Merkel Loses Economy Minister Ahead Of Election

Standing alongside Seehofer at a news conference, Guttenberg said he was ready to take on the position.

Conservative Michael Glos stood down as German economy minister on Monday in favour of newcomer Karl-Theodor zu Guttenberg, in an embarrassing setback for Chancellor Angela Merkel as she prepares for a federal election.

Glos, 64, shocked the chancellor at the weekend by tendering his resignation, forcing her to fill an important cabinet post with an untried figure less than eight months before she seeks re-election.

Commentators said Glos's decision partly reflects his lack of influence and his departure is unlikely to prompt any major change of economic policy by the government, which has been steered by the finance ministry since the global crisis began.

His 37-year-old successor Guttenberg, who until a few months ago was little known outside his native Bavaria, will be responsible for tackling an economic downturn that threatens to be the deepest Germany has seen since the end of World War Two.

"He has taken over a challenging job at a time when we must continue to battle the international economic crisis," Merkel told reporters, adding that he had her full support.

"He has wide international experience and I think that will be a big help in overcoming the crisis," she added.

A member of the conservative Christian Social Union (CSU), Bavarian sister party to Merkel's Christian Democrats, Glos initially had his request turned down by CSU party leader Horst Seehofer. However, by Monday Seehofer had relented.

The conservative camp shares power at the federal level with the Social Democrats (SPD) in a loveless coalition.

As a replacement, Seehofer proposed Guttenberg, who first achieved national prominence when he took up the office CSU general secretary in November. The president's office said Guttenberg would take up his position on Tuesday.

Guttenberg, a trained lawyer from an aristocratic family from Franconia in northern Bavaria, said he was ready to take on the position, which he would be the youngest person to hold in Germany since the war.

"We are in one of the greatest crises of the past years, a global crisis," he told reporters in Munich, adding he aimed to bring new strength and resolve to tackling the downturn.

However, Guttenberg may be a tougher partner for Merkel as he is close to Seehofer who has adopted a confrontational course with the CDU. He has made demands of Merkel, for example insisting that tax relief was included in the government's second stimulus plan.

TROUBLED INHERITANCE

An expert on defence and a member of the lower house's committee on foreign policy, Guttenberg ran a family business before his election to parliament in 2002.

He inherits an economy which has been in recession since last year and which is expected to contract faster this year than at any time since the end of the war.

Industry has already entered its sharpest downturn since the country reunified in 1990 and unemployment is on the rise.

Gero Neugebauer, a political scientist at Berlin's Free University, said the loss of Glos was unlikely to benefit Merkel's rivals and coalition partners, the Social Democrats.

"At most, it will probably weigh on how well people think Merkel can manage a crisis," he said.

Glos has been criticised for keeping too low a profile during the global economic crisis, and he was reportedly unhappy about what he saw as a lack of support from Merkel.

Glos, a trained miller, took on the job at short notice in 2005 when former CSU leader Edmund Stoiber rejected it, and his period in office has been spent in the shadow of Finance Minister Peer Steinbrueck, a member of the Social Democrats.