21 October 2013

Germany's SPD agrees to enter into coalition talks with Merkel

The Social-Democrats (SPD) have agreed to coalition talks with Merkel's CDU and aim to form a new government by Christmas, further postponing any decisions on eurozone governance. They have set out minimum demands for a coalition deal, including statutory minimum wage, an FTT and more investment.

Partially translated from the German

As the Spiegel reported, the extraordinary SPD party convention of senior party members voted on Sunday by a large majority to start coalition negotiations with the CDU/CSU. Only 31 of the 229 delegates voted against such a move (plus two abstentions), even though the SPD base particularly has long been very sceptical about entering into a grand coalition again, as they did in 2005. The WSJ (subscription required) reports that SPD leaders agreed in principle late last week to coalition talks but needed formal approval at Sunday's party conference before proceeding. The leaders know that many of the party's 472,000 members, who have a veto right on any coalition treaty per postal vote, are sceptical about a junior-partner role in a so-called grand coalition with Ms Merkel's Christian Democratic Union and its Bavarian sister party, the Christian Social Union. 

City AM says that the SPD has listed its 10 non-negotiable demands ahead of coalition talks this week. They include a minimum wage of €8.50 per hour, equal pay for men and women, greater investment in infrastructure and education, and a common strategy to boost eurozone growth and employment. According to an internal document, the party will also demand equal pensions for seniors in the former West and East Germany, the ability to have dual citizenship, and measures to make it easier to combine work with family life. No mention, however, was made in the document of tax increases for the wealthiest, which the SPD had campaigned for during September’s election but which the chancellor has ruled out. In terms of funding these demands, according to the FAZ the document states that "we will insist during the coalition negotiations on a reliable, robust and equitable way of funding all projects of a future coalition agreement to actually achieve the desired improvements". The SPD would not accept social cuts and considered privatisations to be "the wrong way".

"We will negotiate in a tough manner, with the aim of forming a government before Christmas", SPD party chief Sigmar Gabriel said in a press conference after the vote, reports the EU Observer. "This time I can guarantee that we will not strike a coalition agreement in which we do the opposite of what we pledged in the election", City AM reports him as saying.

Even though personnel questions are officially still taboo, the Welt reports that leading SDP figures are apparently debating which ministries they will want to demand during the impending coalition negotiations. It seems to have transpired that the Finance and Labour Ministries will be desired posts for the SPD - the Foreign Ministry is considered as less important. An ECFR-blog-post explains why the country's finance ministry has come to be seen as the de facto seat of political and economic power in Europe.

The FT (subscription required) quotes an CDU official as saying that the party would table its own minimum demands. The SPD is unlikely to emerge with all its demands satisfied, but Ms Merkel will also have to make big concessions – including some form of statutory minimum wage – if she wants to persuade SPD members to back her next government. A recent opinion poll said 65 per cent of the SPD were still opposed to such a deal: the Süddeutsche Zeitung reports that the left wing of the SPD stressed the open nature of the negotiations. Despite the decision to enter into coalition negotiations, no decision had yet been made for the actual formation of a grand coalition. "If we cannot enforce any substantial policy change, I cannot recommend party members to approve a grand coalition agreement", said the Schleswig-Holstein state chairman Ralf Stegner, who coordinates the SPD's left wing, in the Rheinische Post. 

Mr Gabriel was quoted by the Frankfurter Allgemeine Zeitung: "We want to begin coalition negotiations, and we want to bring them to a successful conclusion. Of course it is possible that there may be unbridgeable differences, so that a successful conclusion is not possible. But we intend to reach a result and I'm quite optimistic."

The first round of talks with the CDU and CSU will take place on Wednesday - just one day before an EU summit in Brussels on Thursday and Friday. EU officials are thus not expecting any big decisions on the eurozone governance at this meeting, writes the EU Observer.

Meanwhile, the Federal Government has released a press statement that the Federal President Joachim Gauck has presented the Chancellor and her Cabinet ministers with their certificates of discharge. He asked the Chancellor to stay on as acting head of state until such time as her successor is officially appointed. The constituent session of the new German Bundestag on 22 October marks the end of the period of office of the outgoing government. To prevent the case that Germany is left without a government, article 69, paragraph 3 of the German Basic Law provides for the Chancellor and Cabinet ministers to stay on in a caretaker or acting capacity if requested so to do by the Federal President until such time as a successor is appointed.