German finance ministry may be stripped of policymaking in Europe

Germany’s Social Democrats want to strip euro policymaking out of the finance ministry in chancellor Angela Merkel’s third term, according to three people familiar with the party’s negotiating strategy.

The SPD wants to confine the powers of the ministry currently run by Wolfgang Schäuble to the budget and financial relations between Germany’s federal and state governments.

Responsibility for Europe, the euro, and banking would be split into another ministry, they trio said.

Attempting to rein in Schäuble, Merkel’s top lieutenant and an advocate of austerity in Europe’s debt crisis, is one of the Social Democratic Party’s opening gambits in talks with Merkel on forming a government after she won elections on Sept 22. Talks are scheduled to begin tomorrow in Berlin. Schäuble, 71, has indicated publicly that he is ready to serve another term as finance minister.

The 12 policy areas to be covered in the negotiations include finances and a subordinate working group on banking regulation, Europe, and the euro, according to the agenda released by Merkel’s Christian Democratic Union that was agreed by the two sides.

Schäuble will lead the negotiations on the finance working group for Merkel’s bloc, with the sub-group on Europe put under the responsibility of Herbert Reul, who heads the CDU/CSU group in the European Parliament.

The split reflects Social Democratic negotiating strategy, the people said. The SPD hasn’t decided whether to push for the European finance powers or the proposed finance ministry with a domestic focus, one of the people said.

Merkel’s second term ended yesterday, four weeks after the election, as the lower house of parliament convened without a new government. President Joachim Gauck gave Merkel permission to lead a caretaker administration until the next cabinet is sworn in.

Party leaders said they plan to negotiate through November with the aim to have a government by Christmas. Negotiators will complete an agreement with a two-day meeting on Nov. 26 and 27, Leipziger Volkszeitung newspaper reported.