GERMANY: Social Democrat (SPD) leader Franz Müntefering will urge party members to abandon their "trench" mentality in his final speech as party leader this morning and vote to enter government with their political rivals, the Christian Democrats (CDU).
The CDU-SPD coalition document agreed on Friday has been dubbed the obituary of the West German social state, ending what it calls "the illusion maintained for decades that the state could satisfy new and ever more comprehensive wishes".
But fiery discussion is expected among SPD delegates during the three-day conference that begins in the south-west city of Karlsruhe today, eight weeks after the general election result left SPD and CDU dependent on each other to rule.
"We cannot have a government with SPD and CDU trenches. Then we'll fail," said Mr Müntefering to party rank-and-file yesterday.
The coalition agreement breaks a key SPD pre-election promise by raising VAT from 16 to 19 per cent and breaks a party taboo by loosening hire-fire regulations. Even more hard to stomach for delegates is that the agreement is not open for discussion or modification, but will be voted on as an all-or-nothing deal.
SPD delegates are expected to accept the agreement, but may express their reservations about the compromises necessary to stay in government during the leadership vote. A vote of less than 80 per cent for the new leadership candidate Matthias Platzeck would send a clear signal from the conference back to Berlin.
Whatever the result, the election of 51-year old Mr Platzeck, and the final appearance today of Mr Müntefering and departing Chancellor Gerhard Schröder, will signal a generation shift in the SPD.
The CDU parliamentary party will this morning vote on the deal party leader Angela Merkel has said will "halt and reverse Germany's economic drift downward".
"Germany should manage to be among the top three countries in Europe in the next 10 years," she said.
Meanwhile CSU leader Edmund Stoiber can expect a frosty reception at a party conference in Munich this morning. His flip-flopping over joining Dr Merkel's cabinet, and his final decision to stay on as Bavarian state premier, has angered party members and lead to calls for a leadership putsch.
The first 12 months of the new government as envisioned in the coalition agreement will see a radical slashing of subsidies and benefits for home-builders, commuters, pensioners and social welfare recipients. Projected new borrowing for 2006 will rise to around €40 billion, before sinking under Maastricht guidelines for the eurozone in 2007 when cutbacks savings kick in.
On the other hand, families will benefit under the new coalition agreement with a new "parent allowance" and a further development of the state-subsidised creche system. The SPD succeeded in preserving environmental agreements it reached in government with the Greens.
Reaction from employers and union leaders to the coalition deal was equally critical, while media reaction was mixed. Bild am Sonntag said the plan to raise VAT by three points in 2007 was an attempt at "economic recovery by blackmail".
"Whoever needs a new car, fridge or television will - according to the coalition's calculations - do that now in 2006 and revive consumer demand and the economy. But what if people don't co-operate?" asked the newspaper in an editorial.
"The [ government's] strategy is risky but at least they have a strategy."