German lawmakers have arrived at a deal to form a coalition government, more than two months after the country's elections.
After marathon negotiations on Tuesday, officials from Chancellor Angela Merkel's Christian Democratic Union (CDU) party and the center-left Social Democrats (SPD) finalized an agreement to form a "grand coalition" that will establish a mandatory minimum wage and streamline some banking policies.
“The result is good for our country and has a conservative imprint,” said Hermann Groehe, secretary general of Merkel’s CDU. “No new taxes and no new debts.”
Martin Schulz, president of the European Parliament and a senior SPD negotiator, called it an “excellent result” for his party.
However, before the deal is finalized, it must be approved by a vote of the Social Democrats' 470,000 members. Results are expected by mid-December.
The SPD vote adds uncertainty to a process that has dragged on for months, preventing Germany's European partners from pushing ahead with major reforms, like a banking union. However, the likely outcome does remain continuity under the popular chancellor.
Party leaders should present details of the deal at a news conference on Wednesday but may wait to announce the allocation of cabinet posts. Merkel left the SPD headquarters, where the final round of talks took place, without a word to the media.
However, details of policy compromises that have emerged in recent days show she has leveraged her landslide victory in September's vote to ensure her pragmatic brand of conservativism continues to dominate Europe's largest economy.
Merkel has made concessions to the SPD on the economy, agreeing to a minimum wage of EUR 8.50 per hour, tighter rules for employers and pension hikes, despite howls of protest from business. Just before dawn, the bargaining stalled on how to fund this without Merkel breaking a campaign promise ti not increase taxes or debt.
Polls suggest most people trust 59-year-old Merkel not to endanger an employment rate which is the envy of Europe. She is also trusted on the euro crisis, where she has demanded fiscal reforms from the likes of Greece in return for bailouts.
Wolfgang Schaeuble, Merkel's trusted 71-year-old finance minister, should get to keep his job. Frank-Walter Steinmeier of the SPD may be foreign minister again, as he was in the last Merkel-led CDU-SPD “grand coalition”, from 2005-2009. SPD chairman Sigmar Gabriel, who was in that cabinet too, could get a beefed-up economy ministry or lead the SPD in the Bundestag lower house.
The last CDU-SPD coalition suited Merkel, but prompted SPD left-wingers, already bitter about labor reforms launched by the last SPD chancellor, Gerhard Schroeder, to leave in droves.
The SPD insisted Merkel wait until after the vote to name her cabinet, to avoid giving supporters the impression that the likes of Gabriel put their own ambitions above party values.
With the talks ending on the Nov. 27 deadline set by Merkel, SPD leaders must now persuade members at over 30 rallies that a minimum wage is a victory for the working class.
“We will convince members,” Steinmeier told reporters.
The ballot results are due on Dec. 14. At an SPD congress in Leipzig, delegates said they would only decide after reading the coalition document. Over 170 pages long, it shows a very German attention to detail, ranging from banking rules to plans for the 250th anniversary of Beethoven's birth in 2020.
If the majority are willing to overlook details like the SPD conceding on such a major campaign platform as tax hikes for the rich, and okay Germany's third “grand coalition” of the post-war era, Merkel can be sworn in the week before Christmas.
If the SPD votes does go against the proposed coalition, Merkel could go to the smaller Green party for a possible coalition, or call fresh elections.
Some information in this report was contributed by Reuters.