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UPDATE: German Grand Coalition - agreement reached

by whataboutbob Fri Nov 11th, 2005 at 02:14:38 PM EST

UPDATE 11.11.05 @ 19.57. German coalition poised for power.

Germany's conservative Christian Democrats (CDU) and centre-left Social Democrats (SPD) have reached a deal to form a coalition government. The deal followed four weeks of painstaking negotiations after inconclusive elections.

Party members said they had agreed to tackle Germany's budget deficit by raising some tax rates and cutting public spending.

CDU leader Angela Merkel is to become Germany's first woman chancellor.

Reports say top wage earners will have to pay an extra 3% in income tax, VAT will rise by 3% and social insurance contributions will also go up.

(Looks like the SPD held out and got their wish...though I'm sure there was much give and take)

The original post is below...

From this morning's Swissinfo: German parties near power-sharing coalition deal

BERLIN (Reuters) - German parties negotiating a new coalition government under conservative Angela Merkel go into make-or-break talks on Friday with some key agreements already in place.

The CDU and their sister party, the CSU have covered some of the trickiest areas with the centre-left Social Democrats (SPD) in almost a month of surprisingly harmonious talks.

The parties have reached agreements on tax, budget and labour market policy and want a 25 billion euro (17 billion pounds) investment programme on research and infrastructure to boost growth, politicians at the talks have said.(...)

All the parties have given this Saturday as the deadline to make their agreements. Will they make their deadline?

Here seems to be the remaining sticking points:

The deficit - They have already agreed to bring the deficit -- which will breach European Union limits for a fourth straight year in 2005 -- back in line with EU rules by 2007. But they must work out how to get the 35 billion euros they say they need to meet that target.

-The parties have also agreed on moves to loosen job protection rules and cut payroll costs in a bid to bring down Germany's chronically high jobless rate.
But there are still major differences over conservative demands to extend the lifespan of nuclear power stations as well as an SPD demand for a so-called "rich tax" on high earners.

-The Berlin Zeitung reports that the SPD would not weaken its insistence on decommissioning the 17 active nuceur power plants in coming years, and the conservatives may be ready to agree.

It does sound like the parties are very close to an aggreement, is there anything that may block the final agreement of a Grand Coalition?

Is the hang-up now really about the Right not wanting to raise taxes on the rich? Good on the SPD for demanding this!!! (And hope they hold out...)

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Fri Nov 11th, 2005 at 08:32:15 AM EST
I read that there is a lot of scepticism about this coalition qworking...but these talks have gone quite smoothly, which suggests to me that they hear what the people want...a mix of good business and maintaining a good social system. I feel optimistic, actually, though it is based on intuition only...

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Fri Nov 11th, 2005 at 02:17:19 PM EST
Well, there doesn't seem to be a joyful reaction coming from the press:

Spiegel Online: Merkel Turns Germany into a "Grand Pimp"

Cowards, liars, short-sighted opportunists, and -- well -- pimps. Those are the linguistic darts currently being thrown in the direction of Angela Merkel's coalition government. And that even before the agreement has been reached.

In the last four weeks of talks aimed at forming a governing coalition, Germany's two main parties -- the Christian Democrats under chancellor-in-waiting Angela Merkel and the Social Democrats -- have quietly transformed themselves. Reforming the country's flagging economy seems no longer to be a top priority.

And German commentators are not happy. Rather than show any vision, editorialists say on Friday, the country's leading politicians have instead opted for tax hikes that may help plug budget holes but will hurt businesses and keep consumers out of the shops. Party negotiators have agreed to raise sales tax to 19 percent from 16 percent from January 2007. They are still discussing a possible tax on the wealthy in talks expected to finally come to a close late Friday evening.

Financial Times Deutschland says the government's plans are causing outrage across the country. "A handful of politicians are sitting together in Berlin and devastating Germany," writes the paper in an editorial next to a cartoon showing an unhappy German left with nothing but his vest and underpants after his empty-pocketed trousers have been taken away from him. Not a single member of the negotiating teams has come up with any proposals that could be termed forward-looking or confidence inspiring, the paper says. "What's happening in Berlin is an attack on democracy." Ordinary Germans are losing faith in the parliamentary system, it warns darkly. "The makers of the grand coalition are reducing the state to the function of a grand pimp that doesn't give a hoot about rationality, promises or the future -- and which appears to be primarily focused on looking after itself."

by Fran on Fri Nov 11th, 2005 at 02:36:47 PM EST
Deutsche Welle: Germany's New Government Pact Finally in Place

Germany's main parties on Friday finalized a program for incoming chancellor Angela Merkel's left-right coalition government, ending nearly two months of political uncertainty in Europe's biggest economy.

Merkel's conservative Christian Democrats and the Social Democrats of outgoing German leader Gerhard Schröder -- traditionally bitter rivals -- wrapped up a manifesto of more 130 pages for a four-year term in government.

"I am pleased to tell you that the pact for the second grand coalition at federal level in the history of the federal republic of Germany is finished," a smiling Merkel told reporters.

It ensures Merkel will become Germany's first female chancellor, and comes just ahead of a self-imposed Saturday deadline.

Outgoing SPD leader Franz Müntefering acknowledged that the odds had been against a government straddling the political divide or a so-called "grand coalition", last seen in Germany in the 1960s.

"None of us was prepared for a grand coalition -- none of you
either," he told the joint news conference. "We learned to make compromises."

Germany has been locked in political limbo since an inconclusive September 18 election which forced the Christian Democrats, who managed a narrow victory, to open coalition talks with the Social Democrats.

Friday's deal is the product of last-minute horse-trading on contentious issues such as new taxation and the future of the country's nuclear power plants.

by Fran on Fri Nov 11th, 2005 at 02:42:29 PM EST

so what does this mean really? I would be quite curious to hear about the spectrum of reactions on the Left. From the above article, sounds like business is mad. But Clinton raised taxes on the wealthy and got rid of a deficit...

...so perhaps this is saying they need to do something short term (taxes), to make things better in the long-run (eliminate the deficit). Or am I missing something here? (wouldn't be the first time <heh>)

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia

by whataboutbob on Fri Nov 11th, 2005 at 03:00:00 PM EST
I guess there will be more comments by tomorrow. Currently there isn't much in English available.
by Fran on Fri Nov 11th, 2005 at 03:19:41 PM EST
[ Parent ]
You are the true (only?) Buddhist News woman, Fran!

"Once in awhile we get shown the light, in the strangest of places, if we look at it right" - Hunter/Garcia
by whataboutbob on Fri Nov 11th, 2005 at 03:22:17 PM EST
[ Parent ]

poor, poor germany. you people thought that schroeder and fischer and hartz had been bad enough ? well, you're in for a big surprise with that neocon stooge merkel.

when she's finished with you, you'll be happy to be allowed to walk the streets in groups of more than three, and to keep your meager jobs from hordes of chinese gulag dwellers imported to make german companies more 'competitive'.

by name (name@spammez_moi_sivouplait.org) on Fri Nov 11th, 2005 at 04:50:28 PM EST
Putting VAT up is an indirect tax on everyone and will probably result in higher unemployment in the short to medium term. More unemployment is not what Germany needs. Yes getting the rich to pay more tax is good but nothing to celebrate when viewed against VAT going up.
by observer393 on Sat Nov 12th, 2005 at 01:04:20 AM EST

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