All-round approval for new coalition pact

The approval of the deal by the conservatives, the Social Democrats (SPD) and the CDU's Bavarian sister party, the Christian Social Union (CSU), at separate congresses on Monday laid the basis for Merkel to be installed at the head of a potentially fragile and unwieldy bipartisan government.

The endorsements for Germany's political marriage of convenience will likely lead to Merkel being sworn in as the country's first woman chancellor and the first chancellor from the former communist east. But Merkel must still be voted into the position by the Bundestag, the lower chamber of parliament, on Nov. 22, before she can get to work.

Approval of the coalition deal will not, of course, be the last of the hard negotiations between the CDU/CSU and the SPD. The parties may have come up with a proposal all of them can live with after almost two months of haggling over power, but the machinations will continue as the government takes its seats in leading Germany.

Industry gunning for coalition deal

The pact sealed by Merkel's conservatives and their longtime rivals, the SPD of outgoing Chancellor Gerhard Schroeder, details a sudden and dramatic consolidation of the German budget in 2007, driven by a rise in sales tax. It is a deal that has angered German industry and the new opposition parties.

The criticism is focused on the agreement to bring Germany's budget deficit back within European Union borrowing limits by 2007 - a massive undertaking requiring upwards of 35 billion euros ($40.96 billion) in savings or extra revenues - and the means of getting there.

A huge portion of that money will come from a 3 percent rise in value-added tax in 2007 - a move some economists fear could hit weak German consumption and make it tough for the coalition to achieve its chief goal of cutting unemployment, currently at 11.6 percent.

Business figures have condemned the pact, fearing the higher taxes will hit German consumers, and the Green party and free-market liberal FDP have painted it as a betrayal of the promises the ruling partners made during the election campaign.

Discontent in the conservative ranks

There are also rumblings of discontent within the ranks of the coalition parties themselves. Some conservatives are dismayed with the concessions Merkel made to the SPD in her quest to become chancellor.

While agreeing to loosen job protection measures and cut payroll costs, the CDU rebels say the most damaging concessions were the rise in taxes for top earners and the dumping of reforms in governing wage negotiations

However, the voices of dissent remained silent on Monday as just three of over 100 members voted against the pact and one abstained.

Schroeder tells tearful SPD: Take the deal

Schroeder made an impassioned plea to his party earlier in the day which had some members visibly moved. At the party meeting in the southwestern city of Karlsruhe, the outgoing chancellor urged his party to accept the pact.

"No one is forcing anyone to love this grand coalition or to cheer about it," Schroeder said, as some of the crowd dabbed away tears. But the agreement contained the undeniable signature of the SPD and was Germany's only chance for a stable government, he said.

"I urge you therefore to give your broad approval," Schroeder said.

And they did. During the two and a half hours of discussion, the delegates expressed little criticism, demonstrating a nearly united front of approval for the coalition. In the open ballot, 518 delegates backed the deal, 15 voted 'no' and five abstained. The Social Democrats also overwhelmingly put their weight behind outgoing party chairman Franz Muentefering becoming Merkel's deputy and approved the remaining eight SPD cabinet designates.

The CSU voted unanimously in favor of the coalition plans at its congress in Munich. CSU leader and Bavarian Premier Edmund Stoiber, who has been under fire from critics both inside and outside his party ever since he unexpectedly backed out of his position as designated economy minister in the new cabinet, took the opportunity to apologize.

"I'm sorry that my decision put our party and all of you here in a … difficult situation," he told the roughly 200 delegates.

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