Published: Sat, January 13, 2018
World | By Paul Elliott

New German parliament to cap refugee inflow & scrap tax hike - coalition roadmap

New German parliament to cap refugee inflow & scrap tax hike - coalition roadmap

German Chancellor Angela Merkel's conservatives (CDU-CSU) and the centre-left Social Democrats (SPD) plan to forge "a stable and effective government", according to a draft coalition deal seen by dpa.

Merkel's immediate destiny now lies in the hands of rank-and-file Social Democrats whose party leaders will ask them on January 21 to back Friday's deal, a repeat of the grand coalition that governed from 2013 to 2017.

The euro climbs to a three-year high as German Chancellor Angela Merkel's conservatives and rival Social Democrats reach a breakthrough in coalition talks.

"We Social Democrats, in our [leadership] committee, decided unanimously to the party congress giving the party leadership a mandate to pursue coalition negotiations to form a government", Schulz said on Friday.

The embattled mainstream parties have also struggled to fend off the encroaching far right, which has seized on anger over a mass influx of more than one million migrants and refugees since 2015.

September's inconclusive elections have meant that Germany has essentially been working as a minority government for four months.

The problem is that neither the DCU nor the SPD have managed to maintain their core electorates in wrangling over domestic issues - the September poll saw both Merkel's CDU/CSU alliance and the SPD getting their worst results since World War II, bleeding supporters to smaller parties.

As the negotiations got underway, Merkel acknowledged there was a lot of work ahead, but said she was "optimistic" the parties could reach an agreement. If she can win him over, Schulz will still have to rally support from membership at a special party conference later this month, which would then trigger another round of coalition talks.

European Commission President Jean-Claude Juncker hailed as "positive" plans for Europe in a deal that brings Merkel a step closer to forming a coalition government.

And now, it seems, she can't even form a government.

At 9am on Friday (8am Irish time), 23.5 hours after talks began on Thursday, the horse-trading concluded between the centre-right Christian Democratic Union (CDU) of Dr Merkel, her Bavarian CSU allies and the SPD.

They also agreed on turning the ESM bailout mechanism into a full-blown European Monetary Fund under parliamentary control and anchored in EU law.

Scepticism is high within the party about joining hands again with Merkel after the SPD scored a humiliating result in September s election.

German President Frank-Walter Steinmeier reminded the negotiators of their responsibility - towards not just their own parties and political futures, but also to?Europe.

The SPD's youth wing chief Kevin Kuehnert has said he would embark on a national tour to press his case against a new grand coalition, known as "GroKo" in German political shorthand. The formal coalition talks need the green-light to kick off.

The deal "smells strongly of a continuation of the governing style we know from the last grand coalition, which didn't do much good for society or for the SPD", he said.

While the main issues were refugees, climate goals, social security, and the relationship with Europe, taxes and the ability to pay for new programs appear to have been the sticking point overnight.

Merkel ruled with the SPD in two of her three terms in office, including in the last parliament from 2013-2017.

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