GERMANY

Merkel seals deal to form German 'grand coalition' with SPD

Key concessions point to a working parliament, but deal still faces crucial vote of SPD members

PUBLISHED : Wednesday, 27 November, 2013, 1:53pm
UPDATED : Wednesday, 27 November, 2013, 9:25pm
 

German Chancellor Angela Merkel early on Wednesday agreed to form a coalition government with the Social Democrats, negotiation sources told reporters, two months after her conservatives won elections but fell short of a full majority.

Merkel’s Christian Democrats, their Bavarian allies the CSU and the Social Democrats (SPD) agreed the deal after marathon talks lasting 17 hours and were due to formally present it to a meeting of some 75 delegates from all three parties.

For us it’s a package that, I believe, we can present to our members
SPD OFFICIAL ANDREA NAHLES

In the tense final round of talks, the centre-left SPD scored several key concessions, including the introduction of a national minimum wage from 2015, while Merkel stuck to her guns on her own red-line issue and blocked higher taxes for the rich.

The chancellor now hopes to be sworn in for a third term on December 17 as leader of Europe’s biggest economy, but a key hurdle remains: a binding SPD membership ballot next month must still sign-off on the proposed left-right ‘grand coalition’.

The outcome of the rank-and-file postal ballot remains far from certain because many SPD members reject the notion of their traditionally blue-collar party again governing in the shadow of Merkel, as it last did in 2005-09.

After that uneasy political marriage, the SPD scored two humiliating electoral defeats in a row, winning less than 26 per cent against the conservatives’ nearly 42 per cent in the September 22 ballot.

SPD chief Sigmar Gabriel, who would be Merkel’s vice-chancellor, hopes to convince the base of his 150-year-old party with the key concessions his team has wrested from the conservatives in recent weeks.

To avoid the impression that SPD chieftains are worried only about gaining cushy ministerial posts, they have focused on their policy deal and reportedly plan to stay silent on who would get which portfolio in the next Merkel cabinet.

In the protracted talks, the SPD scored a major victory on its core demand, a minimum wage of 8.50 euros (HK$89.02) per hour from early 2015 to help the country’s army of working poor.

The move aims to narrow a wealth gap brought about by decade-old labour reforms but should also cheer critics in the United States, the IMF and Europe who want the export-power to stimulate domestic demand and correct its lopsided trade balance.

The SPD also pushed through a demand for a 30 per cent women’s quota on the boards of listed companies from 2016, and an easing of a ban on dual nationality, a key demand of Germany’s large Turkish immigrant community, sources said.

Both sides also agreed on pension increases to protect retirees in rapidly ageing Germany, where many elderly are growing scared of suffering poverty in advanced age.

Bavaria’s CSU also brought home the bacon on its own pet issue – charging foreign drivers a toll for using Germany’s famed autobahn highways, negotiation sources said.

In all, the additional spending and investment agreed by all sides until 2017 amounts to 23 billion euros, reported national news agency DPA. Details of the more than 170-page coalition deal were to be presented on Wednesday.

Like Germany’s lacklustre election campaign, the coalition talks centred not on big European or global issues and ideas, but mostly on haggling over the finer points of domestic policy.

“Because the Merkel-Gabriel government, if it comes into being, lacks a political idea, a project or a vision, issues like the women’s boardroom quota, the car toll for foreigners and the mothers pension are inflated as large-scale projects,” said the Dresden newspaper Saechsische Zeitung.

“This kind of politics suits Angela Merkel. Rather than take long-term steps against the impact of an ageing society or the euro-zone crisis, she likes to come to the office in the morning and deal with the problems of the day.”

 

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