Published: Thu, February 08, 2018
Global News | By Stacy Ballard

Germany's top parties said to reach deal on Merkel coalition

Germany's top parties said to reach deal on Merkel coalition

In a marathon, 24-hour session at the headquarters of Merkel's Christian Democratic Union alongside a tree-lined canal in central Berlin, the chancellor handed key Cabinet posts to the SPD, including the finance ministry her party has held for the last eight years.

Germany's centre-left Social Democratic Party (SPD) has secured the key finance ministry - and, with it, the prospect of backing for French euro zone reform plans - as its price for entering a third grand coalition with Angela Merkel.

But this is a marriage of convenience. The contract was agreed more than four months after an inconclusive election that saw support for mainstream parties fall and a breakthrough by the far-right Alternative for Germany party.

The parties ironed out their final differences and were ready to sign an agreement for Merkel 's fourth term, her chief of staff and acting finance minister Peter Altmaier said, calling it a "good day for our country". These promises are not popular with Germany's business leaders, who say they will harm German competitiveness.

"We made progress in many areas that will make people's lives better", he added.

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There is one more hurdle before a government can be installed.

The SPD has sought to drive up the price for a deal, which it must still sell to its 440,000 members who will vote on the pact in a yes-or-no referendum.

On defence spending too, both sides remained at odds as the finish line neared with the conservatives more open than the SPD to raising military spending closer to North Atlantic Treaty Organisation targets, as pushed for by US President Donald Trump. She also noted that many conservatives will not be happy with the SPD taking over the finance ministry.

Outside of Germany this deal could have a big impact on the EU. Germany is Europe's largest economy.

In exchange, the SPD moderated some of their positions on health care and immigration, and gave the Economy Ministry to the Christian Democrats.

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The delay in building a government in Germany has left Paris and other European capitals anxious and has diminished Merkel's worldwide stature as the leading stateswoman in Europe - and perhaps even "leader of the free world", as she was dubbed by some media outlets in the wake of Donald Trump's election.

The SPD is keen to deepen European Union integration, so the fact that it will hold the finance and foreign ministries will help.

But when it comes to Brexit, it's doubtful this government will change Berlin's stance.

Despite their campaign promise to terminate Turkey's European Union membership process, the parties' coalition agreement avoided any radical proposals.

It's the domestic issues that matter for German voters.

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An SPD push to overhaul the two-tier healthcare system also yielded results, with a new commission set to examine levelling out doctor pay under statutory and private insurance schemes. But the danger is that by trying to please everyone, you end up pleasing no one.

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