Germany’s CDU and its Bavarian sister party the CSU have come to an agreement with the Social Democrats (SPD) to form a coalition government.
The agreement puts to an end four months of political stalemate following parliamentary elections in September that were disappointing for the conservatives and the social democrats, but marked a breakthrough for the extreme right.
It will be Angela Merkel’s fourth term as Chancellor.
The Social Democrats will get the key ministries of finance and foreign Affairs, while the ministry of the interior will go to the CSU. The CSU also holds on to the ministries of transport and development aid.
As for Angela Merkel’s Christian Democrats, they keep the defence portfolio and take over that of the economy.
The negotiations, which began in January, ran into two significant hurdles. One being the SPD’s wish to overhaul the health system to reduce inequalities between holders of public and private health insurance. And the other being its wish to limit the use of short-term work contracts.
The SPD leader, Martin Schulz looks set to take the position of foreign minister while relinquishing his leadership of the party to be replaced by Andrea Nahles, according to reports.
Arguably of greatest interest to observers outside Germany will be news that finance ministry is to switch from the austerity-driven policies of Wolfgang Schauble to an as yet unnamed Social Democrat.
This will be welcomed in France as a sign that Germany might get on board with some of Emmanuel Macron’s proposals for reforms to the eurozone.
Highly indebted member states like Greece will also welcome a left-leaning German finance ministry in the hope that it might result in more lenient repayment terms.
The draft coalition agreement will now be put to SPD party members for a vote expected to be organised within the coming weeks.