Merkel's Shadow Finance Minister Schäuble's Outsized Influence

Finance Minister Wolfgang Schäuble is the most important member of Germany's new coalition government. He insists he is loyal to Chancellor Angela Merkel, but he could prove to be a thorn in her side.



Wolfgang Schäuble is sitting in his seat on a small Bombardier Challenger jet owned by the German military, heaping praise on Chancellor Angela Merkel. He has nothing but good things to say about her intelligence and her attention to detail, and he raves about her charm. His press spokesman interjects that she also has a strong political instinct. "That's true," Schäuble agrees, "she does have a good instinct."

It is Tuesday of last week, and Schäuble is flying back to Berlin from Brussels, where he attended a meeting of European Union finance ministers. He eventually tires of praising the chancellor and begins talking about Merkel's weaknesses. She likes to be surrounded by low-maintenance people, says the new CDU finance minister. He doesn't elaborate, which raises the question of whether he counts himself as part of this group.

He leans back and says: "I'm not low-maintenance."

This is precisely the reason why Schäuble stands a good chance of becoming the cabinet's strong man. He is already at the center of the first rift in the new CDU/CSU-FDP coalition government, over whether it should enact a major tax reform. FDP Chairman and Foreign Minister Guido Westerwelle thinks it should, Horst Seehofer, the head of the CDU's sister party, the Christian Social Union (CSU), doesn't think so and Merkel's opinion is somewhere between the two. Finding a solution to the impasse is Schäuble's job.

Criticism and Praise

The new government got off to a miserable start, because it couldn't agree on a uniform interpretation of its vague and contradictory coalition agreement. The government was met with a hailstorm of criticism. The little praise that was given was motivated by Merkel's decision to make Schäuble her finance minister.

His task, now, is to resolve the paradox of the government program. The new government wants to cut taxes, paying for it with borrowed money, while also consolidating the federal budget. This isn't actually possible, but Schäuble somehow manages to awaken the hope that he'll manage this feat after all, given his experience, ingenuity, toughness and intellect.

He is now the old fox of German politics, after having managed to live down his disability; he has been confined to a wheelchair since a 1990 assassination attempt. In Schäuble's case, his wheelchair became a symbol of a unique authority he derives from overcoming his difficult fate.

Schäuble was not an outstanding interior minister, his position in the last administration. His alarmist sentences were a source of irritation, and some of the laws he cobbled together, such as one including provisions for clandestine monitoring of criminals' computers by police, have been controversial. But he did acquire the aura of a man who is intellectually imbued with the essence of politics, who approaches problems seriously and represents an unadorned and straightforward political style.

This is why he is getting so much credit prematurely. He must now demonstrate whether he fits into the framework of interests of the chancellor, the governors, the CDU, CSU and FDP. When asked about the issue of major tax reform, Seehofer told SPIEGEL that the FDP will "eventually have to give up their illusions." Westerwelle, on the other hand, is convinced that his party has "probably the best possible approach to combating the economic crisis."

Focus on the Budget

Schäuble creates the impression of being loyal to the coalition. And he says that he sees no contradiction between the new administration's goals of reducing taxes while simultaneously repairing the federal budget. "We have to do both; both are necessary."

But the truth is that the finance minister, with the tacit approval of his chancellor, decided long ago which of the two goals is more important to him: cleaning up the budget. Both the new German "debt ceiling" rules and the European stability pact force him to make this decision. Schäuble intends to comply with both provisions, as he promised EU Economic and Monetary Affairs Commissioner Joaquín Almunia and his fellow European finance ministers during his first official visit to Brussels.

As a former constitutional minister, Schäuble feels particularly bound to abide by the recent "debt ceiling" amendment to Germany's constitution that almost completely prohibits the federal government from incurring any new debt after 2016. "This means that we will begin the consolidation process starting in 2011."

However, the plan clashes with the government's tax plans, which call for about €20 billion ($29.8 billion) in tax cuts starting in 2011, which will only exacerbate the budget crisis. Government experts have calculated that Schäuble will already have to collect about €50 billion in revenues by the end of the legislative period if he hopes to consolidate the federal budget. These calculations do not reflect tax cuts that would begin in 2011.

Schäuble and the chancellor know that it will be next to impossible to achieve both goals at the same time, but they are trying to delay publicly acknowledging this fact until next summer. By then, the two hope, the FDP will have abandoned their pipe dreams. In the meantime, Schäuble and Merkel are doing everything they can to encourage the FDP to move in that direction.


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