Is Germany’s powerful finance minister in over his head?

BERLIN — Lars Klingbeil’s leap to the highest rung of German politics began on a day of unprecedented defeat for his center-left Social Democratic Party (SPD).

Klingbeil, as one of the SPD’s national leaders during the reign of former Chancellor Olaf Scholz, undeniably bore much of the responsibility for the party’s worst national election result in its modern history in a February snap election. But instead of falling victim to his party’s failure, Klingbeil emerged as the new face of the SPD and one of Germany’s most influential politicians, serving as vice chancellor and finance minister in the new coalition government led by German Chancellor Friedrich Merz.

At at time when Germany, the European Union’s biggest economy, is on the cusp of a historic increase in borrowing and spending, Klingbeil’s control over the purse strings gives him immense power to shape Europe’s course. The only question is whether the cunning that enabled his stunning domestic rise will allow Klingbeil — who has no real governing experience — to thrive in one of the most important, difficult posts in European politics just as the continent faces the immense challenges of war, a fraying alliance with the U.S. and great economic uncertainty.

“When somebody concentrates all power into their hands, then of course that person will be held responsible for their mistakes,” said one SPD politician, speaking on condition of anonymity to discuss internal party matters. In the past, Klingbeil could always blame the party’s failures on others — including Olaf Scholz’s unpopularity — said the parliamentarian. But now, the parliamentarian added, Klingbeil is “the one who has to deliver.”

‘On the edge of the cliff’

The son of a soldier and a retail clerk, Klingbeil grew up in the military town of Munster in northern Germany — home to one of the German army’s largest bases. Disapproving of the military’s hierarchical nature, he was one of the few men in his high school class to forgo military service.

Rather, Klingbeil played guitar in rock bands growing up, including one called Pflaumenmus, or “Plum Jam,” and once joked that he wanted to be a punk rock star, but “somehow no one else wanted that.” The finance minister still keeps his guitars on hand in his home and office, and playing them, he once said, “is for me like meditation.”

Klingbeil, by his own account, was the first person in his family to attend university, studying political science in Hannover. For a stint, he interned at an SPD-affiliated foundation in Manhattan, where he witnessed the 9/11 attacks, an experience, he has said, that sparked a long-term interest in security policy.

Klingbeil entered the German parliament for the first time as a 27-year-old with an eyebrow ring. He was able to work his way up through the party ranks, ultimately shedding the piercing, due to a unique combination of personal attributes: the ability to be friendly, charming and persuasive, while also acting as a ruthless power broker when needed, according to SPD members speaking to POLITICO on condition of anonymity.

“Overall, he’s a very friendly, sociable guy,” said Ralf Stegner, a senior SPD parliamentarian who has known Klingbeil for over two decades. “People who are like that are easily underestimated, because that’s not the usual style in politics.”

Klingbeil says his recovery following a tongue cancer diagnosis in 2014 has shaped much of his outlook. “You look at life differently once you’ve been on the edge of the cliff,” he said in a podcast interview.

Cementing power

During intensive negotiations to establish a coalition between conservatives and the SPD, Klingbeil and Merz established a close personal connection, according to people familiar with the talks.

It was during these negotiations that Klingbeil’s standing inside his own party soared. Even before the coalition deal was announced, Klingbeil reached an agreement with Merz to fulfill one of the SPD’s greatest wishes: the ability to borrow massively to fund Germany’s defense and infrastructure. In addition, he managed to get his SPD, the coalition’s junior partner, control of seven ministries, including the influential finance, defense and labor posts.

Among those appointed are Boris Pistorius — Germany’s most popular politician and the only minister from the previous government to have his mandate renewed. Ahead of the coalition negotiations, it was unclear whether Pistorius or Klingbeil would become the new face of the SPD. Klingbeil, however, has now cemented his position as the party’s clear leader.

In order to do so, Klingbeil, who belongs to the conservative wing of the SPD, selected many young and progressive SPD politicians for ministerial posts and for party leadership positions, which had the effect of winning him broad-based support within the ranks. Following the broad leadership reshuffle, Klingbeil is one of the few survivors.

“He got representation for as many groups as possible to make himself less vulnerable and because he knows that opponents can also be tied to him in this way,” said one SPD parliamentarian on the party’s left flank. “There’ll always be headwinds when there is this strong leadership figure to whom a party is tailored,” the lawmaker added. “On the other hand, I also ask myself who else it could be, because there are few, if any, alternatives.”

The hard part begins

The historic U-turn on German fiscal policy that Klingbeil negotiated with Merz now unlocks hundreds of billions of euros that the new finance minister will have to allocate. That’s an extraordinarily complex task for any finance minister, let alone someone with no technocratic or governing experience.

Klingbeil also faces the more mundane immediate task of getting the budgets for this year and next year over the line by the fall. That task became more challenging on Thursday, as Klingbeil announced that the government, because of the sluggish economy, is now expected to collect €33.3 billion less in tax revenue by 2029 than previously forecast.

He’ll also have to juggle how to preside over a historic expansion in his country’s fiscal policy while maintaining the EU fiscal rules the Germans have long demanded other countries adhere to.

Klingbeil intends to stick to policy and political messaging while handing over the finer financial details to his team of technocrats, according to a Handelsblatt report. However, this is an approach that is doomed to failure, according to ministry officials interviewed by the newspaper; a successful minister, those officials argue, needs to have a good grasp of the technocratic details.

But his biggest task may well be winning the trust of his counterparts in Brussels.

At his first meeting with European finance ministers in Brussels, Klingbeil appeared unprepared when confronted by reporters with tough questions about how Germany’s spending plans can be reconciled with EU budget rules that limit national deficits to 3 percent of gross domestic product.

“I ask for your understanding. This is my fifth day in office,” he told reporters. “All these issues will be resolved in the next few weeks.”