Leaders play down early breakthrough in talks

10th November 2005, Comments 0 comments

10 November 2005, BERLIN - Germany's political leaders are holding a crucial round of talks Thursday to hammer out an agreement on forging a new grand coalition government with both sides playing down the chances of an early breakthrough in the negotiations.

10 November 2005

BERLIN - Germany's political leaders are holding a crucial round of talks Thursday to hammer out an agreement on forging a new grand coalition government with both sides playing down the chances of an early breakthrough in the negotiations.

Instead of reaching an accord late Thursday, party officials now expect the talks to drag on into Friday before they can finally piece together an agreement that would help pave the way for Angela Merkel to become the country's first woman Chancellor.

Despite almost four weeks of talks, the nation's two main political parties - Merkel's conservative Christian Democrat (CDU)- led alliance and outgoing Chancellor Gerhard Schroeder's Social Democrats (SPD) - still have to overcome several major hurdles before an accord can be reached.

A further meeting on cobbling together an agreement to form a new Merkel-led government has been set down for Friday afternoon.

A leading member of Merkel's party, Ronald Pofalla, has even raised the prospect of the negotiators battling on into Saturday.

The parties have to reach agreement by Monday, when the new coalition accord is due to be approved by separate party conventions.

The party conventions are to be held ahead of a meeting on November 22 of the German Parliament when 51-year-old Merkel is expected to be elected Chancellor.

While both parties have agreed to slash public spending by 35 billion euros (41.2 billion dollars) by 2007 in a bid to bring Germany's deficit below the three per cent target for euro member states, they still have to finalize details of how the big reduction in the deficit is to be achieved.

In particular, this includes whether the cuts should be partly financed by a two or three per cent hike in consumption tax or, as the SPD has proposed, an increase in tax for Germany's top income earners.

As well they have finalized agreement on Schroeder's government policy to phase out nuclear energy in Germany and a proposal to further liberalize Germany's strict hire-and-fire laws.

Analysts say the coalition agreement, especially if it contains plans to hike the nation's consumption tax and liberalise the job protection laws, could run into trouble at the SPD party convention.

Merkel has been forced into forming a coalition with Schroeder's SPD following September's inconclusive national election.

About 40 representatives of the two political groups were attending Thursday's talks in Berlin.

But as the two parties geared up for the talks, their plans came under fresh attack from both unions and business.

Germany's Employer Federation President Dieter Hundt added his voice Thursday to the growing chorus of critics telling the daily Stuttgarter Zeitung that a hike in the consumption tax would be a "false start" to the grand coalition.

Coming as Germany struggles to emerge from a protracted period of stagnation, the Kiel-based Institute for World Economics described the proposed tax increases as "absolutely fantastic" in a report published in Thursday's daily Berliner Zeitung.

Meanwhile, Germany's unions have stepped up their campaign to head off a proposal by the new Merkel-led government to ease the nation's tough hire-and-fire laws by insisting that the moves would not create any new jobs.

DPA

Subject: German news

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