Europe welcomes German grand coalition plan

Former European Parliament president, current head of Germany's Social Democrats (SPD) and the probable next German Foreign Minister Martin Schulz celebrated his party's coalition deal with Chancellor Angela Merkel's conservatives  on Wednesday, saying it meant Germany "will return to an active and leading role in the European Union."

Read more: Germany's Angela Merkel finally reaches coalition deal with SPD

For their part, European leaders praised Berlin's grand coalition agreement, which still requires approval from the SPD party base.

EU Economics Commissioner Pierre Moscovici welcomed the coalition announcement via Twitter: "Coalition agreement in Germany: good news also for Europe!" 

'Europe is happy'

CSU politician Manfred Weber, the chairman of the European People's Party at the European Parliament, told DW that the coalition agreement is a step in the right direction.

"Europe is happy because we now have a good signal from Berlin. Everyone was waiting for the outcome of the Berlin coalition talks. Now we can go forward," said Weber, who leads the center-right alliance including Merkel's CDU. However, he hinted that another grand coalition need not mean more of the same in Europe from Germany.

"Times have changed and having in mind that we have a growth rate of 2.5 percent, we should not talk about rescue programs anymore or stabilizing the eurozone. No, today it's about investment. It's about creating a future for this continent."

'End of forced austerity' 

An end to so-called "austerity" policies at home and abroad was a major election talking point for Germany's Social Democrats.

The SPD's Schulz on Wednesday described the coalition agreement on Europe as "an end of forced austerity." Speaking at a press conference on Wednesday with his coalition partners, Schulz said, "I think we have achieved what will be a new awakening for Europe and a new dynamic for Germany."

Read more: Martin Schulz, leader of Germany's Social Democrats in profile

However, the number of ministries — foreign, finance and labor — given to the SPD had some German commentators musing on what they saw as concessions from the conservatives: Julian Reichelt, editor of Bild, quipped, "This is the first SPD government led by a CDU chancellor."

Merkel said the deal would form the basis of "a good and stable government."  

A European welcome

Martin Selmayr, the influential chief-of-staff to European Commission President Jean-Claude Juncker, welcomed the accord: "A 170-page agreement for four years, opened by a strong Europe chapter, numerous committed references to the EU framework in all sectoral chapters."

Schulz said the key point was that the government was prepared to put more into the EU budget. Saying he has often spoken with French President Emmanuel Macron on the telephone, Schulz added that he wanted to work with Paris to champion: "A better and fairer Europe." 

Writing in the Frankfurter Allgemeine, former European Central bank (ECB) chief economist Otmar Issing said the coalition agreement represented: "A farewell to the idea of a European community aimed at stability."

'A new departure' awaits SPD members' approval

The prominently placed five pages on the subject of the EU in the coalition document were titled: "A new departure for Europe!" It called for the eurozone’s ESM bailout fund to be turned into a full-blown European Monetary Fund, and for funding to shield the eurozone from crises. 

The SPD's 463,000 members need to sign off on the deal in a special ballot expected by early March. The party's standing in opinion polls has fallen to a record low of 17 percent after September's election — its worst showing in a generation. Parliamentary group leader Andrea Nahles is expected to take over the role of SPD leader if party members approve the coalition agreement and Schulz becomes foreign minister.

New finance minister

Government spending is expected to increase for education and infrastructure in Germany, supervised by the likely new Finance Minister Olaf Scholz, the current mayor of the northern port city of Hamburg. This is a key appointment after years of strict spending controls under former finance chief Wolfgang Schäuble, although Berenberg Bank analyst Florian Hense commented on Scholz: "He is a realist... within the SPD, probably the closest to ex-finance minister Schäuble." 

However, Commerzbank chief economist Jörg Krämer said: "Do not underestimate the impact of the SPD getting the influential Finance Ministry."

"This marks a huge change from the policy of Wolfgang Schäuble regarding European integration, transfer of risks toward the peripheral countries," Krämer said.

Merkel admitted the significance of the change: "After so many years in which Wolfgang Schäuble held the Finance Ministry, himself becoming an institution, it was hard for many of us that we couldn't hold on to that ministry," Merkel said on Wednesday.

Spending of €46 billion ($58 billion) over the next four years to increase investments and reduce taxes would be a key change in policy. 

In January, International Monetary Fund director Christine Lagarde had said, "Germany can afford to spend and invest more."

jm/sms (Reuters, dpa, AFP)