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Germany on track for a new chancellor after 16 years of Merkel

A coalition of the Social Democrats, Greens and Free Democrats say they have reached a deal to form Germany's next government, with increased social spending, climate change and digitalization at the core of their agenda.

(CN) — Olaf Scholz, a veteran politician and moderate within the center-left Social Democrats, is on track to become Germany's next chancellor after sealing a coalition deal with the Greens and the pro-business Free Democrats on Wednesday.

The coalition breaks new ground in German politics because it will be the first in the country's history to be made up of three parties and these parties have never governed together at the federal level.

They are presenting themselves as a breath of fresh air after 16 years of conservative rule by Chancellor Angela Merkel and the party leaders pledged to speed up Germany's move away from fossil fuels, upgrade the country's digital infrastructure and increase social welfare spending.

Following September federal elections where no party dominated, this three-way coalition reflects how Germany's political landscape is becoming more fractured. The country's traditional powerhouses on the right and left – Merkel's Christian Democrats and the Social Democrats – have seen their voter bases siphoned off by smaller parties, such as the Greens and Free Democrats. Younger people voted in large numbers for both smaller parties.

Scholz is expected to take over from Merkel in December when the Bundestag is likely to approve the new government. Wednesday's coalition deal was preceded by two months of secret talks.

The coalition's ambitions for Germany face stiff headwinds as the country reels from a surge in coronavirus infections. Germany's infection rate was described as a national emergency by its health minister.

Also, the new government may be strained by big policy differences, especially because it relies on the support of the Free Democrats, a center-right pro-market party strongly opposed to raising taxes and increasing national debt. The Greens and Social Democrats want more public spending to carry out their policies.

Under the deal, Christian Lindner, a fiscal hawk and leader of the Free Democrats, is expected to become finance minister, a key position in German cabinets because it oversees spending. The parties pledged to uphold Germany's so-called “debt brake,” a limit on government debt that was included in the country's constitution by Merkel. Critics say the debt brake hinders Germany's growth and by extension is holding other European economies back too. Germany is Europe's largest economy and the fourth largest globally.

Green party co-leader Annalena Baerbock, who ran a disappointing campaign for the chancellery after an early surge in polls, is on track to become Germany's first female foreign minister and the Greens' other co-leader, Robert Habeck, is set to become the vice chancellor and oversee climate change policy.

For now, they are promising to set their differences aside.

“We are united by the belief in progress and by the belief that politics can do good,” Scholz said at a news conference in Berlin. “It's not about the politics of the smallest common denominator, it's about the politics of the big impact. We want to be bold, to dare.”

They set fighting climate change, modernizing the country and spending on social programs as their main objectives. These goals also reflect the priorities of the three parties.

For the Social Democrats, increased social spending is a priority.

Scholz said the minimum wage will be increased to 12 euros an hour (about $13.40) and he promised more spending for children and housing, including rent controls. He said 10 million workers will benefit from the wage increase.

The Social Democrats are Germany's oldest party with roots in the 19th century and they traditionally have represented German workers and unions. But the party's credentials as a strong left-wing party have been damaged by neoliberal economic reforms under the chancellorship of Social Democrat Gerhard Schroder between 1998 and 2005 and the party's decision to govern in so-called grand coalitions in three of Merkel's four terms.

In recent years, the Social Democrats have seen their support erode and many pundits ruled out their chances of regaining the chancellorship.

But Scholz surprisingly led the party to a slim victory in the September elections, edging Merkel's conservatives. The Greens picked up the third most votes and the Free Democrats the next biggest chunk.

Germans approved his serious attitude, centrist politics and leadership as the finance minister during the coronavirus crisis. Germany spent large amounts to help businesses and individuals make it through lockdowns and restrictions. He is seen by many Germans as a reliable politician who will carry on Merkel's centrist legacy and her role as Europe's steady hand at times of crisis.

The Greens – a party that grew out of anti-nuclear movements in the 1970s – insisted on making efforts to combat climate change a priority and at least on paper the new government is pledging to do just that.

Habeck said climate change will be the “thread woven through all the policies” presented by the coalition.

As for the Free Democrats, they see upgrading Germany's digital infrastructure as critical. Germany lags behind other major economies in digitalization.

Courthouse News reporter Cain Burdeau is based in the European Union.

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