German Parties Reach Coalition Deal After Long Talks

Chancellor Angela Merkel’s conservatives and Germany’s main center-left party reached an agreement to form a new coalition government on Wednesday after a final session of negotiations that dragged on for 24 hours.

“We have a coalition agreement that means positive things for many, many citizens,” Merkel’s chief of staff, Peter Altmaier, said as he left the talks.

The deal between Merkel’s Christian Democratic Union, its Bavaria-only sister party, the Christian Social Union, and the center-left Social Democrats won’t bring an immediate end to the political limbo following Germany’s Sept. 24 election. The country has already broken its post-World War II record for the longest time from an election to the swearing-in of a new government.

A deal will be put to a ballot of the Social Democrats’ more than 460,000 members, a process that will take a few weeks. Many members are skeptical after the party’s disastrous election result, which followed four years of a “grand coalition” with the party serving as junior partner to Merkel’s conservatives.

Still, another senior conservative expressed relief that a deal had finally been reached. Alexander Dobrindt, the CSU’s top federal lawmaker, said it had been time for negotiators to come out of their “trenches” and “we succeeded.”

“I think it was time to have the prospect of a government in Germany,” Dobrindt told reporters. “So it’s a good morning.”

In a move likely to mean a shift in Germany’s euro zone policy, media reported the SPD would take the Finance Ministry that was until recently presided over by conservative Wolfgang Schaeuble, widely despised in struggling euro zone states during his eight-year tenure for his focus on austerity.

SPD leader Martin Schulz said earlier this week that his party had ensured that an agreement with the conservatives would put an end to “forced austerity” and set up an investment budget for the euro zone.

Handing over the crucial Finance Ministry suggests the conservatives had to make big concessions to get the SPD to agree to renew the “grand coalition” that has governed Germany since 2013.

Bruised by its worst election result in the post-war era, the SPD had planned to revamp itself in opposition and only agreed to the coalition talks reluctantly. Its 464,000 members still have the chance to veto the deal in a postal ballot.

The agreement will lift much of the uncertainty that has weakened Germany’s role in international affairs and raised questions about how long Merkel will stay in her job.

News of a deal will bring some relief to investors and partner countries, who had been concerned by Merkel’s failure to cobble together a government in more than four months at a time when Europe is facing multiple challenges – including the need for euro zone reform and Britain’s looming departure from the EU.

A negotiating source said the SPD would have the Finance and Labor Ministries while media reported the party would also secure the Justice, Family and Environment Ministries.

Merkel’s Christian Democrats (CDU) will get the Economy and Defense Ministries while their Bavarian allies, the Christian Social Union (CSU), will provide the interior minister in the form of Horst Seehofer, who talks tough on migration, media reported.

The conservative bloc and the SPD began talks about renewing their alliance after Merkel’s coalition talks with two smaller parties collapsed last November. Both camps have seen their support wane.

An Insa poll on Monday had support for the SPD dropping to 17 percent, below its election result of 20.5 percent. The conservatives slipped to 30.5 percent, suggesting there would be no majority for a grand coalition if an election were held now.

The two blocs had aimed to strike a deal on Sunday, but extended that deadline as they grappled with health insurance reform and employment policy demanded by the SPD, which promised members it would negotiate until the conservatives capitulated.