Germany’s Second-Most Powerful Woman Takes on Merkel

Photographer: Sean Gallup/Getty Images

Kraft’s role in spearheading the fight against tax dodging reflects the power she wields as the head of Germany’s most populous state. Close

Kraft’s role in spearheading the fight against tax dodging reflects the power she... Read More

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Photographer: Sean Gallup/Getty Images

Kraft’s role in spearheading the fight against tax dodging reflects the power she wields as the head of Germany’s most populous state.

Germany’s second-most powerful woman is picking a fight with Angela Merkel.

Hannelore Kraft, the Social Democratic prime minister of North Rhine-Westphalia, says that Merkel’s federal government isn’t taking tax evasion seriously. Her state, which has more people than the Netherlands, is at “the vanguard of combating tax dodgers” and won’t back down, Kraft said.

“I stand by this approach: fairness in tax matters is a central plank of my politics,” Kraft, 52, said in an interview Aug. 30 during a break from campaigning for SPD chancellor candidate Peer Steinbrueck in Bernbeuren, a Bavarian village southwest of Munich. “It’s consistent and right to continue to pursue tax evasion forcefully.”

Kraft’s role in spearheading the fight against tax dodging reflects the power she wields as the head of Germany’s most populous state. The daughter of a cobbler-cum-streetcar operator, Kraft has risen from relatively humble origins in the industrial Ruhr region to become one of Germany’s most popular politicians. That public and political clout makes her a potential leader of her party -- and a rival to Merkel, 59.

“Time is playing in Kraft’s favor,” Ulrich Sarcinelli, a professor of political science at the University of Koblenz-Landau, said by phone. “Whatever way the election goes, Kraft is the figure in the SPD who has the biggest chances in the middle- and long-term to take over the chancellery one day.”

Stolen Data

Kraft’s focus on tax evasion allows her to take on Merkel over a policy that is not exclusively the reserve of the federal government, both by exercising her power in her region and in the upper house of parliament in Berlin, where the states are presented and the opposition has a majority.

North Rhine-Westphalia has pioneered the use of means opposed by Merkel, such as buying CDs with stolen data. Kraft led the upper-house opposition to a treaty with Switzerland, blocking it earlier this year as too easy on tax dodgers.

“Those who hid their money in Switzerland would have got a pass and paid less than those who pay their taxes honestly,” said Kraft. “The deal the federal government struck with the Swiss would have made those honest people look like fools.”

The upper house, known as the Bundesrat, has also blocked or delayed a package of tax cuts introduced last year by Merkel’s coalition, and legislation involving solar subsidies, building insulation and fiscal rules. It’s a role that puts Kraft on a collision course with Merkel, the Christian Democratic leader, after the Sept. 22 election.

Power Base

As the most important opposition politician outside Berlin, Kraft has a power base in Dusseldorf at a remove from Steinbrueck’s campaign. That enables her to contribute to her party’s election effort without being damaged by the outcome if Steinbrueck fails to defeat Merkel, as polls indicate.

In fact, Kraft is more popular than Steinbrueck, placing fourth on a list of Germany’s favorite politicians compared with his sixth position, a monthly Infratest poll for ARD television conducted Sept. 2-3 showed. She rates ahead of the entire government save Merkel, who placed first, and Finance Minister Wolfgang Schaeuble, in second spot. Frank-Walter Steinmeier, the SPD Bundestag caucus leader, was third.

Kraft’s image as a politician with a common touch rivals that of Merkel, who goes on walking holidays, lists cooking and gardening as her hobbies and says she sends her husband to do the shopping. For the young Kraft, Sunday was the only day she saw her parents together since they worked shifts, she relates on her website. She trained as a bank clerk before studying economics in Duisburg, then attending King’s College London.

2010 Win

Kraft and Merkel not only come from opposite ends of the country, their politics are diametrically opposed. Kraft defeated Merkel’s party for control of North Rhine-Westphalia in a state vote in May 2010, a result the government blamed on voter anger at the first aid package for Greece.

Kraft took aim at Merkel’s euro policy in the interview, saying the government has relied too heavily on budget cuts.

“A policy of pure austerity that’s constantly propagated by the chancellor along the lines of ‘save, save, save’ doesn’t leave any air for the crisis countries to breathe,” she said.

Kraft has been spending more time in Berlin recently, appearing with Nobel laureate author and SPD backer Guenter Grass at a book presentation on Sept. 2, then holding a press conference three days later with Steinbrueck and her fellow opposition state leader, Winfried Kretschmann of the Greens.

‘Refreshing Change’

Kraft’s party “needs to break out of tradition and change its course to make itself electable,” Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, said by phone. “Having an SPD leader who’s a woman would be a refreshing change from Steinbrueck and Sigmar Gabriel, but I don’t yet see her as a leader who will break new ground or take the party in new directions.”

Should Kraft, currently an SPD vice-chairwoman, move to the top of her party, it could shift the political calculus in Berlin. Steinbrueck has repeatedly ruled out an alliance with the anti-capitalist Left Party, made up of labor activists and the remnants of East Germany’s former communists.

While Kraft echoes that line, her first administration was a minority government tolerated by the Left. When that collapsed over a budget fight two years later, an election in May 2012 returned Kraft’s coalition to power with a 19-seat majority.

Merkel has used North Rhine-Westphalia during the election campaign to warn that a vote for the SPD could lead to the Left coming in through the back door, and citing Kraft as proof.

Merkel’s Doubts

After a prior SPD cooperation deal with the Left went sour in Hesse state, “it was said that this would never happen again, and subsequently Mrs. Kraft did it,” Merkel told a rally in Trier on Sept. 4. “Therefore I see no reason why I should believe those who’re saying it today.”

At a convention in Berlin in December 2011, Kraft was confirmed in her vice-chairmanship by 97 percent of party members, the best result for a board member. Merkel was re-elected CDU leader in December 2012 with 97.9 percent of the delegate votes, the biggest margin of support for a chancellor since Helmut Kohl reunified Germany in 1990.

For all the obvious comparisons, Kraft is reluctant to acknowledge any semblance with Merkel, either political or personal.

“The similarity between me and Merkel consists of us being two women, that’s it,” Kraft said. “Politically we differ significantly -- there are no similarities.”

To contact the reporters on this story: Arne Delfs in Berlin at adelfs@bloomberg.net; Patrick Donahue in Berlin at pdonahue1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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