Angela Merkel will become Germany's first woman chancellor today with the broadest parliamentary mandate in decades to pursue overdue economic reforms.

Merkel's center-right Christian Democrats and the center-left Social Democrats (SPD) will form Germany's first "grand coalition" since 1969, commanding a crushing majority of 448 of the its 614 seats in parliament's lower house.

The two main parties also dominate the upper house of parliament, the Bundesrat, giving the new government an opportunity to implement reforms of the federal structure, pensions and taxes without fear of a veto.

"The election taught me that Germans are hesitant to accept reforms," said Volker Kauder, Merkel's parliamentary floor leader, in an interview with the weekly Bild am Sonntag.

"And that's exactly where this grand coalition's great chance is. Both parties have to link arms together to convince the public of the need for reforms and get them with us."

Merkel was forced to form a "grand coalition" after neither of the two main parties was able to secure a clear majority for either the left or the right in a September 18 general election.

A majority of Germans doubt the "odd couple" can survive a full four-year term, polls suggest.

But Merkel and SPD leaders, including the party's new chairman Matthias Platzeck, are exhibiting a sober determination to co-operate for common goals a sign, perhaps, that the long-time rivals believe failure will harm them both.

Economic challenge

High unemployment, currently at 11.6 percent, has hurt German confidence and torn holes in the budget for years. The economy, once Europe's motor, is now one of the most sluggish in the 25-nation European Union, with growth expected to come in below 1 percent this year and only slightly better in 2006.

The economic challenges facing Merkel's government could grow if the European Central Bank, as is widely expected, raises interest rates next month for the first time in five years.

Merkel also has to hope her plans for a 3-percentage point rise in value added tax to 19 percent in 2007 will not hit consumer spending, for years the German economy's Achilles heel.

But amid the gloom, there are reasons for hope.

Since the early 1990s, the party in control of the lower house has rarely had also a majority in the upper house representing the 16 federal states meaning its ability to carry out reforms was very limited.

Merkel may also find it easier than her predecessor to convince a German public of the need to let go of cherished benefits and subsidies, after outgoing SPD Chancellor Gerhard Schroeder paved the way with his "Agenda 2010" reform programme.

Still, the road ahead will inevitably be bumpy.

Merkel and Platzeck, who was catapulted into the SPD's driver's seat after a leadership crisis last month, have vowed to work closely together on reforms. They are both 51, both from the former East Germany and both scientists by training.

Both weathered recent storms in their respective parties and emerged with strengthened positions. Both are seen as pragmatic and are known for their steady, analytical approach.

Foreign relations

Merkel, who has vowed to make German-French relations less exclusive and improve ties with smaller European countries, will travel to Paris and Brussels tomorrow in her first official trip as chancellor.

According to her website, Merkel will also meet British Prime Minister Tony Blair on Thursday evening in London.

During the German election campaign, Merkel criticised Schroeder for forging "exclusive" ties with French President Jacques Chirac and Russian President Vladimir Putin at the expense of relations with smaller European Union countries.

But the coalition programme of her new government describes co-operation with France as "indispensable" for driving Europe forward and her new foreign minister, Frank-Walter Steinmeier, is a close ally of Schroeder who has vowed continuity in German foreign policy.

"It is a tradition for the chancellor to travel to France first," said a senior member of Merkel's conservative Christian Democrats. "Germany and France have been the drivers of European integration. This is a sign of continuity."

Sources in Merkel's new coalition government of conservatives and Social Democrats said last week she also planned a trip to Poland before the end of the year and later visits to Washington and Moscow.

She has promised to improve ties with Washington, strained by Schroeder's staunch opposition to the US-led war in Iraq.

Firm 'no' to Turkey's EU bid

Merkel remains firmly opposed to Turkish European Union membership, but has accepted an invitation to visit the country.

Most members of Merkel's Christian Democrats want to offer Ankara a so-called "privileged partnership" which Turkish leaders angrily reject as second-class membership.

In contrast, Schroeder has been a staunch backer of Ankara's entry to the 25-nation bloc.

Bridging the differences between Merkel and the SPD over Turkey, the coalition pact signed in Berlin on Friday essentially fudges the issue by saying negotiations are totally open-ended in terms of final results.

"If the EU is not capable (of taking in Turkey) or if Turkey is not in a position to fully uphold all obligations linked to membership then Turkey must be bound as close as possible to European structures through further developing its privileged partnership to the EU," says the German government accord.

In any case, the question of Turkey's admission to the EU will not overly burden the Merkel government given that talks between Ankara and Brussels are expected to last another 15 years.
 
(China Daily November 22, 2005)