Merkel's CDU must relinquish finance ministry, FDP leader says

BERLIN (Reuters) - Germany's next finance minister should be politically independent from Chancellor Angela Merkel, the leader of the Free Democrats (FDP) said on Tuesday, rebuffing calls to keep the ministry in conservative hands.

Merkel's conservatives are poised to begin tricky three-way coalition talks with the pro-business FDP and the environmentalist Greens following an election last month in which her party suffered a sharp drop in support.

Wolfgang Schaeuble, a veteran member of Merkel's Christian Democratic Union (CDU), is giving up the finance ministry after eight years to become president of the Bundestag lower house of parliament.

He has been temporarily replaced by Merkel ally Peter Altmaier. But FDP leader Christian Lindner said the CDU should relinquish the post in a new government, rebuffing Volker Kauder, a senior Merkel ally, who said last week that the party should keep control of the ministry in order to safeguard Schaeuble's legacy.

"I think the Chancellery and the finance ministry should be politically separate," Lindner told the Frankfurter Allgemeine Zeitung. "A Green, a CSU or an FDP finance minister - anything would be better than leaving the finance ministry in CDU hands."

Lindner was coy about whether he might do the job himself. The expectation is that the FDP will claim the ministry, but senior members of the party say Lindner, who indicated during the election campaign that he might prefer to stay outside the cabinet, has not made up his mind yet.

In the interview, Lindner reiterated hardline FDP positions on Europe that appeared in the party's election programme, including calls for an insolvency mechanism for the euro zone and treaty changes to allow countries to exit the euro.

Lindner also voiced opposition to the idea of turning the euro zone's rescue mechanism, the ESM, into a more powerful European Monetary Fund, an idea supported by Schaeuble, Merkel and French President Emmanuel Macron.

"In a monetary union where the deficit rules of Maastricht are respected, there is no need for permanent rescue funds," Lindner said.

He came out against a common deposit insurance scheme for European banks and warned Merkel and Altmaier against doing deals in Brussels before a new coalition government is in place.

"Germany is not currently in a position to take decisions," Lindner said. "For me it is completely out of the question that a finance minister who is only there in an acting capacity negotiates in Brussels as if nothing has happened. No decisions can be taken without achieving a new political legitimacy."

(Reporting By Thomas Escritt; Editing by Noah Barkin)