German coalition talks reach breakthrough

Frederick Owens
January 13, 2018

Four months after Germans went to the polls, the country still doesn't have its new government in place.

September s inconclusive elections left Merkel without a majority and she has struggled to find partners to govern Europe s biggest economy. "In addition, more should be invested in apartments, in traffic and in the energy transition", she added.

"We have done a lot of preparatory work but there are still major obstacles to clear", she told reporters Thursday.

While the main issues were refugees, climate goals, social security, and the relationship with Europe, taxes and the ability to pay for new programs appear to have been the sticking point overnight.

However, an SPD party conference set down for January 21 still has to approve holding the talks for a rerun of the Merkel-led coalition that has ruled the nation for eight of the chancellor's 12 years in power. The chancellor said that the newly-formed government would be a "new awakening" for Europe, vowing also to come to an agreement with France over the future of the EU.

To win over the SPD, Merkel agreed to 5.95 billion euros ($7.2 billion) of investment in education, research and digitalization by 2021, expanded child care rights, and a pledge to strengthen Europe's cohesion with increased German contributions to the European Union budget.

Merkel passed this first hurdle of the - by German standards unusually long - coalition talks by reaching a preliminary agreement with the SPD.

The three parties will enter into formal and detailed government coalition talks after each party agrees on the outcomes of the exploratory talks.

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In a 28-page policy document agreed after all-night talks between the German parties, they backed the idea of an "investment budget" for the single currency bloc.

However that will likely depend on whether she can build on the policy document agreed on Friday over the coming months and forges what would be her third "grand coalition" with the SPD. Visit MarketWatch.com for more information on this news.

"Nothing is fixed", said Andreas Scheuer, the general secretary of the Christian Social Union, the Bavaria-only branch of Merkel's Union bloc.

People might not care about exactly how responsibilities were divided, Merkel said, "but they do want the country to function".

The SPD's youth wing chief Kevin Kuehnert said he would embark on a national tour to press his case against a new grand coalition, known as "GroKo" in German political shorthand.

"It is welcome that the goal of a United States of Europe, which sounds great and which perhaps sometime in the future can be a long-term objective, is not included in this coalition agreement", said Detlef Seif, the deputy European Union spokesman for Merkel's conservative parliamentary bloc.

Merkel has been largely absent from the worldwide stage in recent months as she focuses on her domestic woes, just as a newly confident France is looking for a strong partner in Berlin to help drive President Emmanuel Macron's European Union reform plans. The government plans to obtain the appropriate public financing for the project from the proceeds it receives from auctioning off UMTS and 5G licenses, according to a position paper seen by RND from the parties' expert group on digitization and economics.

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