News analysis
Merkel's deal unlikely to make either party happy
German Chancellor Angela Merkel has defended her decision to enter into a coalition agreement with her chief political opponents, the centre-left Social Democrats (SPD).
The agreement, struck on Wednesday after months of political haggling, was promptly hailed by Dr Merkel, who is now assured of a fourth consecutive term in office, as "a good foundation for a stable government".
But the coalition deal may yet be rejected by the SPD's rank and file. And it comes as a deep disappointment to Dr Merkel's own centre-right supporters and backbench MPs, who fear that she has made too many concessions in order to cling to power.
Neither Dr Merkel's ruling Christian Democrats nor the SPD wanted this deal ,as they view a coalition agreement as harmful to their long-term interests.
But an agreement became inevitable after Germany's inconclusive general election results last September, and the Chancellor's subsequent failure to attract two small German parties into her government.
Still, the consensus among politicians in Berlin is that the opposition Socialists drove a hard bargain. They did poorly in the elections, and with 153 MPs against the ruling party's 246, they are very much the junior partner.
But that's hardly noticeable in the 170-page coalition agreement, which is peppered with Socialist electoral priorities, from pledging more money for social welfare to fixing Germany's roads.
With a booming economy and state coffers full, Dr Merkel can afford to keep the spending promises while still upholding the government's determination not to borrow.
Protesters in Cottbus, Germany, with a sign which means "Close the borders" in English. PHOTO: EPA-EFE
ECONOMY
• Stick to goal of balanced budget with no new debt.
• Invest €5.9 billion (S$9.6 billion) in education, research and digitalisation by 2021; €12 billion in family, child and social measures; €4 billion in building social housing and in tax incentives to encourage home ownership.
• Ensure all regions have fast Internet by 2025.
TAX
• Gradually abolish solidarity tax introduced after reunification in 1990 to support poorer states.
EUROPE
• Strengthen and reform euro zone in close partnership with France so that the euro is more resistant to global crises.
• Turn the euro zone bailout fund, called the European Stability Mechanism, into a European Monetary Fund controlled by Parliament and anchored in EU law.
IMMIGRATION
• Limit intake of refugees to 180,000 to 220,000 per year.
• Cap at 1,000 a month the number of people allowed to join family members living in Germany as refugees with temporary status.
REUTERS
Nevertheless, Germans in the higher tax brackets are likely to be angered by her quick abandonment of her electoral promise to cut the country's overall tax burden. Taxpayers may also be unimpressed by another promise in the coalition deal which declares that Germany is "ready to contribute more to the European Union budget".
This hints at the possibility that the new government would be prepared to accept proposals put forward by French President Emmanuel Macron, who suggested the creation of an automatic system to bail out EU nations in financial difficulties, precisely what the Germans have opposed for decades. The unpopularity of any German move to accept the French proposals is sure to be exploited by opposition parties.
"French President Macron may well have been invited to join the government," quipped Mr Alexander Gauland, the leader of the far-right Alternative for Germany, now the country's third-biggest party.
Yet the biggest surprise has been the number of ministries which the Socialists have been able to secure. They got not only the foreign ministry but also the all-powerful finance ministry, which controls the purse strings.
This came as a shock to Dr Merkel's supporters, many of whom were hoping for promotion. "At least we still have the Chancellery," Mr Olav Gutting, a fast-rising 47-year-old Christian Democrat MP, tweeted ironically.
Despite the generosity of the deal they obtained, the Social Democrats are no means certain their 400,000 rank-and-file members will support the coalition arrangement. Many in the party see the Chancellor as the source of their current electoral misfortunes, and the party's youth wing, now growing fast, is particularly against any power-sharing with her.
But even if the deal is approved and a new government starts functioning by the end of next month, Dr Merkel is not about to enjoy her time in office. The fight to succeed her is about to begin, and the battle for the soul of the Christian Democratic party, which has made so many concessions to the Socialists, will soon erupt.
Then, there is the tiny matter of the electorate. Current opinion polls indicate that the Socialists are supported by only 17 per cent of voters, not that much more than the support for the Alternative for Germany.
And, for the first time, Dr Merkel's new government commands the support of barely half of the German public. Not promising omens for an administration that is supposed to last for the next four years.
