German Chancellor and leader of German Christian Democratic Union (CDU) Angela Merkel reacts during a joint press conference at the headquaters of CDU in Berlin, capital of Germany, on Feb. 7, 2018. Three German parties reached an agreement on a "grand coalition" after tough negotiations, local media reported Wednesday morning.(Xinhua/Shan Yuqi)
BERLIN, Feb. 7 (Xinhua) -- The Christian Democratic Union (CDU), Christian Social Union (CSU) and German Social Democrats (SPD) on Wednesday reached a contractual agreement on the outlines of a new "grand coalition."
Speaking to press after protracted negotiations here on Wednesday morning, visibly-tired SPD negotiators confirmed an agreement had finally been reached. CSU regional party leader and senior negotiator Alexander Dobrindt subsequently praised the outcome of negotiations as having effectively resolved long-standing disputes between the coalition partners.
"It's about time that Germany has the prospect of a government. In that sense, it is a good morning," Dobrindt said.
The parties had missed an earlier deadline on Sunday and were forced to continue with talks which lasted throughout the entirety of Monday and Tuesday.
More than five months after national elections in September 2017, the only remaining obstacle to the formation of a federal government in Germany is now a referendum among SPD members on whether to join another "grand coalition."
As widely expected, Angela Merkel will lead the new government again as chancellor, according to media reports, a post she has already occupied for more than 11 years. The CDU will also control the federal ministries of economics, defense, agriculture and education.
The SPD has in turn secured the right to nominate federal ministers in prestigious departments such as foreign policy, finance and labor, as well as in the areas of families, justice and environment.
Newspaper Sueddeutsche Zeitung reported SPD's Martin Schulz would assume the cabinet post of foreign minister, whilst ceding the party leadership to SPD parliamentary faction leader Andrea Nahles. The influential mayor of Hamburg Olaf Scholz is tipped to become Germany's next finance minister.
CSU leader Horst Seehofer is to stand at the helm of an expanded interior ministry in the "grand coalition," including additional responsibilities for homeland security. CSU politicians will further head the government's transport, digital affairs and developmental aid departments.
Despite the relief expressed by the negotiators on Wednesday, fears persist that the referendum on the final coalition agreement promised to more than 400,000 party members of the SPD could still see the process of government formation falter.
Schulz faces strong resistance within parts of his party, including the SPD's youth wing (Juso) against plans to support another Merkel cabinet. Internal critics have mounted a "no grand coalition" campaign and invited the public to temporarily join the party in an effort to overturn the agreement between the CDU, CSU and SPD in the upcoming vote.
Schulz has also heard growing calls not to assume a ministerial post after originally pledging to return to the opposition benches in the case of electoral defeat.
The SPD recorded its worst result (20.5 percent of the vote) since World War II in September's elections, prompting speculation over Schulz' political future.
The SPD leadership will seek to highlight last-minute concessions granted by the CDU and CSU on health care and labor policy as it attempts to persuade the party membership to vote in favor of signing the final coalition agreement achieved on Wednesday.
German media reported that the parties had reached a compromise by limiting the ability of employers to use fixed-term contracts unless directly related to the nature of the work. The number of so-called "unjustified" fixed-term contracts which a company can sign with its staff will be tied to its overall headcount (2.5 percent in a firm with more than 75 employees) and only be valid for a maximum of 18 instead of 24 months.
While no concrete policy proposals were tabled to reduce inequalities between the German public and private healthcare systems, as demanded by the SPD, the new government has announced the appointment of an expert commission to assess possibilities for reform.
Tellingly, the opening chapter of the coalition agreement upon which Merkel's fourth cabinet is based addresses Europe. The parties have committed to significant changes in the governance of the single currency, including accepting the principal of a fiscal union for macroeconomic stabilization and transforming the existing European Stability Mechanism (ESM) into a permanent institutionalized rescue fund.
The change in Berlin's tone towards a more federalist vision of the Eurozone potentially paves the way for ambitious reforms of the bloc as championed by French President Emmanuel Macron.
Nevertheless, German business representatives were less than enthralled by the outcome of negotiations on Wednesday. The Confederation of German Industry (BDI) criticized the coalition agreement for showing no real ambition to lower the fiscal burden on companies.
"There is a clear imbalance towards redistribution instead of future-securing measures in the budget proposals," a statement by the BDI read.
Similarly, the German Chambers of Industry and Commerce (DIHK) expressed disappointment that the "grand coalition" did not respond to recent U.S. corporate tax reforms with corresponding tax cuts for German firms.
