Berlin - Germany's powerful Ministry of Finance is turning into a major political battleground in the moves to forge the nation's new government. Talks are underway to form a new coalition to rule Europe's biggest economy and which is to be headed up by Chancellor Angela Merkel after her conservative Christian Democrats (CDU) emerged as the biggest party in parliament following last month's national elections.
But signs of a tough round of horse trading over posts in the new Merkel Cabinet have already emerged with each of the three parties that are likely to form the government - the CDU and its Bavarian- based associate party the Christian Social Union (CSU) and the business-friendly Free Democrats (FDP) - having laid claims to the prestigious finance portfolio.
This is despite Merkel's having made clear at the weekend that she wants someone from the CDU to take over the Finance Ministry, which will play a central role in steering Germany clear of the recession and knocking its public finances back into shape.
"There will be differences between us, but they are bridgeable," said FDP chief Guido Westerwelle with party leaders insisting that the coalition negotiations have got off to a good start.
However, cutting back the country's record debt levels and tackling a soaring budget deficit - run up as result of efforts to contain the recession - while at the same time launching a hefty round of tax cuts could represent the first major test of the new Merkel-led government.
At the same time, the Finance Ministry could also be expected to take the lead in implementing the far-reaching reforms to financial markets that the Group of 20 major economies, including Germany, have agreed to.
But emboldened by its election success of garnering 14.6 per cent of the vote in the September election and its role as kingmaker following the ballot, the FDP are promoting one of its leaders Hermann Otto to take charge of the Finance Ministry.
Indeed, Westerwelle has entered the coalition talks with Merkel claiming his party's platform has received solid backing at the election and determined that the FDP will not to be relegated to the somewhat servile role it played under previous conservative-lead governments.
To be sure, the Finance Ministry could be key to the FDP's ambitions to press on with a rigorous makeover of the German economy including cutting back public spending and sweeping changes to the nation's tax system.
At the same time, however, the CSU is keen to boost its profile in the new government by arguing that its rising political star, the current Economics Minister Karl-Theodor zu Guttenberg should move up in the cabinet ranking to become minister for finance.
Former CSU chief Theo Waigel held the finance portfolio in Helmut Kohl's CDU-FDP coalition that was voted out of office in 1998 and replaced by former chancellor Gerhard Schroeder's Social Democrat-led government.
Balancing out responsibilities between the Finance and Economics Ministries might help to pave the way for a compromise between the three parties.
There has even been media speculation that the coalition partners will decide to form a new super Finance and Economics Ministry.
Germany might have managed to pull out of recession in the second-quarter, but a major part of the new finance minister's job will be to ensure that Germany remains on a recovery path and to wind back the public spending programmes Berlin launched to help curb the fallout from what has been the biggest economic downturn in a generation.
However, rolling out the fiscal stimulus package combined with the economic crisis have left Germany with a gaping budget deficit of 17.3 billion euros (25.5 billion dollars) during the first half of 2009, compared with a 7-billion-euro surplus during the same period last year.
Meanwhile, the country's budget deficit is expected to jump to about 5 per cent of gross domestic product next year, well above the strict 3-per-cent target for euro member states.
