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Wolfgang Schäuble, Architect of Austerity, Is Out as Germany’s Finance Minister Wolfgang Schäuble, Architect of Austerity, Is Out as Germany’s Finance Minister
(about 4 hours later)
FRANKFURT — Wolfgang Schäuble, a dominant figure in German politics who was reviled in countries like Greece for his advocacy of austerity during the eurozone debt crisis, will leave his powerful post as finance minister to become speaker of the German Parliament, his party said on Wednesday. FRANKFURT — Wolfgang Schäuble, a dominant figure in the European Union for more than a decade, will leave his post as Germany’s finance minister, effectively ending a career in international politics that has been marked by his insistence on budgetary penitence for suffering eurozone countries.
While the move is ostensibly a promotion, the speaker’s job is in reality less powerful than the cabinet position Mr. Schäuble has occupied since 2009, which gave him more influence than many European heads of government. His departure was prompted by national elections on Sunday in which the Christian Democrats — his party, and that of Chancellor Angela Merkel — came in first but nonetheless lost ground. Mr. Schäuble’s impending departure leaves a huge gap in European politics. Loved or hated, he has been a force for stability who played a leading role in keeping the eurozone from disintegrating during a debt crisis that began in 2010.
Though a staunch advocate of European unity, Mr. Schäuble was widely criticized, and even vilified, for insisting that Greece and other eurozone members make drastic cuts in public spending after markets lost confidence in their ability to pay their debts. Many economists blamed the austerity policies for prolonging the economic agony that Greece continues to suffer. The Christian Democrats, Mr. Schäuble’s party, said on Wednesday that he will become the speaker of the German parliament. The move is a consequence of the party’s disappointing showing in recent elections, which have made the post of finance minister an important bargaining chip in negotiations to form a new government.
As the president of the Bundestag, Mr. Schäuble will ostensibly be Germany’s second highest official, just behind the president, Frank-Walter Steinmeier, and ahead of the Ms. Merkel. A member of Germany’s Bundestag since 1972, Mr. Schäuble, now 75, is among the last German politicians to come of age during his country’s painful recovery from World War II and the tensions of the Cold War. He overcame a rivalry with Angela Merkel, the German chancellor, to become her ally — often playing the bad cop in eurozone negotiations while she privately struck compromises.
The new position was confirmed by Volker Kauder, chairman of the Christian Democrats’ parliamentary bloc. Mr. Schäuble was reviled in Greece for insisting on austerity policies that many economists believed prolonged the country’s economic agony, and was a divisive figure in Ireland and Italy as well. But he was also a committed believer in European unity, a Francophile who had a warm relationship with Christine Lagarde, the French politician who is managing director of the International Monetary Fund.
Mr. Schäuble, 75, has been a fixture in German politics for more than 40 years, dating to the period when Helmut Kohl was chancellor and Germany was still divided between East and West. “It’s hard to articulate just how significant this change is going to be for the eurozone, for other member states, for the investment community,” said Mujtaba Rahman, the managing director for Europe at Eurasia Group, a consultancy. “It introduces uncertainty into probably the most important economic position in the eurozone.”
A consummate political survivor who even managed to see off a 1990 attempt on his life, he overcame an earlier rivalry with Ms. Merkel, who has been chancellor since 2005, to become the most important member of her cabinet. No major decision is possible in Brussels without the assent of France and Germany, and Mr. Schäuble’s experience and toughness may be missed as European leaders confront a daunting policy agenda. Looming points of conflict include a reform of the European Union’s finances, debt relief for Greece, and the choice of a successor for Mario Draghi, the president of the European Central Bank, whose term ends in 2019.
Blunt yet affable, Mr. Schäuble often rated higher than Ms. Merkel in opinion polls. His insistence on balanced budgets, though criticized by economists, was extremely popular with debt-averse Germans. Mr. Schäuble’s departure is also a blow to efforts by Emmanuel Macron, the French president, to create a stronger European Union with its own finance minister and a budget big enough to help member countries that get into economic trouble.
As president of the Bundestag, the lower and more powerful house of the federal Parliament, Mr. Schäuble will oversee parliamentary sessions and be responsible for keeping order. That may not be an easy job. Following the Sunday elections, six parties will be represented in Parliament, including the far-right Alternative for Germany, which has vowed to be a disruptive force. Blunt yet affable, Mr. Schäuble had a talent for brinkmanship that often helped Germany’s point of view to prevail, to the frustration of his critics.
In 2015, with France and Italy pushing to ease the terms of austerity imposed on Greece, Mr. Schäuble circulated an alternative proposal: Greece could temporarily exit the eurozone. That prospect alarmed France, Italy and Greek’s left-wing government enough that they backed down.
He was unpopular elsewhere, too.
“Schäuble crystallized this growing gap between the so-called peripheral Europe and the core Europe,” said Constantin Gurdgiev, an adjunct finance professor at Trinity College Dublin. “As a result of this, he was loathed not just in Greece, and not just in Ireland, but in the likes of Italy, Spain, Portugal and Cyprus.”
Mr. Schäuble was often caricatured as an uncompromising disciplinarian, but he belonged to a generation that saw the European Union not just as an economic convenience but as a bulwark against the wars that devastated the Continent early in the 20th century. He regarded crises as a chance to push closer to something resembling a United States of Europe.
“We can only achieve a political union if we have a crisis,” Mr. Schäuble said in an interview in 2011.
At home, he has been a fixture in German politics for more than 40 years, dating to the period when Helmut Kohl was chancellor and Germany was still divided between East and West.
Mr. Schäuble has survived innumerable crises, including an attempt on his life in 1990 that left him in a wheelchair. In 2000, a campaign finance scandal forced him to step aside as chairman of the Christian Democrats, paving the way for Ms. Merkel’s ascent. She became chairwoman of the party at the time, and in 2005 rose to become chancellor.
Still, Mr. Schäuble often rated higher than Ms. Merkel in opinion polls. His insistence on balanced budgets, though criticized by economists, was extremely popular with debt-averse Germans. At conventions of the Christian Democrats he was greeted like a rock star, and his comments could move financial markets.
The two leaders nevertheless overcame their differences and forged a partnership that helps explain the Christian Democrats’ longevity as Germany’s strongest party. Mr. Schäuble’s tough talk on Greece appeased party conservatives, leaving Ms. Merkel the political space to work out compromises that, though often flawed, kept the eurozone together.
“The two tag-teamed well together,” Mr. Rahman of Eurasia Group said. “That will never be replaced.”
Mr. Schäuble’s successor is likely to be ideologically similar, though lacking his political finesse or his bedrock belief in European integration.
The leader of the pro-business Free Democratic Party, Christian Lindner, is widely expected to demand the Finance Ministry as a condition of joining a coalition led by Ms. Merkel. Mr. Lindner is known for being skeptical about giving more power to Brussels, and has expressed opposition to some of the proposals advocated by France.
That means Mr. Schäuble’s legacy could live on when it comes to Germany’s economic policy.
“Wolfgang Schäuble may have left the finance ministry but his project for turning the eurozone into an iron cage of austerity, that is the very antithesis of a democratic federation, lives on,” Yanis Varoufakis, a firebrand former Greek finance minister who often clashed with Mr. Schäuble, said in an email.
“The Free Democratic Party’s ascension will see to it that Wolfgang Schäuble’s departure will not alter the policy of doing whatever it takes to prevent the eurozone’s evolution into a sustainable macroeconomy,” Mr. Varoufakis said.
Mr. Schäuble’s appointment as speaker must still be approved by the Bundestag, but he is not likely to face significant opposition. He is viewed as someone with the authority to keep order in the legislature, which will be more fractious after the far-right Alternative for Germany party won seats Sunday. The party has vowed to be a disruptive force.
If he ascends to the post of president of the Bundestag, the position’s formal title, Mr. Schäuble will ostensibly be Germany’s second highest official, just behind the president, Frank-Walter Steinmeier, and ahead of the Ms. Merkel. Mr. Schäuble’s nomination for the new position was confirmed Wednesday by Volker Kauder, chairman of the Christian Democrats’ parliamentary bloc. Mr. Schäuble will probably remain at the Finance Ministry until a successor is chosen, a process that could take months.