German parties reach coalition deal

Written By Unknown on Rabu, 27 November 2013 | 19.15

27 November 2013 Last updated at 06:59 ET

German Chancellor Angela Merkel's conservatives have agreed terms for a coalition with the centre-left Social Democratic Party (SPD).

The late-night deal follows talks by SPD leaders with Mrs Merkel's Christian Democrats (CDU) and allied CSU.

She hailed the deal as "very much in the theme of mutual trust", while SPD leader Sigmar Gabriel said it was fair.

Mrs Merkel could be sworn in for a new term in office next month if SPD members ratify the deal.

The CDU/CSU fell short of a majority in September polls, and traditional coalition partner the FDP won no seats.

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Analysis

Under the deal, the SPD gets a minimum wage and a lower retirement age and Chancellor Merkel's Christian Democrats get agreement that taxes will not rise.

The broad thrust of German policy is unlikely to change. The new government will balance its spending against incomes.

One intriguing policy is an agreement to introduce higher road tolls on foreign drivers. It is not clear how that would work or whether it would fall within European law.

The agreement has to be ratified by the membership of the SPD but the leadership will sell it as a real improvement in the lives of Germany's increasingly numerous low-paid workers.

It may also strengthen Chancellor Merkel's position on Europe. In the past, she has had to get agreement within the Bundestag for German participation in bail-outs via a debate and a vote on the floor of the Bundestag. In future, she will have the overwhelming majority a cross-party grand coalition brings.

Minimum wage

The breakthrough came after 17 hours of tense negotiations.

The final coalition deal will now go to a ballot of SPD members to be signed off, with the result expected in mid-December. Cabinet posts are not expected to be announced until after the vote.

Mrs Merkel presented the agreement alongside CSU leader Horst Seehofer and the SPD's Sigmar Gabriel on Wednesday.

She said the coalition would stand for "solid finances, secure prosperity and social security" and oppose a "debt union" in Europe.

Parties reached settlements on issues including a lower retirement age and changes to dual citizenship rules.

The SPD won a key demand for a nationwide minimum wage. An hourly minimum of 8.50 euros ($11.55, £7.11) will come into force in the country for the first time in 2015.

The parties also agreed that there would be no tax increases, a key demand of the CDU/CSU.

"The work is done. It has been very intense and sometimes very hard work today but I think we have a result that is good for our country which is the main measure, but we can also say the result has a strong Conservative imprint," said Hermann Groehe, CDU secretary general.

"No new taxes and no new debts."

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Key points of the deal

  • National minimum wage of 8.50 euros, from January 2015
  • Opposition to mutualisation of eurozone countries' debt
  • No more new debt at federal level from 2015
  • Children born in Germany to foreign parents after 1990 allowed dual citizenship
  • Electricity to be 40-45% from renewable sources by 2025, but subsidies cut
  • Levy for foreign motorists using German motorways
  • Workers who contributed to pensions for 45 years able to retire at 63

Senior SPD MP Karl Lauterbach, quoted by the Associated Press news agency, said his party had "succeeded on the most important points" but would have to overcome "many reservations" among members.

"The Social Democratic signature on this coalition agreement is everywhere," he added.

The SPD previously formed a grand coalition with the CDU/CSU in 2005-2009.

This time around, the partnership faces the twin tasks of rebalancing the eurozone's biggest economy and winning the support of the German public to tackle the eurozone's debt and banking problems.

At the election on 22 September, the CDU took about 41.5% of the vote, the SPD won 26%, the Greens 8.4%, and the former communist Left Party 8.6%.

The CDU's previous coalition partner, the centrist Free Democrats (FDP), narrowly failed to cross the 5% threshold for entering parliament.


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