Budget Hawk Lindner Likely to Be Next German Finance Minister

(Bloomberg) -- As some 300 negotiators from three parties labor to forge a new German government, a consensus is emerging that Christian Lindner from the pro-business Free Democrats will get the powerful finance ministry post.

Cabinet positions under prospective chancellor Olaf Scholz of the Social Democrats won’t be finalized until the end of the coalition talks, slated for late November, and any backroom deals between the SPD, the Greens and the FDP can still change. But the dominant assumption is that Lindner, a budget hawk who’s made a forceful claim to the finance job, would have too much to lose if he doesn’t get it, according people familiar with the talks.

“This post is a significant one for Germany,” Lindner told the Frankfurter Allgemeine Zeitung newspaper in an interview published Wednesday, declining to comment specifically on the allocation of cabinet seats. “It’s about sustained, sound financing and a policy aimed against the risk of inflation.”

A spokesperson from the SPD declined to comment on the coalition talks. Spokespeople from the Greens and FDP did not immediately respond to requests for comment.

Lindner is considered a proponent of the German economic movement known as ordoliberalism, whose followers generally oppose state intervention and reject the use of expansionary fiscal and monetary policies to counteract downturns.

His job in the next government and the makeup of the rest of the cabinet are just some of many moving parts in the sprawling coalition talks. Party officials in 22 working groups are gathering in undisclosed locations across the German capital to hash out policy language on issues ranging from financing, fighting climate change and economic policy to Germany’s defense and Europe’s strategic sovereignty.

But despite gaping differences between the three parties on display during the election campaign, all sides have been motivated by a sense of political renewal now that Chancellor Angela Merkel and her conservative Christian Democratic-led bloc face their first stint in opposition in 16 years. All have expressed confidence that the deadlines set out by negotiators will be met.

Working groups have been told to settle policy differences by Nov. 10, leaving only the most intractable issues to be resolved by party leaders. After that, the main negotiation round will finalize a coalition text of more than 100 pages by the end of the month.

Scholz, whose narrow victory on Sept. 26 was enough to dispatch the once-dominant CDU/CDU bloc, is aiming to be sworn into office during the week of Dec. 6.

In the meantime, budget policy and Lindner’s future role could still be potential stumbling blocks. As the second-largest party in the talks, the Greens would have the first cabinet pick after Scholz takes the top job -- and party officials have said that Greens’ co-leader Robert Habeck should have the finance job.

He has some high-profile supporters. Nobel laureate economist Joseph Stiglitz and Adam Tooze, a professor of history at Columbia University, backed Habeck for the finance post and warned that Lindner’s views are “conservative cliches” that would prevent Germany getting the investment it needs.

But Habeck’s claim also has the effect of extracting as much as possible from Lindner and the FDP in return for the finance ministry, people familiar with the talks said.

Moreover, the SPD, which currently controls the ministry under Scholz, doesn’t see Lindner winning the post as a deal breaker, according to a party official. The party is well aware that Lindner won’t back down, and Scholz is working on a solution which would satisfy both the Greens and the FDP, according to people familiar with the discussions.

The Greens, in turn, would get a top position that controls the new government’s ambitious climate policy -- possibly a combined “super” ministry that overseas policy touching on the environment, the economy and mobility.

Habeck could be slated for that job, though he has also considered a post outside the Greens’ traditional purview, such as the interior ministry, according to an official familiar with his thinking. Whether Annalena Baerbock, the Greens’ candidate for chancellor, takes the climate job or becomes foreign minister is still open.

All parties have lauded a working atmosphere that places each on an equal footing. In November 2017, talks between Merkel’s party, the Greens and the FDP collapsed after Lindner pulled out of the talks. The FDP party leader at the time decried the chaos of the negotiations, exclaiming that “it’s better not to govern than to govern badly.”

‘Activate Investment’

This time is different. Lindner and Habeck, ostensibly from opposite ends of the political spectrum, made common cause soon after the election, paving over potential disagreements.

While the SPD and Greens, traditional allies, secured commitments on new investment on climate and digital economy, the FDP won out on a pledge not to raise taxes and to reinforce Germany’s constitutional debt restrictions.

“The task is to activate private investment and create a fair balance between private and state,” Lindner told FAZ.

“In addition, after the French presidential election, there will be debates about European economic and monetary union,” he added. “In those, the FDP will make contributions in Germany’s interest.”

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