German Coalition Reaches Deal but Faces Tough Party Vote
Polls Show Left-Leaning Social Democrats Barely Support Alliance With Merkel's Conservative Party
BERLIN—Germany's biggest political parties agreed early Wednesday on a deal to forge a coalition government led by Chancellor Angela Merkel.
After 17 hours of negotiations, Ms. Merkel's conservative Christian Democratic Union, its Bavarian Christian Social Union sister party and the Social Democrats agreed to introduce a national minimum wage and toughen labor market rules, as well as boost spending on pensions, education and infrastructure.
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Chairman of the German Christian Social Union party, Horst Seehofer, and Angela Merkel arrive for coalition talks, in Berlin on Tuesday. European Pressphoto Agency
But the real nail-biter comes next: an unusual mail-in referendum that gives the 470,000 members of the left-leaning Social Democrats, or SPD, an up-or-down vote on whether to approve the coalition agreement.
Approval of the deal in the referendum, with results to be announced around Dec. 14, would nudge Germany and Ms. Merkel to the left on a few economic and social issues, while the country's fiscal conservatism would be largely maintained at home and in its response to the euro crisis.
Parliament would officially elect Ms. Merkel to her third term as chancellor soon after.
But if the referendum fails—an outcome a number of political analysts consider possible given the discontent among the SPD rank and file—German politics would be in for one of its most turbulent phases of the past two decades.
Ms. Merkel would then have three options: strike an unprecedented coalition agreement with the center-left Greens; form a minority government in which she would have to haggle for opposition support for every bill; or hold new elections that could catapult an upstart anti-euro party into parliament.
SPD leaders, who promised the referendum to persuade their members to enter coalition talks in the first place, will campaign intensively next week to try to win the vote. A poll by research firm YouGov for the tabloid Bild last week said SPD voters barely favored a coalition, with 49% voicing support and 44% opposed to one.
The career of SPD leader Sigmar Gabriel will be on the line, with a political exit possible if the referendum is lost, and a prominent government post and chancellor candidacy likely if it is won.
After a stinging defeat in the Sept. 22 federal election, many members wanted the Social Democrats to stay in the opposition and rebuild the party for their next chance in 2017. But the outcome of the election, in which Ms. Merkel's old governing partner, the Free Democrats, lost all of their seats in parliament, made a "grand coalition" between her conservative Christian Democrats and the Social Democrats the most viable option. SPD leaders, given postwar tradition of stable majority governments, had virtually no choice but to find a way to go along.
Wednesday's deal comes after a month of negotiations to form Chancellor Merkel's third government, which will have a two-thirds majority in the lower house of parliament. The coalition treaty is expected to be presented later Wednesday.
Before the deal, critics said the planned national minimum wage, the option for early retirement at age 63 and making temporary work more difficult will roll back some of the country's most successful labor-market overhauls of recent years which helped turn Germany into Europe's growth engine. Ms. Merkel's previous grand coalition had raised the retirement age to 67.