German 'traffic light' coalition: Five breakdowns

Three-way deal unveiled under which Olaf Schulz will succeed Angela Merkel as chancellor

Social Democratic Party chancellor candidate Olaf Scholz, centre, arrives with the SDP's Norbert Walter-Borjans, second left, and Saskia Esken, second right; Green party leaders Annalena Baerbock, fourth left, and Robert Habeck, third left; the Free Democratic Party Chairman Christian Lindner, fourth right, and Volker Wissing, third right, for a joint news conference in Berlin on November 24. AP

Mr Scholz is set to become Germany’s ninth post-war chancellor under a coalition deal that will hand him the reins of Europe’s biggest economy. AP

Left to right: Christian Lindner, Olaf Scholz, and the co-leaders of Germany's Greens, Annalena Baerbock and Robert Habeck, attend a press conference in Berlin to present their deal for a post-Merkel government. AFP

Mr Scholz arrives for the presentation of the coalition agreement. Three parties united behind a four-year programme which they said would modernise Germany while preserving its economic might. AP

FDP leader Christian Lindner arrives for a final session of coalition talks in Berlin. AFP

Departing Chancellor Angela Merkel speaks with Olaf Scholz after her last cabinet meeting in Berlin. EPA

Ms Merkel receives a bouquet of flowers from Mr Scholz as she arrives for the cabinet meeting. EPA

Angela Merkel poses with ministers and other members of her government after the cabinet meeting at the Chancellery. AFP

The newly formed German "traffic light" coalition unveiled its four-year programme for government on Wednesday.

The raft of policy announcements from the Social Democrats, Greens and Free Democrats includes plans to hasten decarbonisation, a pledge not to increase taxes and legislation to tackle increasing costs of health care.

Olaf Scholz of the Social Democrats will be at the helm of the new coalition when, as is expected, he succeeds long-standing German Chancellor Angela Merkel in early December.

After two months of post-election talks, the formation of the “traffic light” coalition represents a seminal moment in German politics as never before has such a disparate range of political persuasions worked together at national level.

"The Greens will lead the following ministries: foreign affairs and economy and climate protection" as well as family affairs, environment and agriculture, said the pact.

"The FDP will lead finance, justice, transport and digital issues and education and research."

Leftists, environmentalists and business-friendly liberals are represented in the pact and their presence is reflected in Wednesday's policy announcements.

Here are the headline policies announced, divided into these five key areas:

1. Environmental policy

2. Economic policy

3. Foreign policy

4. Immigration policy

5. Health policy

1. Environmental policy

Heavily influenced by the Greens, the agreement promised a faster roll-out of carbon-free power capacity, more ambitious carbon emissions prices to incentivise a quick exit from fossil fuels and more aggressive support for a hydrogen economy,

A central plank of the pledge will see rail freight transport increase by 25 per cent and at least 15 million electric cars on the roads by 2030.

Already agreed to in a provisional deal in October were pledges to put solar panels on every suitable new roof and use two per cent of Germany's territory for wind energy.

The coalition will also seek effective carbon leakage protection measures and ensure the price of CO2 won't fall below 60 tonnes per euro, a policy aimed partly at promoting electric vehicles.

From January 1, 2023 it will pay a renewable energy support fee from the budget, not consumer levies. This funding will only stop once a total transition from coal has been achieved.

The coalition also backed creating carbon trading for heat and mobility in the EU.

2. Economy policy

With the public purse under sustained and intensive use to combat the coronavirus pandemic, the coalition pledged to return to strict debt limits in the constitution from 2023 onwards.

At the behest of the Free Democrats, they will not raise taxes or loosen curbs on running up debt, making financing a central issue.

The pro-business Free Democrats (FDP) will run the Finance Ministry in the next government, so it seems likely these policy pledges will be kept.

The coalition also agreed to strengthen the European Union's economic and monetary union and signalled an openness to reform the bloc's fiscal rules, also known as the Stability and Growth Pact.

The fiscal rectitude at the core of the agreement was somewhat offset by a commitment to raise the minimum wage to 12 euros ($13.45) per hour from 9.6 euros, resulting in a pay rise for around 10 million people.

There was also a pledge to build 400,000 apartments a year.

3. Foreign policy

Germany will remain part of Nato's nuclear-sharing agreement under the new government, a move it believes will prevent a rift in the Western military alliance at a time of rising tension with Russia.

The coalition is sticking to Berlin's longstanding foreign policy principles of maintaining close ties with Washington and with EU countries, especially France, while seeking dialogue with Russia where possible.

Germany does not possess nuclear weapons but hosts US nuclear bombs that German Tornado fighter jets are meant to carry to targets during a conflict.

It had not been clear how the incoming government would handle the issue, as some politicians in the new coalition oppose Berlin's participation in the nuclear-sharing deal.

"As long as nuclear weapons play a role in Nato's strategic concept, Germany has an interest in participating in strategic discussions and planning processes," the agreement document says, referring to Berlin's seat on Nato's Nuclear Planning Group.

The new coalition will aim to replace the German Air Force's ageing Tornado fighter jet, the only Bundeswehr plane fitted to carry US nuclear bombs.

The German Air Force has been flying the jet since the 1980s. The Defence Ministry plans to phase it out between 2025 and 2030 as it is expensive to maintain and spare parts are difficult to find.

An agreement to arm the next generation of German military drones was also struck. Some Social Democrats had previously opposed doing so.

From one bloc to another, and the Greens will have the right to nominate the country's European Commissioner if the Commission President is not from Germany - which she currently is.

The UK was described in the document as "one of Germany's closest partners outside the EU". The coalition wants to work with Britain on foreign and security policy.

4. Immigration policy

The coalition promised to allow dual citizenship and simplify the process of acquiring German nationality, a huge change for thousands of ethnic Turks, many of whom remain foreign citizens after decades in Germany.

"As a rule, naturalisation should be possible after five years, with special integration achievements after three," the document said.

The current time requirement for naturalisation is eight years.

At an EU level, the coalition wants border agency Frontex expanded into a fully-fledged protection corps and called on other member states to take in more refugees. Germany will establish a scheme to take in Afghan refugees, modelled on an earlier project for Syrians.

5. Health policy

The coalition will take office in the midst of a severe health crisis as coronavirus infections reach record numbers in Germany. The SPD will take over the Health Ministry from Christian Democrat incumbent Jens Spahn.

Mr Scholz announced on Wednesday that he would set up a crisis task force in the chancellery, expand compulsory vaccines and spend €1 billion ($1.12bn) on bonuses for health workers.

However, an amended infection control law, which the parties passed in the German Parliament last week, does not retain powers for the most restrictive measures, such as sweeping school closures.

In broader health terms, prices will be cut retroactively for newly launched prescription drugs to keep healthcare expenses under control.

Pharmaceutical companies have been free to set prescription drug prices in Germany only for the first 12 months after approval by the European Commission to allow for an elaborate benefit assessment and price setting procedure that the country introduced in 2011.

Instead of taking effect after the price negotiations, which typically result in a discount, the new price will be enforced with a retroactive reimbursement from the seventh month after market launch.

From pharmaceutical drugs to recreational drugs, and the coalition said it will legalise the recreational use of cannabis.

"We will introduce the controlled distribution of cannabis to adults for consumption purposes in licensed stores," said the document. "This will control the quality, prevent the circulation of contaminated substances and ensure the protection of minors."