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Germany's financial fire-fighter steps back, but for how long?

Annika Breidthardt
Tuesday, 17 Dec 2013 | 7:14 AM ET

* Asmussen steps down from ECB two years into 8-year term

* Desire to spend more time with family cited for decision

* New job in labour ministry means big cut in pay, prestige

* Post could help Asmussen build trust within SPD

BERLIN, Dec 16 (Reuters) - Leaving the spotlight of the European Central Bank for a back-office position in a German ministry that pays a fraction of the salary might look at first glance like professional suicide for Joerg Asmussen.

But the slim 47-year-old with the shaved head, at the centre of German financial crisis-fighting efforts for over half a decade, may be hoping a strategic step backwards will set him up for bigger and better things down the line, possibly even the German finance ministry.

"There's no question, he's got bigger plans," said one veteran lawmaker from Asmussen's Social Democrats (SPD).

Asmussen's announcement on Sunday that he would return to Berlin after just two years on the ECB's six-member executive board was one of the big surprises of a weekend filled with personnel decisions for Angela Merkel's new government, a "grand coalition" that includes the conservative chancellor's centre-left rival, the SPD.

The fireman's son from Flensburg on the Danish border said he was leaving Frankfurt in order to spend more time with his two young daughters in the German capital.

His new job: state secretary in the German labour ministry under fellow Social Democrat Andrea Nahles, a left-winger four years his junior who has no experience as a minister, let alone hob-nobbing with the elite of international finance.

Among Asmussen's new responsibilities will be pensions, European coordination on social policy and the integration of the disabled into the labour force.

After taxes, he will earn just a third of what he did at the ECB, where he was on an annual salary of nearly 270,000 and taxed at low EU rates.

"I must say that I find this very surprising," said one euro zone official who requested anonymity. "The new job seems to me like two steps down from his current one."

THE FAMILY

At the heart of Asmussen's decision appears to be a genuine desire to see more of his family. At the height of the global financial crisis in 2009, when he was a deputy finance minister, he missed his second daughter's birth because of emergency meetings.

Two years later when he was tapped by Merkel to go to Frankfurt, Asmussen and his partner Henriette Peucker, a communications consultant, thought about moving the entire family down there.

But Peucker and the girls ended up staying in Prenzlauer Berg, a trendy district in east Berlin. Asmussen has commuted by plane to Frankfurt, where he rents a small flat. He has often given speeches in the German capital on Fridays and Mondays to keep him close to home.

Still, personal considerations may not have been the only reason for his decision.

ECB President Mario Draghi praised Asmussen in an email to staff on Monday, saying he would "miss him as a friend and as a highly skilled board member."

But officials in Frankfurt say he never appeared to relish the central banking job.

"For insiders it was clear from the start that Asmussen saw himself as a temporary replacement, and never really settled in at the ECB," said one central banker who knows him well.

In returning to Berlin, Asmussen may be making a bet that the new position will help him build the SPD power base he needs for a shot at a bigger, more political post.

This time around, despite sending signals to Merkel and SPD officials that he wanted to return to Berlin, he found himself without the allies needed for a top job in the Chancellery or the cabinet.

In the SPD he is viewed by some as too close to the chancellor, with whom he has built up trust after years of late-night crisis fighting sessions. Conservative allies of Merkel view him with suspicion because of his SPD membership.

ONLY OPTION

In the end, the labour ministry was the only option available in Berlin.

There, he can help Nahles with the introduction of a nationwide minimum wage, the SPD's signature policy initiative heading into its new coalition with Merkel. If that goes well, Asmussen will have earned his SPD spurs. In four years time, he will be only 51 years old, young by political standards.

Still, his return to the top flight of German or European policymaking now depends on the success of his party, which saw its support slide during its first partnership with Merkel between 2005 to 2009.

The other big surprise of the weekend was the appointment of Ursula von der Leyen to the post of defence minister, a move that vaults the popular mother of seven her into pole position to replace Merkel should she step aside after three terms.

Regardless of who runs for the conservatives, the SPD and Asmussen face an uphill battle to return to the top.