(Bloomberg) -- To gauge the balance of power in Angela Merkel’s new government, look at where she’s placed her top political fixer.
The German chancellor has entrusted Peter Altmaier with a key mission: bulking up the Economy Ministry, traditionally a relative backwater in policy terms, and turning it into a counterweight to the powerful finance post.
As Merkel embarks on her hard-won fourth term, critics in her own party bloc still bemoan her decision to cede the Finance Ministry to the Social Democrats in a deal which helped seal their coalition. Yet it’s beginning to look like a reality she can turn to her advantage.
The debt crisis that marked the peak of the Finance Ministry’s dominance over euro policy has faded. Wolfgang Schaeuble, whose decades of experience contributed to the ministry’s supremacy, has moved on to preside over the Bundestag. And with attention now shifting to trade conflicts, artificial intelligence and scrutiny of Chinese investments, Merkel has put Altmaier in charge of the themes she’s identified as critical to Germany’s future prosperity.
“A strong personality like Altmaier has the power to make this ministry stand out,” said Bela Anda, a political consultant and former German government spokesman. “Altmaier will try to put a clear stamp on the post.”
Altmaier dived in quickly, traveling to Washington within days of his appointment to hold crisis talks with Commerce Secretary Wilbur Ross on averting U.S. import tariffs on European steel and aluminum. Closely co-ordinated with Merkel, Altmaier’s trip was a success, for now at least.
To be sure, the Finance Ministry remains the center for coordinating policy on the euro area, a key role as French President Emmanuel Macron presses for wide-ranging changes in lockstep with Germany. Finance Minister Olaf Scholz is a political heavyweight who served as labor minister in Merkel’s first-term government.
None of which detracts from Altmaier, a multilingual former European Union official who served as Merkel’s chief of staff for four years and is one of her oldest confidants. A miner’s son from the Saarland area bordering France, he has won the chancellor’s trust by crafting compromises in domestic policy battles.
When she ran into severe political headwinds for declining to close Germany’s borders to refugees, Merkel had him coordinate the government’s crisis response. She put him in charge of the shift to renewable energy after her 2011 decision to close Germany’s nuclear plants following the Fukushima disaster.
“My job as chief of staff is to allow Mrs. Merkel to stay chancellor, which I hope she will for a long time,” he said in 2015.
It’s a task he fulfills in numerous talk show appearances, newspaper interviews and on Twitter, making him a powerful media presence when the chancellor takes a back seat.
At the Economy Ministry, housed in a former Prussian military hospital in Berlin, Altmaier, 59, may be facing his biggest test yet.
Merkel and her Christian Democratic Union, the party Altmaier joined as a teenager, want him to turn the department into a platform for securing German economic interests and easing public fears of globalization. It’s a response to a backlash in last year’s election that sent support for the CDU to a historic low and lifted a far-right party into parliament.
“We see signs of a race to cut taxes in the U.S., and trade obstacles in the U.S. and Asia,” Deputy Economy Minister Christian Hirte said on March 1. “We need to watch out that we’re not crushed between the front lines.”
Besides trade policy, Altmaier’s toolkit includes oversight of foreign investment in Germany, which is gaining urgency after Chinese billionaire Li Shufu took an almost 10 percent stake in carmaker Daimler AG. The ministry will help guide a government-backed push to expand digitalization and AI among Germany’s vaunted midsize companies, an area where France is plowing ahead.
Merkel’s loyal aide seemed headed for the finance post last year when she made him acting minister after the election. Now that she’s shifted him to a traditionally less powerful position, the pressure to deliver is on.
That risks conflict Scholz, a Social Democrat whose party is pressing Merkel to embrace Macron’s proposals for overhauling the euro area. Many in her CDU-led party bloc view the French plan as a slippery slope to financial risk-sharing at German expense.
Altmaier, a gregarious operator who’s been known to cook dinner for reporters and political opponents, is aware of the potential for a clash. Handing over to Scholz at a closed-door ceremony on March 15, he called for the two to set ideological differences aside and work together, according to a participant who asked not to be identified.
In any case, Merkel has a record of overruling the Finance Ministry, including Schaeuble when he flirted with kicking Greece out of the euro in 2015. While Scholz’s views on the euro’s future are still emerging, Merkel’s task for Altmaier is clear.
The Economy Ministry is a “power center,” she told skeptical CDU members in February. “It’s up to us to turn it into something.”
©2018 Bloomberg L.P.