Merkel hammers out coaliton deal

GERMANY has a new – and costlier – government after five weeks of political horsetrading ended in the early hours of Wednesday with chancellor Angela Merkel once again being wedded to her bitter political rivals for the next four years.

From left, Sigmar Gabriel, Angela Merkel and Horst Seehofer face the media. Picture: Markus Schreiber/AP

The centre-left SPD party agreed to enter into a coalition with her conservative CDU for the second time since she became leader. It extracted a higher price this time, eager not to be seen merely as her servants; an impression from its first time power-sharing with her between 2005 and 2009 that has led to two successive electoral defeats and divided the rank-and-file membership.

At a news conference with SPD chairman Sigmar Gabriel and Horst Seehofer, leader of the Bavarian Christian Social Union, Mrs Merkel said: “We entered negotiations with very different ideas, and that is why things took a little time.”

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All three politicians praised the atmosphere in the talks, with Mr Gabriel and Mr Seehofer joking with reporters about whether they could now address each other with the informal “du” in place of the formal “sie”.

SPD negotiators gained a guaranteed minimum wage of €8.50 (£7) per hour, pledges to increase pensions and control rents and a commitment to upgrade road and rail infrastructure in the west of the country, neglected in the two decades since reunification because of the need to build up the decrepit former Communist east. They also got her to agree to a quota of 30 per cent of women on public company boards.

From the Bavarian wing of her own party, the CSU, she gave ground over a controversial plan to charge foreigners using the autobahn network. This would bring in revenue without adding to the burden on domestic taxpayers, but Mrs Merkel was against it, and it remains to be seen whether it will be judged legal by the European Union.

Initial estimates suggest it will cost Germany the equivalent of an extra £20 billion through to 2017, a period when it is hoped, though not guaranteed, that the euro crisis will have waned.

Mrs Merkel was forced into a second coalition of the unwilling because of the September general election result. Her partner of choice in the last coalition, the liberal FDP party, was wiped out, which left her with little choice but to court the SPD. However, its membership still has to ratify the coalition, in a postal ballot scheduled for the second week of December.

Many of them have long memories of the way the SPD was, in their minds, relegated to a subservient role in the previous power-sharing agreement. It is not guaranteed that they will buy the package on offer.

On one key issue – higher taxes for the wealthy – Mrs Merkel held her ground and won. But she surrendered on several pre-election policies once seen as inviolable. By giving in on certain things now, the reasoning goes, she hopes she is keeping the SPD out when the next general election comes around.