Agreement in Berlin

Reality, it is often said, is something you rise above, and Germany has been happily doing just that for years

Reality, it is often said, is something you rise above, and Germany has been happily doing just that for years. But Germany's political class, trained disciples of denial, have landed back in reality with a bump.

Voters realised that further reform was unavoidable and delivered an election result last September instructing bitter political rivals to work together to secure change.

Yesterday, members of the Christian Democrats (CDU) and Social Democrats (SPD) voted in favour of an agreement for a "grand coalition", only the second time in post-war history that Germany's two people's parties, or volksparteien, have called a political ceasefire. Like the previous grand coalition of 1966-69, it has been forced on them by harsh realities: unemployment of over 11 per cent, economic growth stuck at 1 per cent and a budget deficit of over €1 trillion which balloons by €35 billion annually.

The programme for the new government is not a pleasant read, but it lays bare the frightful state of Germany's financial and structural problems while acknowledging that only political co-operation can solve these problems. It is a clever balancing act of CDU and SPD policies, which allowed both party leaders to present it to their members yesterday as a success and not a sell-out. It also makes clear that the deal is a marriage of convenience, not a long-term romance.

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Acceptance of this reality has given Germany's political leaders a new-found defiance towards critics of the deal, of which there are many, from employers' groups to unions. But Christian and Social Democrats told them to stop complaining and move on with the rest of the country. There is a new German political reality of no significant parliamentary opposition anxious or able to take up their arguments.

The Free Democrats and Greens will be nimble in opposition but will lack the relevance the CDU formerly had with its majority in the upper house; an opposition that disabled the government of the retiring chancellor, Gerhard Schröder, at every legislative turn, will henceforth be an enabling force.

The rest of Europe is watching for something new and positive to happen in Germany. Blaming opponents for political failures will not work because those opponents are now sitting across the cabinet table. Effective problem-solving requires a cool, analytical approach, something which is the greatest strength of chancellor-elect Angela Merkel.

After six months of political drift in Berlin, the new grand coalition is reason for, if not euphoria, then real optimism.