German SPD’s Schulz optimistic membership will back coalition

In early March, the agreement must pass a vote among the SPD’s 460,000 members, many of whom are loath to see the party enter government with the conservatives again. Did she pay too dearly?

Mrs Merkel’s Christian Democrats will get the Economy and Defence ministries while their Bavarian allies, the Christian Social Union, will provide the interior minister in the form of Mr Horst Seehofer, who talks tough on migration.

EU Commissioner Pierre Moscovici hailed the coalition news as a “good news for Germany, and also for Europe”.

The liberal-conservative Christian Democratic Union (CDU) and the centre-left Social Democrats (SPD) negotiated through the night in a marathon final push to nail down an agreement.

Under the terms of Wednesday’s agreement, Merkel will continue as chancellor for a fourth successive term, according to state broadcaster Deutsche Welle.

“The SPD got its wish list”, said Holger Schmieding, chief economist at Berenberg bank in London. It’s this fear, more than anything, that’s brought the CDU and the SPD back together – to cobble together an alliance which they hope will last the full four years, in the hope that by 2021, the AfD’s populist bubble will have burst. But the real victor is not Mrs Merkel, but Martin Schulz, the leader of the Left-of-centre SPD. They’ll have a platform to fulfill SPD pledges to deepen euro-area cooperation. He also wants to create the post of European Union finance minister. While France is on the same page with Germany regarding these ideas, the plans are less popular in European Union member states that offer low taxes for multinationals. Nine government departments will be headed by CDU or CSU politicians, the remaining six by members of the SPD. The CSU were punished at the polls for their close association with Merkel’s open door policy, losing ground to Alternative für Deutschland, Germany’s new anti-immigration party.

The SPD has already been the junior partner in two Merkel-led “grand coalitions”, from 2005 to 2009 and from 2013 to 2017.

On the conservative side, Merkel needs only the approval of a party congress of her CDU, a far lower hurdle.

The parties spent the last two weeks negotiating a governing pact, but if members of the Social Democratic Party reject the deal, the country could face more uncertainty and the prospect of a snap election. Yes, she gave up some key ministries, but she’s an experience power broker who knows when to give in and when to stand firm.

Olaf Scholz, the centrist SPD mayor of Hamburg, will take over the finance ministry and vice-chancellor job.

That would leave only an unprecedented minority government under Merkel or a new election as options.

Merkel admitted the debate on the division of ministries “wasn’t easy” while Schulz held up the coalition deal as bearing “the strong signature of the Social Democrats”. “Honestly, I’m not anxious at all”.