Germany's Social Democrats (SPD) and Greens yesterday ended two weeks of coalition talks and agreed a joint programme for government that will move Europe's most powerful nation decisively to the left.
The negotiating teams are expected to sign the deal today but it must be approved by special conferences of both parties before Mr Gerhard Schroder becomes chancellor next week.
Both sides praised the friendly, business-like atmosphere of the negotiations and expressed confidence that the coalition will survive a full four-year term in office. But Mr Schroder suffered an unexpected setback yesterday morning when his first choice as Economics Minister, Mr Jost Stollmann, turned down the post.
Mr Stollmann, a self-made millionaire who is not a member of any political party, played a key part in Mr Schroder's campaign to persuade voters that his government would be good for German business. But he was unwilling to take over an Economics Ministry which has lost power to Mr Oskar Lafontaine's Finance Ministry.
The Greens insisted yesterday that they were satisfied with three cabinet posts out of a total of 15 (the foreign, environment and health ministries) and rejected the charge that they have abandoned their principles. "All in all, they were fair negotiations which naturally reflected the balance of power," said one Green negotiator, Ms Gunda Rostel.
At the centre of the programme for government is an "Alliance for Jobs" which will bring together employers and unions to devise a strategy to fight unemployment. Income tax rates will come down slightly and company tax will fall from 47 per cent to 35 per cent.
But business leaders are angry about the reintroduction of a wealth tax and a rise in energy prices to fund some new measures. Employers are also unhappy with the incoming government's promise to reverse a number reforms in labour law and the pensions system introduced by Dr Helmut Kohl.
The new coalition is pledged to close all Germany's nuclear power stations. It has set a limit of a year for negotiations with energy-providers over how to implement the shutdowns. These negotiations may be made easier by yesterday's nomination of Dr Werner Muller, a former manager in one of Germany's biggest energy companies, as the new Economics Minister.
Mr Stollmann's refusal to enter the cabinet has highlighted the influence of Mr Lafontaine, who is SPD chairman, within the new government. Mr Schroder has agreed to Mr Lafontaine's demand that his Finance Ministry should be expanded to become an equivalent of Britain's Treasury. Mr Lafontaine is especially eager to represent Germany at a European level and to use Germany's six-month presidency of the European Union at the start of 1999 to make the EU more active in promoting job-creation.
The change of government could transform the lives of Germany's seven million foreign residents, making it easier for them to become citizens and introducing anti-discrimination legislation. The new government is also pledged to promote equal opportunities for women and to give same-sex couples some of the rights enjoyed by married couples.
The programme for government represents a compromise for both parties, but especially for the Greens, who have been forced to put many of their cherished policies on the back-burner.
