MUENTEFERING RESIGNS; STEINMEIER BECOMES

C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 002060

SIPDIS

SIPDIS

E.O. 12958: DECL: 11/13/2017
TAGS: PGOV PREL GM
SUBJECT: MUENTEFERING RESIGNS; STEINMEIER BECOMES
VICE-CHANCELLOR, SCHOLZ, LABOR MINISTER

REF: A. BERLIN 1977

B. BERLIN 1853

C. BERLIN 1604

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Classified By: Political Counselor Jeffrey Rathke for Reasons 1.4 (b) a
nd (d)


1. (C) Summary: In a surprise move, one of the Social
Democratic Party's (SPD) top politicians and ministers, Franz
Muentefering, announced his resignation as Vice-Chancellor
and Labor Minister November 13, citing personal reasons.
Later in the day, SPD Chairman Kurt Beck announced that
Foreign Minister Frank-Walter Steinmeier will become
Germany's new Vice Chancellor and Parliamentary Whip Olaf
Scholz its new Labor Minister. Although Muentefering's wife
has been suffering from cancer and recently underwent a
second round of surgery, Muentefering's decision likely was
also influenced by his diminished role and stature in the SPD
and the governing coalition after a bruising debate with Beck
over the party's direction. The selection of Steinmeier and
Scholz, both closely affiliated with Gerhard Schroeder's
economic reforms, to take over Muentefering's offices
suggests that Beck is sending a centrist signal on domestic
politics. Beck appears intent on consolidating his position
in the SPD and building up the party from its weakened state
during the next two years before national elections. End
summary.

Steinmeier's Ascent Continues
--------------


2. (C) Recently elected to one of three SPD deputy chairman
positions (see reftel A),Steinmeier continues his rise to
political influence, an astounding development for one who
never has held elective office. Steinmeier's appointment as
Vice Chancellor also marks a return to the German political
tradition in which the foreign minister holds the second
highest office in government. Steinmeier, a centrist on
domestic policy, likely will face a delicate balancing act --
pursuing joint successes for the Grand Coalition while
fostering a smooth relationship with sometimes left-leaning
Beck, whose recent boost in the polls was based on criticism
of the coalition's economic direction. In his new role,
Steinmeier will have even greater authority to assert his
views on foreign policy and challenge the chancellor -- as he
has recently done implicitly on matters such as Russia policy
or the Chancellor's meeting with the Dalai Lama. As a
result, tensions between the Chancellery and Foreign Office
may increase, although it appears that the SPD still does not
see an interest in provoking a collapse of the Grand
Coalition.

Who is Olaf Scholz?
--------------


3. (SBU) The new Labor Minister-designate, Olaf Scholz, is a
lawyer, federal parliamentarian, and party whip from
Hamburg-Altona. He was general secretary of the SPD from
2002 to 2004. A former IVLP nominee, he is generally
pro-American. Scholz is a very good contact of Consulate
General Hamburg (septel) and someone with whom Mission
Germany has a positive relationship. As recently as November
1, Scholz indicated to Hamburg CG Johnson and Poloff that
"his office is always open to the consulate."


4. (C) Scholz is often viewed as a pragmatic centrist in the
SPD context, including with regard to foreign policy issues.
For example, on Afghanistan, Scholz communicated to CG
Johnson that he understands the necessity of ISAF and OEF and
their importance not only to the security of western
countries, but also to "upholding our international
standing." Scholz said that he would like to see a change in
OEF's structure (NOTE: presumably to shift some OEF training
responsibilities to ISAF, an idea with currency in SPD
circles; END NOTE) and also fewer civilian casualties.
Overall, however, Scholz sees success in Afghanistan as
crucial for NATO and understands the need for Germany to
remain engaged in the country.

Why not Beck?
--------------


5. (C) In the coalition agreement, the appointments of the
vice chancellor and labor minister rest with the SPD, and
therefore with Beck, the party chairman. As a consequence,
Beck could have simply chosen himself to become Labor
Minister and Vice Chancellor. Beck is not lacking in
ambition -- his recent moves to strengthen his position
within the SPD (see reftels) strongly indicate that he has
his eye on the SPD's chancellor candidacy in 2009. Beck has
profited recently from being outside government, which allows

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him to take on the role of an "opposition" politician when it
suits him. For example, he drew praise from the SPD
rank-and-file for his populist proposal to extend the
duration of unemployment benefits to older workers, contrary
to the centrist direction of former chancellor Schroeder's
Agenda 2010 reforms. Furthermore, our contacts in the
Rhineland-Palatinate State Chancellery, where Beck also
serves as Minister-President, suggest that much of Beck's
attention is focused on a severe crisis in the state in which
his heir-apparent and deputy minister-president, Karl Peter
Bruch, is accused of illegally directing a contract to his
son-in-law's company. Beck likely sees his ability to shape
the struggling SPD's identity as greater from outside the
government.


6. (C) Comment: Beck has successfully rid himself of
Muentefering, an extremely skilled centrist politician who
threatened Beck's rank-and-file support by his very presence
in a leadership position. In that sense, Beck is
strengthened. Beck's appointment of Steinmeier and Scholz,
Beck sends a centrist message that may reassure Germans about
the durability of the Grand Coalition, even as Beck himself
tries to use his freedom from federal office to the full
extent to reverse decline in support the SPD has suffered
since Merkel took power two years ago. End comment.
KOENIG