German Coalition Deal Evokes Relief and Anxiety in Europe

Ulrich Kelber deputy acting justice minister and SPD member left with Sigmar Gabriel at the Bundestag in Berlin | Odd Andersen  AFP via Getty Images

Christian Social Union (CSU) and German Social Democrats (SPD) on Wednesday reached a contractual agreement on the outlines of a new "grand coalition".

The conservative bloc and the SPD began talks about renewing their alliance only after Merkel failed to agree a coalition last November with two smaller parties in the fragmented parliament.

The Social Democratic leadership now has to convince party members that got enough concessions to justify entering into another coalition government, rather than leading the opposition. Other key sticking points involved "whether to allow certain categories of refugees who've been granted asylum in Germany to send for their relatives, which officials estimate would amount to 150,000 to 180,000 people", NPR's Soraya Sarhaddi Nelson reports. "In that sense, it is a good morning", Dobrindt said. An initial deadline of Sunday was extended into Tuesday. Assuming the deal is ratified by a ballot of SPD members-by no means assured-it will bring an end to five months of uncertainty over Germany's political stability.

The DPA newswire reported that Hamburg Mayor Olaf Scholz will become finance minister.

The AfD's anti-immigration stance proved popular with voters, taking it to 12.6 percent of the vote, a political natural disaster in Germany. The deal is contingent on their approval in a postal vote that analysts say is too close to call.

Schulz tapped the party's parliamentary group leader Andrea Nahles to replace him as SPD chief, a role he himself held for just over a year.

CDU and its Bavarian sister party CSU had seen their popularity drop after being in coalition on and off since 2005. An increase in the eurozone investment budget will please French president Emmanuel Macron, who has been waiting patiently for Berlin to emerge from its political limbo and talk about having a joint European Union budget and finance minister.

Germany has already broken its post-World War II record for the longest time between its latest election on September 24 to the swearing-in of a new government.

The results of the SPD vote will be known on March 2 after a postal vote, with all 460,000 registered members having final say in the coalition decision.

An SPD push to overhaul the two-tier healthcare system also yielded results, with a new commission set to examine levelling out doctor pay under statutory and private insurance schemes. Germany's economy has grown so strong that the new coalition will have a $55 billion budget surplus to redistribute on benefits for families, tax cuts and investments in infrastructure. That's a boost for French President Emmanuel Macron's campaign for deeper eurozone cooperation.

Nevertheless, German business representatives were less than enthralled by the outcome of negotiations on Wednesday. The deal is the first German coalition agreement that explicitly criticizes Israeli settlements in the West Bank.

A recent poll from public broadcaster ARD showed that 52 percent of respondents did not think another grand coalition was a good idea.