Schaeuble Poised to Leave German Finance Ministry in End of Era

Updated on
  • Free Democrats signal claim to powerful euro-area finance post
  • Merkel ally dominated euro-area policy during debt crisis

Germany's Schaeuble Said Ready to Lead Bundestag

German Finance Minister Wolfgang Schaeuble is ready to give up the post that made him a dominant figure during the euro-area debt crisis, signaling a watershed moment as Chancellor Angela Merkel puts together a government to take her through a fourth term.

Schaeuble, 75, a veteran of Merkel’s three previous cabinets, served under Chancellor Helmut Kohl, when he was charged with helping to negotiate the reunification of East and West Germany after the fall of the Berlin Wall in 1989.

Wolfgang Schaeuble, Germany’s finance minister.

Photographer: Jasper Juinen/Bloomberg

In the finance post for the past eight years, Schaeuble came to be vilified in Greece and the rest of southern Europe as the face of German-led fiscal austerity. While his departure raises the possibility that Germany will become more accommodating toward the euro area, the emergence of the Free Democratic Party as a potential Merkel coalition ally angling for the finance post means there is unlikely to be any significant shift in policy.

Merkel’s party bloc said Wednesday it plans to nominate Schaeuble as president of the lower house, a reaction to the populist Alternative for Germany’s arrival in parliament after a national election on Sunday that gave Merkel a mandate for a fourth term. Schaeuble’s 45 years in the Bundestag chamber make him the country’s de-facto elder statesman.

“Last of the great West Germans,” Rupert Harrison, a former U.K. government official and now a portfolio manager at BlackRock Inc. said on Twitter. “Him stepping down is end of an era, even if you disagree with his take on e.g. fiscal policy.”

Election Fallout

Schaeuble’s looming departure is the first major fallout from the election as Merkel prepares to explore a three-way coalition with the FDP and the Greens. The combination is untested at the national level and would require her Christian Democratic-led bloc to make a complex deal on policy and cabinet posts.

As the bigger of the two junior partners, the Free Democrats left little doubt they want one of their own to succeed Schaeuble. “It’s no secret that the Finance Ministry has a special importance for the Free Democrats,” Wolfgang Kubicki, a senior FDP lawmaker and likely participant in coalition talks, said in an interview.

“We can reassure the financial markets that Germany’s finance policy won’t change significantly if it’s a Free Democrat,” Kubicki said. His party would “take care that the euro area’s stability is maintained” and investors wouldn’t have to fear a Merkel coalition with the FDP and Greens, he said.

Three days after the election, nothing about Merkel’s new government is set in stone and policies are subject to negotiation.

What is known is that the FDP wants to allow countries to leave the euro in an orderly way without quitting the European Union, limit the firepower of the European Stability Mechanism -- the euro-area bailout fund -- and introduce automatic sanctions in case of excessive budget deficits. Still, Schaeuble advocated Greece’s temporary exit from the euro, but was overruled by Merkel.

House Speaker

The Greens, who have never partnered with Merkel’s bloc, have a less stringent approach to the euro and European integration.

Merkel’s parliamentary group plans to nominate Schaeuble for the post of Bundestag president at a meeting on Oct. 17, caucus head Volker Kauder said in a statement on Wednesday.

Similar to the Speaker of the House in the U.S., the post is seen as having an elevated civic importance, allowing its holder to set the tone of debate and discourse in the chamber as the AfD enters parliament on a platform of tearing down consensus politics.

“We are glad that Wolfgang Schaeuble has declared himself ready to run for the office,” Kauder said.

Joining the Euro

Harrison related a story on Twitter of meetings with Schaeuble during his time as an adviser to former U.K. Chancellor of the Exchequer George Osborne.

“He would always start by saying ‘so George, when are you going to join the euro?’ Cue general hilarity all round. What a joker etc. And then each time it was clear he wasn’t really joking.”

Schaeuble was worried about Germany being too strong and France too weak, and the potential for conflict -- “the old postwar concerns,” said Harrison. “Don’t think many like that any more.”

— With assistance by Patrick Donahue, and Elena Gergen-Constantine

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