By Noah Barkin and Annika Breidthardt
BERLIN (Reuters) - Two years ago Wolfgang Schaeuble's 40-year career in German politics seemed at an end.
After repeated trips to hospital because of complications from an operation, he told Chancellor Angela Merkel he felt unable to continue as her finance minister. She encouraged him to stay and now the 69-year old appears on the verge of a new chapter in a career with more twists and turns than any other post-war German politician.
Twenty-two years after he was shot and paralyzed from the waist down, Schaeuble is the leading contender to become chairman of the Eurogroup, the influential policy-setting forum of euro zone finance ministers. The appointment would give Germany control over one of the most important European policy jobs, formalizing its transformation to unabashed leader of the single currency bloc. Many people would see it as a sign of growing German dominance over its economically weaker partners.
But conversations with more than half a dozen colleagues, friends and relatives of Schaeuble suggest the move could actually end up tempering Berlin's leverage.
Schaeuble, a trained lawyer who was born in the Black Forest near the French border during World War Two, is frequently referred to as the last true European in the German government.
He is a passionate defender of closer integration who has nudged Merkel in that direction at a time when many Germans have grown skeptical about the single currency project. As Eurogroup chairman he would have more freedom to push that vision.
"I've known him since 1969 and from the beginning there was always one theme above all that drove him, and that was Europe," said Hans-Peter Repnik, a longtime friend who met Schaeuble when both were in the youth wing of the Christian Democrats (CDU).
"In the past it was difficult, even impossible to envision a German in a role like this. But Schaeuble is unique because he has managed to defend German interests while conveying to other countries that it is Europe's future he is fighting for."
Few German politicians have been as influential as Schaeuble over the past three decades.
The longest-serving member of the Bundestag lower house, he led the negotiations on German reunification and is credited by many with swaying the decision to move the capital to Berlin from Bonn with a passionate 1991 speech in parliament.
His career has also been clouded by disappointment.
Former Chancellor Helmut Kohl publicly anointed Schaeuble his successor in 1997, but then refused to make way for his protégé, later dragging him down in a campaign financing scandal that vaulted Merkel into the CDU leadership.
His dream of becoming chancellor over, Schaeuble set his sights on the German presidency, only for Merkel to quietly drop her support for his candidacy in 2004.
His career at the very top of German politics seemed over when Merkel unexpectedly brought him into her cabinet as interior minister in 2005. Four years later his shift to the finance ministry made the revival complete.
He became Germany's point-person for the European debt crisis, before health issues flared up in 2010, forcing him into hospital during an emergency summit meeting in Brussels and raising questions once again about his political future.
But now Schaeuble is seen as the only viable candidate to replace Jean-Claude Juncker, the Luxembourg prime minister who has had the Eurogroup job for more than seven years and wants to give up when his term ends in June. He has said he is exhausted.
Schaeuble has signaled in private that he is ready to take the job if Juncker leaves, though Eurogroup members may not make a final decision until after the French election in May.
Thomas Schaeuble said the health problems his older brother experienced two years ago were a thing of the past.
"At the moment he is feeling better than ever," the younger Schaeuble told Reuters. "He's become very disciplined. He doesn't smoke any more, doesn't drink much and exercises, on a hand-bike and of course regular gymnastics."
Some colleagues wonder whether Schaeuble could be taking on too much with the Eurogroup post, which could add hours of work each day to his schedule as finance minister.
"Schaeuble sees it as the big European job that would crown his career," one senior German official who has worked with Schaeuble said. "But he has no idea how much work the Eurogroup job entails."
NEGOTIATOR TO MEDIATOR
The official said Schaeuble would have to transform himself from tough negotiator to mediator in the new post, leaving the work of pushing Berlin's positions to his deputy Thomas Steffen.
A European official said Germany would find it more difficult to press its views if Schaeuble were to get the post.
"That's why many are in favor of it," he said.
A third official, who worked with Schaeuble when he was interior minister in Merkel's first term, pointed to his work chairing meetings to boost dialogue between the government and German Muslims as a model for how he would do the Eurogroup job.
"At the first meeting at the Charlottenburg Palace in 2006, the debate got really heated, there was lots of tension," that official said. "Schaeuble said little himself, he let the others speak. But at the end he took control, summed up the different positions and it was clear to everyone that he had listened and understood."
"He has a great feel for the small guy, he's very attuned to their problems. He's not a dogmatic German."
Both as interior and finance minister, Schaeuble has always made a point of attending European meetings that his predecessors often did their best to avoid, or leave early.
At the last meeting of European finance ministers in Brussels for example, attendees say he insisted on staying until the bitter end of a discussion on Hungary, when counterparts had left for the airport, leaving ambassadors to negotiate instead.
In private, he has bemoaned efforts by European leaders to bypass the Eurogroup and take control of the policy process themselves, telling colleagues that they only mess things up.
If he gets the post, some expect him to try to restore the primacy of the finance ministers in policy matters.
"Many of the central policy decisions are taken at the Eurogroup. It is a pretty powerful position," said Guntram Wolff, deputy director of the Bruegel think tank in Brussels.
"It would be a good signal to have someone from Germany at the heart of European decision making. It would anchor Germany in Europe, really bring it all together."
(Additional reporting by Ilona Wissenbach in Brussels, Daniel Flynn in Paris; Writing by Noah Barkin; editing by Anna Willard)