* Coalition talks to begin Weds, expected to last six weeks
* Some of Germany’s partners hoping for softer euro stance
* SPD to push for minimum wage, investments, jobless push
By Noah Barkin and Madeline Chambers
BERLIN, Oct 23 (Reuters) – German Chancellor Angela Merkel’s
conservatives and the Social Democrats (SPD) start hammering out
compromises on economic, energy and euro policies on Wednesday,
the opening day of talks on a coalition government that should
be in place by Christmas.
Germany’s European partners will be watching the
negotiations closely, hoping for a swift deal that allows the
bloc to meet looming deadlines for its ambitious banking union.
Some allies are hoping a government that includes the SPD
will take a softer approach towards struggling southern euro
zone members, but any changes are likely to be more subtle than
substantial.
The parties, which ruled together in Merkel’s first term
from 2005 to 2009, set out a timeline for the negotiations on
Tuesday which foresees a deal by the end of November.
That would give the two biggest groups in parliament a
fortnight to sell their “grand coalition” agreement to ordinary
party members. Merkel could then be formally voted in as
chancellor in parliament’s last session of the year, the week
before Christmas.
Merkel’s conservatives easily won elections on Sept. 22 but
fell short of achieving a majority. Exploratory talks with the
Greens collapsed last week, allowing Merkel to focus on opening
formal negotiations with the SPD.
Among the central themes will be agreeing a minimum wage,
overhauling a renewables law that has sent energy costs soaring,
and finding funds to raise public investment on infrastructure,
education and research – a major demand of the SPD.
Europe will also feature, with the SPD expected to push for
a European financial transactions tax, harsh rules for creditors
to bear the cost of failing banks, and a renewed effort to stem
youth unemployment in southern Europe.
“The new government’s domestic policy agenda should bring a
modest shift to the left with stricter labour market regulation
and a minimum wage,” Barclays economist Thomas Harjes wrote in a
research note this week.
“At the European level, the Social Democrats started to
lobby for an economic growth strategy, but they also may be
reluctant to push for significantly higher German transfers to
other parts of the EU.”
Election year in Germany has slowed progress on European
banking union, an ambitious plan to restore confidence in the
financial system following the crisis that erupted in 2008.
EU finance ministers agreed last week on the first stage,
which gives sweeping supervisory powers to the European Central
Bank. However, Berlin has dug in its heals over the next stage
on dealing with failing banks, fearing that it would have to
pick up much of the bill.
Berlin has been reluctant to accept anything that would be
unpopular with German voters but other European governments now
hope that formation of a new coalition will allow a compromise
on the issue.
SCHULZ & SCHAEUBLE
European Parliament President Martin Schulz is slated to be
the lead negotiator for the SPD on European themes, sources told
Reuters on Tuesday.
Finance Minister Wolfgang Schaeuble will take the lead for
Merkel’s conservative Christian Democrats (CDU) in a working
group focused on finance and budget issues.
Environment minister Peter Altmaier, a loyal Merkel ally,
will face off with influential SPD leader Hannelore Kraft in the
important energy area. Kraft, premier of Germany’s most populous
state of North Rhine-Westphalia, is expected to defend the coal
industry, which has a sizeable presence there.
A large group of 75, led by Merkel, her Bavarian ally Horst
Seehofer and SPD Chairman Sigmar Gabriel is due to meet weekly
from Oct. 30 to vet the results of 12 working groups and hammer
out compromises.
In the last coalition talks in 2009, the main group had just
27 members, a sign that these talks will be far more complex.
Only at the end of the talks will Merkel, Seehofer and
Gabriel divide up cabinet posts. The top prize is the finance
ministry, but the SPD is divided over whether to claim that,
pushing out the veteran Schaeuble, or go for other high profile
portfolios such as the foreign or economy ministries.
A grand coalition would hold 80 percent of seats in the
Bundestag lower house, making it easy to push through
legislation. But some experts have expressed concern that the
right-left partnership could boost fringe groups such as the new
Alternative for Germany (AfD), an anti-euro party which nearly
made it into the Bundestag and is expected to make waves in
European Parliament elections next year.
