On Wednesday, Hannelore Kraft became minister-president of North-Rhine Westphalia, Germany’s most populous state, with a minority coalition government between her left-wing SPD party and the Greens. To get herself elected, the 49-year-old SPD politician – a trained economist who previously served as minister of Science and Research in a similar regional Red-Green government during 2002-2005 – opted for a minority government dependent on the radical Left Party, whose 11 MPs abstained in the second round of voting, thus handing Kraft’s coalition the required simple 90 - 80 vote over the center-right CDU-FDP parties that lost power in the May 2010 state elections.

During her campaign, Kraft always emphasized that it was imperative to form “a stable government” for North-Rhine Westphalia and its 18 million inhabitants (the state is more populous than the country that’s next door, Holland). Notwithstanding her commitment to stability, Kraft shrewdly avoided ruling out any future coalition options, thus leaving the door open for some type of formal or informal cooperation with the Left Party. Kraft’s decision to forge a Red-Green minority government tolerated by the post-Communists immediately drew massive criticism from the ruling CDU/CSU-FDP coalition in Berlin. Chancellor Merkel accused Kraft of “a massive breach of faith,” stating bluntly that “you can’t trust a government like that.”

For embattled Chancellor Merkel, Kraft’s election, following the defeat of the CDU-FDP government in North-Rhine Westphalia, is both politically difficult and embarrassing. The most immediate and significant consequence is that the leader of Germany’s ruling center-right coalition has lost control over the Bundesrat, the parliament’s upper chamber. The Bundesrat is composed of representatives from the 16 German “Laender” (states) and plays a crucial role because it approves more than 40 percent of all laws passed by the lower chamber, the Bundestag.

As a result, the potential for a domestic political logjam in Berlin has just increased considerably, making it tempting for the populist SPD party leader, Sigmar Gabriel, to try and pursue the type of “Blockadepolitik” that had already doomed former Chancellor Helmut Kohl during his last years in office in the late 1990s. Prior to a major constitutional reform in 2006, the Bundesrat approved more than 60 percent of all German laws. Furthermore, it was the SPD’s historic defeat in regional elections in North-Rhine Westphalia five years ago that prompted then-Chancellor Gerhard Schroeder to call for early elections. Several months later, his Red-Green coalition was swept from power, mainly due to record unemployment and unpopular economic reforms.

For reasons already outlined in a previous posting, I am pretty convinced that the current CDU/CSU-FDP government will serve out the remainder of its term until 2013, in spite of all the recent political difficulties arising from lack of strong leadership as well as frequent coalition infighting. Of course, whether the leader of that center-right coalition is still the same three years from now is an entirely different (but infinitely more intriguing) question.

That being said, one should not overlook the fact that Hannelore Kraft’s election as chief executive of Germany’s most-populous state could also have important political ramifications that go beyond swinging the balance of power in the Bundesrat. Very importantly, the rising fortunes of Hannelore Kraft (her last name aptly translates as “power” in German) are also bound to affect the balance of power within the SPD as the country’s main opposition party. Until now, SPD chairman Sigmar Gabriel – who, like his mentor Gerhard Schroeder, combines a strong populist streak with killer political instincts – has been regarded as the undisputed front runner to take on incumbent Chancellor Merkel in the next general elections. A second potential challenger, Frank Steinmeier, Merkel’s technocratic foreign minister and vice chancellor in her CDU/CSU-SPD “Grand Coalition” during 2005-2009 – is now the SPD’s rather isolated Bundestag leader and cannot count on the support of the party’s rank and file members.

Enter Hannelore Kraft. As a senior SPD strategist who serves as an informal political advisor to the new minister-president told me, Kraft has the opportunity to emerge as the SPD’s new de facto national leader. “If Hannelore Kraft keeps her Red-Green minority government together and establishes a solid policy record over the next 2-3 years, no one within the SPD will be able to seriously challenge her as the top opposition candidate to take on Chancellor Merkel in the 2013 election cycle,” he added. “Remember, she just delivered North-Rhine Westphalia and reclaimed the country’s most sought-after political prize for the SPD. Sigmar Gabriel, in contrast, failed to secure his own re-election as minister-president of Lower Saxony.”

Of course, any “Hannelore for Chancellor” campaign is still a long way away, and her path to the top of German politics remains fraught with uncertainty (primarily over whether the Left Party will continue to tolerate the current Red-Green minority government). But the SPD strategist who just outlined Kraft’s national ambitions this week is the same person who told me more than a year ago that she would be North-Rhine Westphalia’s next minister-president – at a time when virtually no one (including myself) took her seriously. To be honest, I am still not sure whether Hannelore Kraft can leverage North-Rhine Westphalia as a springboard to become Germany’s next female chancellor. But you heard it here first.