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Last Updated: Tuesday, 11 October 2005, 01:33 GMT 02:33 UK
Merkel triumphant - but at a price
By Bethany Bell
BBC News, Berlin

Angela Merkel
More tough negotiations lie ahead
As she announced the deal that will make her chancellor, Angela Merkel looked relieved and happy, but there was little sense of triumph.

Her reaction was oddly subdued, considering that Mrs Merkel is breaking the mould of German politics.

Not only will she be the country's first woman chancellor, she will also be the first leader to have grown up in communist East Germany.

But Mrs Merkel had to be pushed by journalists to admit that she was pleased at the agreement with the Social Democrats.

"I'm in a good mood," she said, "but I know that there is a lot of work ahead."

Compromise coalition

Some observers put this down to Mrs Merkel's Protestant work ethic.

But it is more likely a reflection of the intensely difficult negotiations of the past three weeks and the prospect of more to come.

The two parties - which until recently were bitter rivals - don't trust each other.

"Germany needs reform," the CDU MP Michael Fuchs told me. "I hope the SPD understands that too."

Negotiations on the details of future government policy are likely to drag on till mid-November - before the hard business of the grand compromise coalition can begin.

She is a new Mrs Thatcher, just with a smaller handbag
Michael Fuchs, CDU MP
Mrs Merkel may have won the battle for the chancellorship, but it came at a price. The Social Democrats have taken eight of the 14 ministries, including the key posts of finance, labour and foreign affairs.

There are also signs that Mrs Merkel has agreed to water down her reform policies to boost the flagging German economy - such as cuts in payroll costs. That is not likely to go down well with reform-minded CDU MPs.

Speculation

But there is also anger among the Social Democrats. Their outgoing minister for economics Wolfgang Clement accused the leadership of "losing its nerve too soon."

The most painful sacrifice for the SPD is the loss of its charismatic leader Gerhard Schroeder, who stepped aside as chancellor to allow the coalition with the CDU to go ahead.

There is strong speculation that many rank and file Social Democrats will vote against the coalition pact at the forthcoming party conference, which is set for early November.

They argue that while Mr Schroeder didn't win the election, he didn't lose it either; they also point to the fact that the grouping of left-wing parties in parliament is bigger than the right-wing block.

A 'no' vote by the Social Democrats could throw all the cards up into the air.

Even if Mrs Merkel does manage to survive the next few weeks of wrangling before a government is formed, there are fears the coalition could be short-lived.

Dirk Niebel the General Secretary of the opposition Liberals, told me he gave the grand coalition just two years.

"The parties don't like each other really, people in both parties are not able to work together," he said.

But Michael Fuchs of the CDU warned against underestimating Mrs Merkel. "She is a new Mrs Thatcher, just with a smaller handbag."


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Politicians give their views on Angela Merkel



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