Germany inches closer to coalition

Germany’s main parties have come one step closer to building a coalition, agreeing on several points including raising the retirement age and a policy on Turkey, but they still must overcome the hurdle of plugging a huge budget shortfall.

Chancellor-designate Angela Merkel’s conservatives and the Social Democrats, the party of outgoing Chancellor Gerhard Schroeder, expect to have a formal agreement by the weekend on forming a so-called “grand coalition", Volker Kauder, Christian Democrat secretary-general, said after yesterday’s talks.

“The discussions once again showed that we are on a good path,” Kauder said. “We want to finish the negotiations by the end of the week.”

That would allow party conventions to approve any deal next week and parliament to elect Merkel as chancellor on November 22.

While the two sides reached agreement on many points yesterday, Kauder warned that the toughest issues of plugging the 35 billion euro budget gap, creating jobs and reforming the national health plan remained unresolved.

“In the coming days we have some major issues to tackle,” Kauder said.

Still, the two sides were able to report substantial progress yesterday, including the decision to raise Germany’s retirement age by two years to 67, starting in 2010, excepting anyone who has contributed to the state pension fund for 45 years.

They also adopted a policy supporting Turkey beginning talks on joining the European Union – a step supported by Schroeder’s outgoing government – which includes stating that the opening of talks does not guarantee Turkey a place in the EU, said Markus Soeder, secretary-general of the Christian Social Union, sister party of Merkel’s Christian Democrats.

During the campaign for the September 18 election, which gave neither side a parliamentary majority, Merkel’s conservatives opposed Turkey’s admission to the EU, arguing instead for a so-called “privileged partnership.”

Furthermore, the two sides agreed to streamline the nation’s complex government system, shifting powers between national and state levels, and set aside funds to support research and the construction of a high-speed rail line, as well as a network to examine the history of forced immigration and expulsion.

Yet many details remain open, and both sides likely will have to make painful compromises as they seek to combine efforts to boost the sluggish economy and cut high unemployment while closing a budget gap.