Germany's Merz names utility executive as economy minister among first cabinet picks

By Andreas Rinke and Sarah Marsh

BERLIN (Reuters) -Germany's Chancellor-in-waiting Friedrich Merz on Monday named utility executive Katherina Reiche as his likely economy minister and foreign policy expert and ally Johann Wadephul as foreign minister, as part of a raft of first appointments.

Merz's CDU/CSU conservatives, who topped February's elections, clinched a coalition deal with the centre-left Social Democrats (SPD) earlier this month as they race to form a new government to deal with an array of international crises.

The two parties aim to revive growth in Europe's largest economy just as a global trade war sparked by U.S. President Donald Trump's sweeping import tariffs threatens another recession year, and to ramp up defence spending amid strains in the transatlantic NATO alliance.

Merz hopes his government will avoid the infighting that plagued the three-party coalition of his Social Democrat predecessor Olaf Scholz - and eventually led to its collapse last November - and that it can prove more decisive.

Even before taking office, Merz and the SPD managed to push a historic fiscal package through parliament that will enable his government to drastically boost spending on infrastructure and defence.

The coalition deal accorded Merz's Christian Democrats (CDU) the economy and foreign ministries, their Bavarian sister party the Christian Social Union (CSU) the interior ministry and the SPD the defence and finance ministries.

Germany's most popular politician Boris Pistorius is widely expected to remain defence minister, while many bet on SPD party chief Lars Klingbeil to become finance minister.

ECONOMY PLANS

The new coalition's plans include cutting taxes for middle and lower income Germans, reducing a corporate tax, lowering energy prices, supporting the electric car industry and scrapping a disputed supply chain law.

With the far-right Alternative for Germany (AfD) breathing down its neck, the coalition has signalled a tougher stance on migration. It has also vowed strong support for Ukraine and higher military spending as Europe faces a more hostile Russia.

Reiche, a former lawmaker, has been CEO of regional energy infrastructure firm Westenergie - a division of E.ON, Europe's largest operator of power grids - since early 2020.

Before her new role, Reiche - who sits on the supervisory board of automotive supplier Schaeffler - was the chief executive of Germany's VKU association of local utilities.

Various industry associations praised the 51-year-old on Monday as a competent manager with experience in the sector.

She takes over from Robert Habeck of the Greens, who held the economy portfolio during Europe's energy crisis and was sharply criticised by the opposition for what they called his lack of expertise. Outside of politics, Habeck was an author, in particular of children's books.

Wadephul, a member of Germany's parliament since 2009, is deputy leader of the CDU/CSU conservative faction in parliament responsible for foreign and defence topics.

He will succeed Annalena Baerbock of the Greens in the position; Baerbock often dissented on foreign policy favoured by Scholz and the SPD.

The fact the conservatives will hold both the chancellery and the foreign ministry, and that Wadephul is a Merz ally, suggests there could be a clearer German line on foreign policy that allies will probably appreciate, analysts say.

"Merz has created the conditions and structures to be a very strong chancellor in foreign policy," said Jana Puglierin, head of the Berlin office of the European Council on Foreign Relations think-tank. "He will be responsible for relations with the United States, China and Russia."

NEW DIGITALISATION MINISTRY

Reflecting the realisation Germany needs to improve the digitalisation of its economy, Merz's coalition has created a new ministry for digitalisation to be headed by business executive Karsten Wildberger, the conservatives said.

"The establishment of the new department is a milestone for Germany," said Ralf Wintergerst, head of German digital association Bitkom.

Wildberger has headed electronic retail group Ceconomy AG since 2021, previously serving on the executive boards of E.ON, Telstra, and Vodafone.

The nomination meanwhile of Alexander Dobrindt of the CSU as head of the interior ministry indicates a tougher stance on migration, as the coalition seeks to reduce support for the anti-immigrant AfD, which has topped some polls in recent weeks.

The SPD will nominate its ministers after party members have approved the coalition deal in a vote, party chief Klingbeil has said. The results of the vote are expected on Wednesday.

Merz is expected to be sworn into office on May 6.

(Reporting by Andreas Rinke and Sarah Marsh; Additional Reporting by Rene Wagner, Alexander Huebner and Matthias Inverardi; Editing by Gareth Jones and Mark Heinrich)