BERLIN (AFP) – German Chancellor Gerhard Schroeder relinquished his seven-year grip on power at the head of Europe”s biggest economy in favour of a coalition government led by his conservative arch-rival Angela Merkel.
His Social Democrats said they had massively approved a deal with Merkel”s Christian Democrats that would allow her to become the country”s first female chancellor at the head of a left-right administration.
Its first task will be to revive the battered economy, crippled by sluggish growth and chronically high unemployment currently more than 11 percent.
Germany”s two biggest parties will share cabinet seats fairly equally, but it remains unclear how the division of responsibilities will affect Merkel”s ability to run what is likely to be a fractious government.
The deal was hammered out amid intense negotiations in a three-week battle for supremacy after inconclusive September 18 general elections failed clearly to separate Schroeder”s SPD from her Christian Democrats.
According to reports citing sources close to the SPD, the centre-left party will take the key ministries of foreign affairs, finance, labour and justice, as well as environment, aid and cooperation, health and transport.
The CDU and its Bavarian sister CSU would also have eight cabinet posts — Merkel as chancellor, a minister of state at the chancellery, and the economy, interior, defence, agriculture, education and family ministries.
CSU leader Edmund Stoiber, whose Bavaria is Germany”s richest state, would run the economy ministry with enlarged responsibility on European policy,
If Merkel is indeed confirmed chancellor, it will cap a remarkable rise for the daughter of a Protestant pastor who moved to communist East Germany in the 1950s.
She would be the first woman at the head of a major European country since Edith Cresson”s brief stint as French premier in the early 1990s.
Schroeder, 61, swept to power in 1998 in a coalition with the Greens on the back of a demand for change after 16 years of conservative rule under Helmut Kohl.
But despite his charisma, he lost the confidence of voters after failing to bring down unemployment or to dispel a sense of malaise stifling the national mood.
Seven years on, with his government struggling to push through sweeping but deeply unpopular structural reforms to revive the economy, his party won just 34.2 percent of the vote in an election he had called a year early in a bid to secure a fresh mandate for his controversial reforms.
With neither the CDU, which finished four seats ahead of the SPD, nor the Social Democrats able to form a government with their preferred partners, both leaders claimed they had a mandate to run the country.
Schroeder notably refused to step aside, a tactic seen by some observers as an audacious attempt to cling to power and by others as a political poker game to ensure the best deal for his party in a coalition government.
Germany has not had a coalition of the country”s two biggest parties since the 1960s.
Merkel, Schroeder, the Social Democrats” party chief Franz Muentefering and Stoiber were meeting again at 11:00 am (0900 GMT).
For Germany”s industrial leaders an end to the impasse could not come soon enough. Growth is sluggish, unemployment high, and industrial output fell by 1.6 percent in August in the face of spiralling oil prices.
German industry has urged the politicians to reach a compromise and get on with urgently needed economic reforms.
Merkel campaigned on a promise to slash unemployment with a new package of measures, but may be forced to continue implementing Schroeder”s labour market reform programme.