Germany's 'Grand Coalition' Sealed

Angela Merkel To Become Chancellor As Parties Agree On Economic Reforms

(AP)  Germany's biggest political parties reached a deal Friday to form a coalition government, sealing an accord that will make Angela Merkel the country's first female chancellor and put her in charge of attempting to revive Europe's biggest economy.

"We want to make more of Germany and we, the two big parties, want with these policies to win back people's trust in the ability of politicians ... and show that we can do something for our country," a visibly relieved and smiling Merkel told reporters. "I think this could be a coalition of new possibilities."

The deal will need endorsement Monday from Merkel's Christian Democratic Union, its Bavaria-only Christian Social Union sister party and the center-left Social Democrats of outgoing Chancellor Gerhard Schroeder.

That would allow parliament to elect Merkel on Nov. 22 as the head of only the second "grand coalition" in German history.

"After 39 years of opposing each other ... the SPD, CDU and CSU want to move Germany forward in joint responsibility," Merkel said. "This coalition treaty also gives us the chance to show foreign policy reliability," she added, without elaborating.

The two sides were bitter opponents before Germany's Sept. 18 election gave neither a majority to govern with its preferred smaller partner.

Merkel's conservatives emerged only just ahead of the Social Democrats - setting the scene for a three-week power struggle in which both she and Schroeder claimed the right to lead the new government.

In an Oct. 10 deal, Schroeder gave way, but the Social Democrats extracted equal representation in Merkel's Cabinet and key ministries such as foreign affairs and finance.

"None of us were prepared for a grand coalition," said Social Democrat chairman Franz Muentefering, who is expected to become Merkel's vice chancellor and labor minister. "There was quite a lot to get over, and that's what we did in the past few weeks."

Over that time, the parties struggled to agree on how to plug a $41 billion budget gap while trying to boost a chronically stagnant economy and reduce an 11 percent jobless rate.