Merkel's Party May Keep Finance as Schulz Eyes Foreign Ministry

(Bloomberg) -- German Social Democratic leader Martin Schulz signaled he’s making a play for the Foreign Ministry in coalition talks, a move that could allow Chancellor Angela Merkel’s party to maintain its grip on finance.

Schulz, speaking after the latest round of talks in Berlin, singled out the Foreign Ministry as the key driver on Europe. He made an even stronger case during the closed-door session, demanding that the Chancellery speak with the foreign minister on all policy related to Europe ahead of the Finance Ministry, according to a person who attended.

Merkel's Party May Keep Finance as Schulz Eyes Foreign Ministry

Giving the SPD a more-prominent Foreign Ministry would boost the case for Merkel’s Christian Democratic Union to replace Wolfgang Schaeuble as finance minister with one of their own, possibly with his acting successor, Peter Altmaier, who is Merkel’s chief of staff. It also would allow the Social Democrats to push for Germany to lend more support to French President Emmanuel Macron’s proposals for a more united Europe, a key point for Schulz.

“As far as portfolios go, European policy, like all international policy matters, is within the Foreign Ministry’s purview,” while taking into account Merkel’s policy making powers as chancellor, Schulz told reporters on Wednesday. It was the strongest signal yet that he’s claiming the portfolio for the SPD.

Target Date

The Social Democrats are jockeying for cabinet posts as Merkel seeks to get the party on board as her junior coalition partner. A government pact that party leaders want to complete by Sunday would still require approval by SPD members, who are split between staying in government or trying to strengthen the party in opposition.

Recent convention suggests that one of the two coalition blocs takes foreign and the other takes finance. A senior government official with knowledge of Merkel’s strategy in the talks said that her bloc is not willing to give up finance without a fight.

The Finance Ministry gained in power during the euro crisis, when Schaeuble used it as a platform to demand fiscal austerity and economic overhauls in return for bailouts in countries such as Greece.

As a result, Schulz has been pushed by members of his party to secure the ministry, while unions are demanding that the party press for the Labor and Social Affairs Ministry, giving it sway over proposed changes to pension and labor policy.

Social Democrat members say the party stands little chance in the negotiations of securing all three ministries -- finance, foreign and labor -- so the SPD has to make up its mind
which ministry it will let go.

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