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Breakthrough in German coalition talks

Friday, 12 January, 2018 - 19:29

German Chancellor Angela Merkel, Christian Socialist Union (CSU) leader Horst Seehofer and Martin Schulz of the Social Democrats have reached an agreement to negotiate the formation of a new coalition government. The agreement was reached between the three party leaders on Friday after talks on Thursday night, bringing to an end a protracted period of uncertainty since Germans went to the polls in September.

At a joint press conference at the SPD headquarters Merkel appeared relieved at the breakthrough in the negotiations, after warning of “big obstacles” before going into the discussions yesterday. She said she was optimistic about the new government in Berlin will mark “a new beginning” for Europe.

In terms of details of the agreement, the Christian Democrats look to have secured a limit to the number of asylum seekers arriving annually in Germany, reported to be between 180,000 and 220,000.

While the Social democrat’s demands for an increase in the tax rate for high earners and the creation of a “citizens health insurance” scheme fail to make it into the final agreement, they have secured a pledge of higher public investment and greater input from employers in financing public insurance.

The solidarity tax – paid by Germans in richer western states to support those of the former GDR – will be phased out, as the Conservatives wanted.

Europe was another sticking point during the negotiations especially after Schulz’s call for a United States of Europe by 2025, but here too the parties seem to have come to an agreement.

The document plans to “strengthen” and “reform” the euro area with France, to make it more resistant to crises. To this end, measures to crack down on tax avoidance and establish a European Monetary Fund to aid member states facing debt crises form part of the deal.

Other measures include “equal pay for equal work” throughout the EU, to make the labour market fairer, and a push to reduce child poverty, strengthen equal rights for women and attract more foreign skilled workers to Germany. The new government will also aim to achieve a 65 percent share for renewable energy in Germany’s power generation by 2030.

EU Council President Jean-Claude Juncker welcomed the compromise saying it was a “positive” and “constructive” contribution to the future of the EU.

However, it’s not a done deal yet, the deal still needs to be ratified by SPD members at the party conference in Bonn on January 21, which will then give a designated team the green light to negotiate, portfolio by portfolio, the composition of the new government.