German coalition deal reached to make Olaf Scholz next chancellor

Social Democrats, Greens and Free Democrats unveil three-way 'traffic light' deal

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Olaf Scholz is set to become Germany’s ninth postwar chancellor under a coalition deal unveiled on Wednesday that will hand him the reins of Europe’s biggest economy.

Three parties — the Social Democrats (SPD), Greens and Free Democrats (FDP) — united behind a four-year programme which they said would modernise Germany and equip it to tackle the climate crisis while preserving its economic might.

Mr Scholz, 63, is expected to succeed Angela Merkel in early December after a vote in the German Parliament, where the new coalition holds 416 out of 736 seats.

He will immediately face the challenge of a resurgent coronavirus outbreak which has brought Germany to the brink of 100,000 deaths from Covid-19.

“The situation is serious,” said Mr Scholz, who announced he would offer a bonus to under-pressure health workers, widen compulsory vaccines and set up a crisis task force in the chancellery.

“I know we all hoped that this winter would not be a coronavirus winter. But despite vaccinations, we are not yet through it.”

Mr Scholz, who led the SPD to a comeback victory at September's general election, said the new government would be “united by a belief in progress” and the “will to make our country better, to take it forward and to hold it together".

The “traffic light” coalition, a nickname derived from the colours of the three parties, brings together leftists, environmentalists and pro-business liberals who have never previously co-operated in Berlin.

But with few politically feasible alternatives, they came together behind a plan to revamp Germany with a digitised, low-carbon economy while maintaining its reputation for fiscal discipline.

“We have different traditions and perspectives, but what unites us is a readiness to collectively take responsibility for the future of Germany,” says a preamble to the 178-page agreement.

The coalition plans to expand renewable energy, promote innovation, increase the minimum wage for 10 million people, protect pensions and build 400,000 new homes a year. It will try to accelerate Germany's coal exit to 2030 by setting a minimum price for carbon emissions.

“With ambition and perseverance, we will make our country a leader in protecting the climate,” Mr Scholz said.

In migration policy, the coalition plans to speed up the process for German citizenship and relax the rules around dual nationality. But it also wants to expand Europe's border agency and urge other countries to take in more refugees.

As part of the pact, the FDP will take on the Finance Ministry after securing promises not to increase taxes or water down government debt limits. It will also get the justice, transport and education posts.

The Greens will lead an expanded economy portfolio that includes responsibility for leading Germany’s drive to climate neutrality.

Robert Habeck, who is tipped to take on that role, said the agreement would put Germany on track to meet the Paris Agreement goal of limiting global warming to 1.5°C.

The “core of this new story that we can write together is bringing together prosperity and climate protection,” he said.

“We will be a government that asks something of people, so we also have to ask something of ourselves.”

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FDP leader Christian Lindner, a potential finance minister, said the deal would ensure sound budgetary policies, a priority for his party, and unleash more private investment.

“In our country, there is so much private initiative, private know-how and private capital, which we finally want to unleash in order to continue our path to being a decarbonised, digitalised, high-tech country,” he said.

He praised Mr Scholz as a strong leader who had the experience and professionalism to represent all Germans, including those who did not vote for him.

Mr Scholz's election victory came after a late sprint in the polls attributed to his personal popularity and image of competence and reliability, while rival candidates were plagued by gaffes.

In addition to the chancellery, the SPD will take on six other ministries including the health, interior and defence ministries. The Greens will take the Foreign Ministry and the family, environment and agriculture posts.

The deal, which ushers in the first alliance between three parliamentary blocs since the 1950s, will need to be approved by each party internally.

Negotiators described a positive atmosphere in the talks, with few details leaking out during the eight-week discussions that followed September's general election.

Ms Merkel, who is retiring after 16 years in power, included Mr Scholz in a recent G20 summit and talks on tackling the coronavirus outbreak.

Her centre-right Christian Democrats (CDU) will head into opposition after crashing to their lowest-ever vote share at the election.

The Greens, who polled a record high, are joining the government for the first time since 2005. The FDP was last in power from 2009 to 2013.

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Updated: November 24, 2021, 3:52 PM