Posted on 10/10/2005 2:27:09 AM PDT by Michael81Dus
By Noah Barkin and Claudia Kade
BERLIN, Oct 10 (Reuters) - Conservative leader Angela Merkel will become Germany's first woman chancellor under a deal with Gerhard Schroeder's Social Democrats (SPD) to break a post-election deadlock, sources said on Monday.
Three weeks after voters gave Merkel's conservatives an unexpectedly narrow win over Schroeder's SPD in a federal election, senior sources from both parties said an agreement had been struck that should pave the way for a power-sharing cabinet.
According to a senior SPD source, the SPD is poised to get the foreign, finance, justice and labour ministries in a new coalition government led by the 51-year old Merkel, a pastor's daughter who grew up in the former communist east.
That would leave Merkel's Christian Democrats (CDU) and its Christian Social Union (CSU) allies with the economy, interior and defence portfolios.
The deal was expected to be ratified by Schroeder, SPD leader Franz Muentefering, Merkel and CSU leader Edmund Stoiber, at a meeting scheduled for 11 a.m. (0900 GMT) on Monday.
The tough negotiations between the main forces on the German centre-left and centre-right come after the election gave neither the conservatives nor the SPD enough votes to rule with their preferred partners.
Schroeder's SPD had refused to relinquish its hold on the Chancellery until now.
By securing many of the most important ministries in return for sacrificing Schroeder, 61, the SPD is expected to force concessions from Merkel on economic policy, resulting in a dilution of the reform agenda she pushed during the election campaign.
POLITICAL LIMBO
The deal is expected to pave the way for detailed coalition talks and the formation of Germany's second "grand coalition" between its top two parties since World War Two. Those talks are likely to extend into November.
Germany has been in political limbo since the Sept. 18 election and economists have warned that further delay could harm the struggling economy.
Financial markets are watching closely to see how much Merkel will have to dilute her reform plans to appease the SPD. If Merkel makes too many concessions it could delay or scupper changes that economists say Germany urgently needs to boost its growth rate.
German gross domestic product is expected to grow just 1 percent this year, the weakest rate in the 25-nation European Union. Unemployment hit a postwar high in February of over 5.2 million people, 12.6 percent of the workforce.
"Under the grand coalition agreement, some compromise will obviously have to take place for things to work," said Ian Stannard, senior foreign exchange strategist at BNP Paribas.
"The reform mandate is probably not going to be as strong as it would have been under an outright victory by Merkel. But the fact that they have a coalition led by Merkel -- the market hope is that reform will to some extent be kept alive."
In some areas, including reform of Germany's complex federal structure and resolving budget problems, the two parties are expected to work well together. In other areas, such as labour market reform, they could struggle to push through substantial measures.
Germany's Dax index of leading shares was trading 0.8 percent higher after the reports that Merkel was to become chancellor. The euro currency and bonds were steady.
I can't believe this coalition will last for more than a year or two...
SPD keeps the Foreign ministry? That sucks.
At least Schröder is out.
LOL, wait until you see who becomes Foreign Minister!! :-) It could be Schröder (though nobody really expects that). Fact is, the SPD doesn´t know yet who shall become FM. Plus, the Chancellor is the key figure, and she has more influence on the foreign policy. On important issues, compromises will be made. But one´s for sure, Germany under Merkel will not play the poodle for France or Russia.
My guess is two years. The most important thing the Grand Coalition should do is to solve the budget crisis and to reform the federal/state level competences.
Thank God for that.
Haven´t you been a fan of Schäuble? He has been offered the office of the parliaments president (in protocol, it´s the number 2 of my country), but he refused. So he probably will become the chairman of the CDU/CSU parliamentary group - a highly influential and political office and ranks just behind the Chancellor within the CDU/CSU. He has hold this office between 1992 and 2000.
And now that I´ve told you that Schröder could become FM, rumors say he will go out of German politics. He once said that he loves New York... take care, America!! ;-)
What is the story on Chirac? Is it out in public or still recovering from his stay in hospital?
What? I´m sorry, but I can´t help you. I don´t know what´s with Chirac. But I´m pinging a French FReeper. He can tell you.
Schröder won´t become Minister under Merkel, he´ll retire after Merkels appointment in November.
IMO, Germanys relations with the US and other European nations will improve, because Schröder as a politician has lost so much trust, so that it can only get better. [That does not apply to China and Russia.]
Best politician by far. But the germans don't want a wheelchair-bound guy in office. Look how hard it was for them to elect a women. The reason they kept going for Schröder was all the women thought he was handsome (10% more women than men supported that bozo). Can you beleive that!
Thanks, I thought maybe there was some gossip on europe that our media was ignoring.
You need to keep Schroeder out of foreign minister post. Good at least that Merkel is a new chancellor.
I know and I´m so glad that we kicked Schröder out. Once Merkel is in power, the people will get used to the combination: Merkel/Chancellery. A governing Chancellor is harder to beat in an election. I´m proud of my party that we have a disabled man and a East German woman in powerful positions.
You´re optimistic. :-)
Seems like pretty good news to me, Michael. I am glad this has been settled. I look forward to Chancellor Merkel coming to visit the United States.
Ok, so lets see...SPD gets foreign, finance, justice and labour ministries. Basically, nothing changes. The country will continue to have tax issues, unemployment, an anti-American tone, no business growth, limited response to Muslim terrorists, and continued episodes with Hartz 4. I don't see a single improvement...except Merkel will be head of this mess. I predict elections....sooner rather than later. I'm betting spring of 2007 at this point. The only plus out of this is that lack of improvement in finance...can be directly point at SPD at the next election....and labor issues can blamed on them as well.
Perhaps that is Merkel's gameplan...play out a 18-month period and get forced into new elections...where the FDP can make a even stronger situation the next time around. I don't see anything positive happening...except the fact that the CDU control state-run tv game, and just might force them to cut 3 or 4 stations out.
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