At times, he has played the bad cop, especially on Greece, questioning, among other things, why the yachting class hasn’t made more sacrifices, why the country was in such a hurry to hold elections and whether Greeks would keep their commitments.
Although Schaeuble has always expressed sympathy with Greeks who are bearing the brunt of the economic reforms, his comments in February drew an angry response from Greek President Karolos Papoulias, 83, who fought the Nazis as a member of the Greek resistance.
“Who is Mr. Schaeuble to insult Greece?” Papoulias said at the time.
No short-term plans
Schaeuble and Merkel say they would be happy to have Greece in the euro zone but that the currency union would survive without it. They say that they have no new short-term measures up their sleeves and that others are overestimating Germany’s resources when they ask it to supply cash to end other countries’ financial difficulties.
Schaeuble and Merkel speak daily for at least 10 to 15 minutes, his advisers say. Although they were spotted together in April at a movie called “Pretty Much Best Friends,” they call each other Frau Merkel and Herr Schaeuble, and their decades-long working relationship has never blossomed into friendship.
“It’s not like in the Anglo-Saxon world where you call everyone Wolfgang and Angela,” Schaeuble said. “We have good relations, but of course we are different by age, by behavior. But the fact that we know each other for quite some time now is a good basis for trustful and respectful cooperation, as well.”
Merkel, a physicist who grew up in communist East Germany, was born almost a decade after the end of World War II. Schaeuble, a lawyer from the southwestern corner of Germany, just over the border from France, was born in the middle of the fighting, the only member of Merkel’s cabinet to have that distinction.
“That affects everything he does,” said Hans Peter Schuetz, the author of a forthcoming biography of Schaeuble.
“He is, by far, the most pro-European politician in the government, and perhaps in German politics,” said Joerg Asmussen, a board member of the European Central Bank who, until last year, was one of Schaeuble’s top deputies at the Finance Ministry.
And Schaeuble has studied how other countries faced their own problems, a few weeks ago reading the memoirs of former Treasury secretary Henry Paulson — although many in Germany look at the U.S. deficit and debt levels and say it’s not for them.
Instead, the lessons of Germany’s reunification — which Germans in the former west are still paying for through a “solidarity” surcharge on their taxes — reverberate in policymakers’ understanding of the current crisis. Schaeuble said that East Germany was less like Greece and more like the relatively better-off members of the former Eastern Bloc, such as Poland and the Czech Republic. But the massive transfers of money from west to east — and the commitments that East Germans made in return, along with the difficulties that ensued — still echo through the finance ministry.
“Reunification was a big, fat transfer union,” said Markus Kerber, chief executive of the Federation of German Industries and a longtime Schaeuble confidant. East Germans “knew the future was where they would find jobs. And jobs are where capital is being invested and deployed. This is the truth they already know, deep, deep down, about the European monetary union. More capital needs to go to the peripheral countries, without being denounced as a transfer union.”
Schaeuble says he remains confident that Europe will make it through the crisis.
“If we stick to the decisions we have made, if we implement them, if markets see that, yes, the Europeans are delivering on what they decided, we will convince investors,” he said.