GERMANY: Germany has a new government, eight weeks after voters forced the Christian Democrat (CDU) and Social Democrats (SPD) to enter a grand coalition together.
The two traditional political rivals agreed a 130-page coalition programme yesterday evening, to be agreed by party members in coming days, which would see CDU leader Angela Merkel sworn in on November 22nd as the country's first woman chancellor and Germany's first leader from the former East Germany.
"We want to make more of this country. This coalition agreement offers the chance to overcome the economic crisis," said a relieved-looking Dr Merkel last night.
"We want economic success, and security in old age and illness. This contract will offer the chance to prove Germany's foreign policy dependability in Europe and the world."
The coalition agreement, Carrying Common Responsibility, will be presented this morning and focuses on cutting Germany's 11 per cent unemployment and reducing its budget deficit.
After four weeks of coalition talks, the CDU pushed through a Vat hike from 16 to 19 per cent in 2007, a reduction in non-wage contributions and looser hiring and firing laws - protections against redundancy will now apply only to workers with two years' service.
The SPD secured the abolition of subsidies for commuters and home-buyers and a new 3 per cent "rich tax" on incomes over €250,000. The party succeeded also in leaving untouched rules enshrining union influence in the companies, the tax-free status of shift work and an agreement reached by the last government to phase out nuclear power over the next 20 years.
The new programme promises a €25 billion investment and research programme over the next four years. "We can all feel it, that Germany is in the middle of changing. But nobody in the world is waiting for us, to give us anything," said Matthias Plat- zeck, expected to be voted SPD leader next week. "Germany is a wonderful country but a strong country and we are able to solve our own problems."
Outgoing SPD leader Franz Müntefering, vice-chancellor and labour minister in the new government, said "personal trust" would decide the coalition's ability to reform and to hold together for a full four-year term.
"Coalitions are means to an end not historical projects. This decision is a result of what voters gave us. It will prove itself in the everyday work," he said. The new government was not about point-scoring for the SPD or CDU but "whether we solve the problems in this country". The two parties will continue to discuss compromises on reform of healthcare and the low-wage sector in the new year, while the tax system will be reformed in 2008.
The new government, the second grand coalition after the 1966-69 administration, will effectively have no opposition in parliament. The end of the CDU blockade in the upper house, the Bundesrat, also clears the way for a shake-up of the federal system to speed up law-making. The missing man at yesterday's press conference was caretaker chancellor Gerhard Schröder. He wished Dr Merkel "much success" in private, and disappeared from the Berlin political stage.