The Social Democrat will take charge of tackling a brutal Covid 19 outbreak and a raft of geopolitical challenges, including the standoff over Ukraine, when laf Scholz was elected by Germany's parliament.
He is expected to be sworn in later on Wednesday, ending Angela Merkel's 16 year tenure and becoming the country's ninth chancellor since World War II. The outcome in the Bundestag was not in doubt because of his three-party coalition's majority.
The 63-year-old, Merkel's vice chancellor for the past four years, represents renewal at the top but not too much. The voters who gave him a narrow victory in the Sept. 26 election saw much of what they liked about Merkel — a steady hand and competent, if not charismatic, leadership.
He will preside over his inaugural cabinet meeting this evening and take over after Merkel declared Germany's status as the supreme power broker in the European Union and one of the leading countries in the West. Scholz will have to learn how to apply Germany's leverage in the face of threats to Europe's eastern frontier and the ascendancy of China as a superpower.
He'll have to deal with mounting pressure from the U.S. over the Nord Stream 2 gas pipeline connecting Russia with Germany's north coast. According to documents seen by Bloomberg and people familiar with the plans, the U.S. will push Germany to stop the almost-completed project if Russian President Vladimir Putin invades Ukraine.
In a Bloomberg interview, Marcel Fratzscher, president of Germany's DIW economic research institute, said that Russia has the ability to blackmail Germany and Europe. My hunch at the moment is that this pipeline won't take off, that it will be blocked permanently. Scholz has already demonstrated domestic political prowess, and he has assembled a government with two other parties with sharply different policies - the Greens and the pro-business Free Democrats.
The coalition, which holds 416 of the Bundestag's 736 seats, was formed more quickly and seamlessly than most political observers in Berlin expected. Scholz received 395 of the 707 votes during the vote on Wednesday.
The 177-sided coalition accord has the finger prints of each party. The Greens brought the country s coal-exit date forward to 2030, the SPD secured a minimum-wage increase to 12 euros $13.50 an hour and pension guarantees, and the FDP won out on a promise not to raise taxes and preserve constitutional debt limits.
Political fights are baked in. With billions in investments to expand renewable resources on the path to carbon neutrality by 2045, the Greens pledge to push Germany to the forefront of the battle against climate change. The FDP has assured its base that it will keep spending and debt in check.
Read more: How Germany s new government plans to be the greenest yet?
Christian Lindner, the FDP chairman who will be Scholz's finance minister, has warned on Tuesday that the government is watching inflation — or monetary devaluation — very closely and will factor it into fiscal decisions.
Robert Habeck, the Green vice chancellor who oversees climate policy, said his party would stick to the ambitious pledges that were secured in the accord.
Ricarda Lang, a Greens deputy leader, said in a Bloomberg TV interview that we are fully aligned when it comes to goals.
The main challenge for the entire coalition will be tackling the Pandemic. In Germany, there has been an unprecedented surge in infections in recent weeks, which has lag western European peers in vaccination rates.
Scholz wants to prevent hospitals being overwhelmed by Covid patients, so he has called for a national effort to administer 30 million shots by the end of the year. He has backed a vaccine mandate that is expected to go to a vote in the lower house of parliament by the end of the year.
Scholz, a one-time SPD activist and lawyer who became a staunch defender of labor-market overhaul under Gerhard Schroeder, brushed past setbacks to become labor minister in Merkel's first grand coalition with the SPD. He returned to his hometown of Hamburg and governed the city from 2011 to 2018 based on a state election.
He is now based in Potsdam outside Berlin, where he won a seat for the Bundestag this year. His wife, Britta Ernst, is the education minister for the eastern state of Brandenburg.
Scholz, who many in Germany had written off as recently as the summer, staged a surprise comeback victory in the September vote. His direct opponents, CDU Chairman Armin Laschet and Greens Co-leader Annalena Baerbock, stumbled in their bid to win over voters.
The new ruling coalition, a formation that has never tried at the federal level, will have Germany's first cabinet staffed by women excluding the chancellor himself, Baerbock will be the first female foreign minister, while the SPD s Christine Lambrecht will be defense minister. Nancy Faeser, a SPD leader from the western state of Hesse, will take over the interior ministry - another first.
Christine Lagarde, European Central Bank President, said she is certain that Scholz and his government will continue to work hard to advance European integration. I have always admired how Angela Merkel has steered Germany through many crises, Lagarde was quoted as saying on Wednesday by the Handelsblatt newspaper. I am sure that Olaf Scholz will work just as calmly, thoroughly, and in a focused way on the huge tasks that he and his government have before them.