Two personalities have dominated European politics this year: German Chancellor Angela Merkel and French President Nicolas Sarkozy.

Last week a third person was added to the heavyweights in EU politics. The man who acted as former German Chancellor Gerhard Schröder’s old enforcer and spy chief, Frank-Walter Steinmeier, was elevated to the vice chancellorship in Germany following Hans Müntefering stepping down from that post.

Relationships between these two—Merkel and Steinmeier—should make for some extremely interesting politics this winter in the Franco-German realm, especially when Russia’s President Vladimir Putin is added to the equation.

As we have observed in the past, Angela Merkel’s popularity in European and, indeed, world politics, has come significantly as a result of her dream run on foreign policy, allowing her to largely divert attention from the bear pit of domestic affairs on her home turf.

Now, with financial pressures rising within her nation due to German banks’ involvement in sub-prime financing, with a strong euro hurting German exports, continuing difficulties restructuring Germany’s domestic economy, plus a major transport strike on her hands, adding to a German populace fearing the threat of a cold winter at a time of unprecedented energy costs, Merkel faces the prospect of a discontented German electorate finally posing a real test on her leadership at home.

Already, cracks are starting to widen in the grand coalition that Merkel has led since Schröder’s ousting in 2005. Party politics are increasingly coming to the fore to override the relative unity enjoyed by the coalition over the past two years.

Yet it’s not only on the domestic front that the chancellor is currently feeling the pressure. Her foreign-policy halo is starting to tarnish.

During the twilight years of French President Jacques Chirac’s tenure in office, Germany forged ahead as the leader in the Franco-German alliance. Now the unpredictable new premier of France, Nicolas Sarkozy, is attempting to seize the limelight and raise his nation’s global profile. In the process, he is suggesting policy changes within the EU that seem well outside the traditional Franco-German ballpark. This is creating real tension between the German chancellery and the Élysée Palace.

Meanwhile, Russia’s Putin is increasingly playing hardball with Germany and the EU. Merkel has already shown in one recent instance that she is certainly not ready to take on her giant eastern neighbor.

Recently the German airline Lufthansa was embroiled in a dispute with the Russian government applying pressure to relocate its Eurasian air freight hub from Kazakhstan to Russia. In a tit-for-tat spat, Russia banned Lufthansa from flying cargo flights over Russian airspace and Germany retaliated by banning the main Russian airline Aeroflot’s cargo flights from landing at Frankfurt. Suddenly the German Transport Ministry left Lufthansa reeling when it quickly caved in to Russia’s demand rather than see the dispute escalate.

In a recent dispatch, Stratfor commented, “Merkel knows that Europe and Russia are tied together by energy and trade and that regardless of what she and most Europeans think about the Russians, threatening Moscow rarely produces favorable results. Merkel cannot force the other EU members to share her hesitation to counter Moscow—and it only takes one EU member to break economic relations with Russia. Yet Moscow’s continued use of trade and economic relations as political levers is only entrenching many EU members against the bloc’s giant neighbor” (November 15). This will prove a major foreign-policy headache to Chancellor Merkel, having isolated herself from Putin by her reversal of Schröder’s pro-Russian, anti-American approach to Germany’s international relations.

Enter Frank-Walter Steinmeier.

Germany’s new vice chancellor could present a real challenge to Merkel’s coalition leadership. Already Steinmeier has been touted as a prospect to run against her in the next federal elections. He now takes on a raised profile, with Merkel knowing full well that his views on international relations differ from hers. In fact, his views are akin to Merkel’s old rival, Steinmeier’s old boss, Putin’s old pal—Gerhard Schröder.

On Steinmeier’s appointment to Merkel’s cabinet as Germany’s foreign minister, the AXIS news service wrote, “He is a real conductor of ‘special relations’ with Russia; he does not like the USA” (Oct. 14, 2005).

Known as the “grey eminence” of German politics for having maintained a low public profile as a behind-the-scenes fix-it man for Schröder, Steinmeier became the chancellor’s right-hand man during Schröder’s governorship of the state of Lower Saxony. Upon Schröder’s election as German chancellor, Steinmeier was quickly drafted into his inner cabinet.

Under the Schröder chancellorship, Steinmeier held the posts of state secretary in the Federal Chancellery and commissioner for the Federal Intelligence Services during 1998 and 1999. It was during his term as head of Germany’s Intelligence Services that Steinmeier earned his reputation as a “grey eminence.” He was promoted to the post of head of the Federal Chancellery in 1999, a position he held until Schröder was deposed by Merkel in 2005.

Following her election success in 2005, Chancellor Merkel appointed Steinmeier as federal minister for foreign affairs, which portfolio he continued to hold till taking on the vice chancellorship last week.

A doctor of law, Steinmeier, who had a reputation as Chancellor Schröder’s enforcer, has been actively seeking to maintain cross-party unity between the left and right within Germany’s shaky grand coalition government. But it’s his involvement in Russian affairs that will be key to the direction he takes from now on. Indeed, Steinmeier has spoken out against Chancellor Merkel’s approach to Russia as relations between Vladimir Putin and the chancellor remain cool, a stark contrast to the apparent warmth that existed between her predecessor and the Russian president, which continues to this day. Remember, Schröder accepted a top job with Russian energy giant Gazprom.

It is worthy to note that Steinmeier’s first public statement after becoming vice chancellor concerned Russia. Deutsche Presse Argentur reported, “German Foreign Minister Frank-Walter Steinmeier expressed the hope Friday that the conflict over the final status of Kosovo would not escalate, but warned that he expected a deterioration in relations with Russia” (November 16).

The agency pointed to Steinmeier maintaining that he was “pessimistic on renewing the partnership agreement between Russia and the European Union. …The German foreign minister was also sceptical whether the Russians would meet long-standing EU demands for an energy charter. But he warned against isolating Russia, which was urgently needed in attempting to resolve conflicts in the Balkans, the Middle East and in Iran” (ibid.).

Watch Frank-Walter Steinmeier, the “gray eminence” of German politics. Watch for him to undermine Chancellor Merkel’s Russian and U.S. policies and work toward a rapport with Vladimir Putin that will consummate in a new “Molotov-Ribbentrop” pact to secure Germany’s eastern flank as it gets on with the business of countering the foreign-policy push of the biblical king of the south.

Should Steinmeier succeed in effectively balancing Russo-German relations, he may just be the man to take the chancellorship from Angela Merkel at the 2009 elections.

In fact, Steinmeier could just be the man to take that office by a political coup even before that election.