament, is to stand down from one of the EU’s most powerful posts and run for parliament in Germany in a move that could lead to a run against Angela Merkel for the chancellorship in elections next year.

In a decision that has shaken the political world in Brussels and Berlin, the long-serving parliament chief will stand as an MP for the Social Democratic party in North Rhine-Westphalia and potentially position himself to lead the SPD in next autumn’s parliamentary elections as its chancellor candidate.

Mr Schulz is believed to be considering challenging Sigmar Gabriel, the SPD leader and Ms Merkel’s deputy in the coalition government, who has struggled to post gains against the chancellor’s Christian Democrats in his seven years as party boss.

Mr Gabriel has long been in pole position. But with SPD support down from 25.7 per cent in the 2013 election to about 20-22 per cent in opinion polls, he is under pressure from his party to galvanise voters or stand aside.

As the chancellor’s coalition partner, Mr Gabriel shares responsibility for her refugee policies, which have split the public and pushed some voters, including SPD supporters, into the arms of the populist anti-immigration Alternative for Germany. Some SPD politicians think that somebody from outside the government, such as Mr Schulz, would give the party a better chance.

“All the SPD rank and file will now be hoping that Schulz will run for chancellor,” said one SPD backbencher. “His big advantage is that he’s not part of the government and wasn’t involved in the policies of the last three years.”

Under German practice, the foreign ministry will remain with the SPD if Mr Steinmeier, also a social democrat, moves out, so Mr Schulz’s possible appointment is in Mr Gabriel’s hands.

Mr Schulz helped inflict a serious defeat in 2014 on Ms Merkel, when he and Jean-Claude Juncker, former Luxembourg prime minister, secured public backing to share two top EU posts, with Mr Juncker becoming European Commission president and Mr Schulz heading the parliament. Ms Merkel wanted member states to control the appointments and to block Mr Juncker’s ascent.

Wheels in Motion

SPD leader Sigmar Gabriel, Merkel’s junior coalition partner is highly likely to appoint Schulz as head of Germany’s foreign ministry.

Schulz would replace Frank-Walter Steinmeier, who in turn will take over as German president from Joachim Gauck who is retiring at the end of his five-year presidential term.

I commented about the German presidency on November 14 in Another Merkel Setback: Rival Social Democrat Selected as German President.

Merkel Surrounded

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On September 2, Sigmar Gabriel laid into Ms Merkel’s refugee policy and at the same time blasted the Transatlantic Trade and Investment Partnership, the controversial planned EU-US free-trade agreement.

Sigmar Gabriel, leader of the left-leaning Social Democrats and Ms Merkel’s junior coalition partner, called for a cap on the number of migrants entering Germany, saying the government had “underestimated the challenge” of integrating the 1m refugees who arrived in 2015.

His remarks show how battle lines are being drawn between Germany’s main parties ahead of next year’s election. They coincided with a poll showing that one in two Germans did not want Ms Merkel, who has been chancellor since 2005, to remain in the post after next year’s elections.

Merkel is surrounded by people seeking to remove her and are increasingly vocal about it. The alleged “grand coalition” no longer looks so grand, from Merkel’s perspective.

Mike “Mish” Shedlock