Elections in Germany update:No turn to the right, after all!

Merkel, Schroeder say on track for coalition deal
Wed Oct 5, 2005

By Noah Barkin

BERLIN (Reuters) - Germany's conservative Angela Merkel and Chancellor Gerhard Schroeder voiced optimism after talks on Wednesday that their rival parties would resolve a row over who should lead the country and seal a deal to share power.

Following a two-and-a-half hour meeting to resolve Germany's crippling political impasse, Merkel sounded more positive on the prospects of forging a new government than she has since she narrowly edged ahead of Schroeder in a September 18 election.

The vote left neither Merkel's Christian Democrats (CDU) nor Schroeder's Social Democrats (SPD) with enough votes to form a government with their preferred partners, forcing them into talks with each other.

"Overall I am more optimistic than pessimistic," Merkel told reporters. "On the basis of substantive policy issues I am broadly positive that I can recommend my party enter serious coalition negotiations."

Schroeder, speaking shortly after Merkel, struck a positive tone. "The exploratory talks have shown that there is a basis for a grand coalition," he said.

The rhetoric from both parties contrasted sharply with the barbs they had exchanged ahead of the discussions. Merkel's CDU had threatened to break off talks unless Schroeder, who has refused to concede defeat, agreed to step down.

While this issue was not resolved in the Wednesday discussions, the comments suggested a breakthrough could come soon, with both parties pledging to hold another high-level meeting to clear up who would be Germany's next chancellor.

A source who attended Wednesday's meeting told Reuters this second meeting -- to be attended by Merkel, Schroeder, SPD chief Franz Muentefering and Christian Social Union (CSU) head Edmund Stoiber -- would take place on Thursday at 7:00 p.m. (1700 GMT).

"I got the signal from the SPD that there is a readiness for such a meeting," Merkel said when asked whether Schroeder had given any signs he could step down. "Overall I have the impression that there is a clear will by the SPD to ensure that coalition talks can start."

END TO DEADLOCK?

The tone of the comments suggests Germany's top parties may be close to ending a deadlock that has plagued the country for two-and-a-half weeks.

Once Europe's economic powerhouse, Germany now faces weak growth, high unemployment and a stubborn budget deficit.

Protracted talks and conflicts between the CDU and SPD over how to solve Germany's woes risk exacerbating these problems.

But CSU chief Stoiber said the talks had shown that a consensus existed on problems in the labour market, on the need to address Germany's budget woes and to tackle its cumbersome federal structure.

"Consolidation of the budget, a cleaning up of our social security system -- these issues can be better solved by a grand coalition," Stoiber said. "I am optimistic that we can come to serious talks in the next week if the other issues are cleared up," he added, in a reference to the chancellor issue.

Others are more cautious about whether a grand coalition, which existed only once before in Germany in the 1960s, is a cure all for the best solution.

German industry fears the SPD could block some of Merkel's plans to loosen the labour market by easing firing rules and cutting payroll costs.

"The talks on forming a grand coalition are going back and forth and are unlikely to lead to a modernisation of the German economy," said Anton Boerner, president of the BGA trade association on Wednesday.

How embarassing.

'Digger' Schroeder calls it quits

Monday, October 10, 2005 Posted: 0944 GMT (1744 HKT)

BERLIN, Germany (Reuters) -- Gerhard Schroeder, who has been fighting from behind since he was born into poverty at the end of World War II, kept up his battle to stay in office for three weeks after he lost Germany's general election last month.

But Germany's seventh post-war chancellor will bow out under a deal sealed on Monday, having turned his campaign to hold on to power after the election into a crusade to get as much of his party's policies as possible written into the new government's program.

His Social Democrats are poised to gain control of powerful ministries in a "grand coalition" government in exchange for handing the chancellery to Christian Democrat Angela Merkel, according to the deal leaked by an SPD source on Monday.

The Conservative leader Angela Merkel is set to become Germany's first female Chancellor under a power-sharing agreement that would end Social Democrat Gerhard Schröder's seven years in office, Social Democratic officials said today.

But the Social Democrats extracted a high price for Schröder backing down from his demands to continue in office: his party would get eight seats in the Cabinet, compared to six for Merkel's group, said the officials, who spoke on condition of anonymity.

Merkel to become German chancellor
Germany's conservative leader Angela Merkel has announced that she will be the country's next chancellor at the head of a coalition government. This marks the first time a woman has held the post. Merkel said she had reached a power-sharing deal with outgoing Chancellor Gerhard Schröder. As the part of the agreement, most of the seats in Merkel's new cabinet will go to Schröder's Social Democratic party, including top jobs such as the foreign minister's post. The deal ends weeks of deadlock and paves the way for formal coalition talks between Merkel's conservative CDU and Schröder's SPD parties.