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08 February 2018, 09:24 | Darnell Patrick
Ulrich Kelber deputy acting justice minister and SPD member left with Sigmar Gabriel at the Bundestag in Berlin | Odd Andersen AFP via Getty Images
German Chancellor Angela Merkel's conservatives and the Social Democrats sealed a deal on a new coalition Wednesday, potentially ending four months of political deadlock in Europe's top economy.
With SPD leader Martin Schulz, a former president of the European Parliament, reported to be headed for the foreign ministry, Germany could become more amenable to proposals for strengthening E.U. institutions and the euro - to the delight of French President Emmanuel Macron.
Sources indicate the Social Democrats will get the foreign, labour and finance ministries, a major prize held by Ms Merkel's Christian Democrats for the last eight years. Schulz has promised to put any coalition accord to a yes-or-no referendum by the SPD's 440,000 rank-and-file members.
The SPD served as a junior government partner under Ms Merkel from 2013-2017.
Senior European Union officials welcomed Wednesday's agreement in Berlin to form a new left-right grand coalition government, calling the long-awaited announcement a boost for the EU as a whole.
"It's not yet possible to say how long it will last - we did good groundwork yesterday but there are still important issues that need to be resolved", Merkel, in office for 12 years, said before heading into negotiations at the SPD headquarters.
Mr Macron wants to create a common eurozone budget and a eurozone finance minister - but Germany has so far been wary of any move that might lead to what it calls a "transfer union", used to prop up indebted governments.
The two main parties reached a breakthrough deal in January when they presented an in-principle agreement to start formal coalition talks.
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Schulz had previously ruled out forming a coalition with Merkel's conservatives, saying that September's poll results - which saw the SPD recording its worst post-war election performance, at 20.5 percent - had "directed us to go into opposition".
Angela Merkel finally has a deal.
Any coalition deal will hinge on how well Social Democratic leader Martin Schulz, the challenger Merkel defeated in September, can sell the pact to a party base that's chafing at the idea of helping the Christian Democrats govern for the third time since 2005. The results from that are due in early March, and that vote is now looking too close to call either way.
Many Social Democrats have blamed their poor showing on the party's membership in the previous "grand coalition".
An SPD push to overhaul the two-tier healthcare system also yielded results, with a new commission set to examine levelling out doctor pay under statutory and private insurance schemes.
The SPD however won assurances that family reunifications for refugees would resume in August, restricted to 1,000 people a month.
The EU is more likely to succeed "when Paris, Brussels and Berlin are pulling together", said Moscovici, adding that there were "common concepts" between the three capitals.
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