grand coalition

Social Democrats hope to appoint finance minister

Illuminiertes Bundesministerium der Finanzen anlässlich des Festivals FESTIVAL OF LIGHTS in Berlin s
Looks like money: The ministry during the Festival of Lights. Source: DPA

The head of the center-left Social Democrats is hoping to exploit Chancellor Angela Merkel’s recent inability to form a coalition government with two smaller parties. The leader, Martin Schulz, wants to grab control of the finance ministry as part of an agreement to continue their so-called “grand coalition” government, Handelsblatt has learned. There has been no official comment.

It’s the most powerful ministry in Europe’s biggest economy and Wolfgang Schäuble, finance minister from 2009 until October, had a huge impact on government policy. Mr. Schäuble imposed tough but controversial austerity measures on southern European countries in return for EU bailouts, while also keeping the purse strings tight in Germany. On his watch, Germany kept balanced budgets since 2014 despite spending billions of euros on the refugee influx that began a year later.

His interim successor Peter Altmaier, Ms. Merkel’s conservative ally, appears to have taken a liking to the job and many in the Christian Democratic Party think he would be willing to make it a permanent position. He’s even been winning friends in the ministry by showing a warmer touch than his popular but-at-times-cantankerous predecessor, recently bringing a cake to work and sharing it in a gesture that startled some lower-ranking members of staff.

19 p10 Minister of Finance in Germany-01

The SPD knows that its party is Ms. Merkel’s only remaining coalition option after her talks with the Greens and pro-business Free Democrats broke down in acrimony this November. And it knows that if it fails to clinch the finance ministry, its policymaking powers will be limited. Even though it received only 20.5 percent in the September election, 12.4 points less than the conservatives, it can afford to punch above its weight.

As finance minister, Mr. Schäuble deftly used his powers to outmaneuver the SPD in the old coalition, seizing SPD policy initiatives and taking the credit for measures, such as tax cuts and investment hikes. The SPD does not want to relive that type of powerlessness, and will need control of the finance ministry to pursue its plans for closer EU integration, which Mr. Schulz announced earlier this month in a call for a “United States of Europe” by 2025.

Traditionally in German coalition talks, the smaller party has the right to choose the first ministerial post. In 2013, during the last round of coalition talks between the two parties, then-SPD leader Sigmar Gabriel decided to forego the post because he believed that driving the popular Mr. Schäuble out of office would have lost him brownie points. He listened to advice from former SPD chancellor Gerhard Schröder, who said the economics ministry offered better opportunities for him to raise his profile.

The SPD won’t repeat that mistake this time around. The party has three heavyweight candidates for the job. Mr. Schulz himself has the best chance. He’s a former president of the European parliament and is well versed in EU policies but would need to read up on finance policy. Mr. Gabriel, the current foreign minister in Ms. Merkel’s caretaker government, is also believed to be in the running. He denies having told party allies that he is interested. Finally, Hamburg Mayor Olaf Scholz has an outside shot but has openly criticized Mr. Schulz, creating a rift.

The conservatives won’t give up the finance ministry without a fight, although their chances of winning it are slim. Officials in Ms. Merkel’s chancellery are saying it was a mistake to let Mr. Schäuble, 75, step down and take up a new post as president of the Bundestag, the lower house of parliament. If he were still minister, he’d be difficult for the SPD to oust, they say. For the CDU, Mr. Altmaier, the interim minister, is a good candidate for the post, and there’s no doubt he’s enjoying himself: At meetings with euro-zone finance ministers in Brussels, he’s been breaking into fluent English and Dutch to answer foreign journalists’ questions.

Jan Hildebrand leads Handelsblatt’s financial policy coverage from Berlin and has won several journalism prizes in Germany for his reporting. To contact the author:hildebrand@handelsblatt.com

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