(Bloomberg) -- Germany’s Social Democrats returned to the finance ministry after a nine-year absence in a coalition deal with Chancellor Angela Merkel, gaining a key position in euro-area policy making and a platform for working with French President Emmanuel Macron.
The finance post represents an important incentive that Social Democrat leaders can offer reluctant party members, who will have the final vote on the blueprint agreed upon with Merkel’s Christian Democratic-led bloc on Wednesday. Olaf Scholz, the Social Democrat mayor of the city-state of Hamburg and a former Labor Minister, is his party’s choice to succeed Wolfgang Schaeuble, Merkel’s finance chief over the last eight years, German media including DPA newswire reported.
While Merkel sets policy guidelines for the government as chancellor, an SPD-led finance ministry will allow party head Martin Schulz to make good on his pledge to help deepen euro-area integration and reach out to Macron, who says the 19-country currency bloc should have a joint budget and finance minister.
“Macron will be happy” about Merkel’s decision to let the SPD have the Finance Ministry, a move that’s “significant” for euro-area reform, Famke Krumbmueller, a partner at political-risk consultancy OpenCitiz, said on Twitter.
EU Integration
Merkel hasn’t fully embraced Macron’s proposals, though she has said the EU needs deeper integration to be able to assert meaningful influence on the global stage. Closer cooperation is “a historical necessity” if EU countries “want to have any influence at all over geopolitical developments,” Merkel said in December.
On Monday, Schulz claimed ownership of an agreement in the coalition pact to create an “investment budget” for the euro area, raise spending to fight EU youth unemployment, and make Alphabet Inc, Apple Inc., Facebook Inc. and Amazon.com Inc. pay “fair” taxes in Europe.
The SPD’s return to the finance ministry, which it last occupied during Merkel’s first term from 2005 to 2009, could signal that Germany is moving on from Schaeuble’s legacy. Schaeuble, a Christian Democrat who served as Merkel’s finance minister during Europe’s debt crisis, became associated with balanced budgets at home and enforcement of fiscal austerity in a series of euro-area bailouts, starting with Greece in 2010.
Schaeuble and Scholz, 59, worked together closely in a major effort to untangle financial relations between Germany’s federal government and the country’s 16 states, an undertaking that has to be completed by next year.
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