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Last Updated: Monday, 8 January 2007, 18:21 GMT
Austrian rivals in coalition deal
Austrian Chancellor Wolfgang Schuessel (left) with Social Democrat Chairman Alfred Gusenbauer
Chancellor Schuessel (l) will hand over his office to Alfred Gusenbauer
The two main parties in Austria, the centre-left Social Democrats and the conservative People's Party, have agreed to form a coalition government.

The "grand coalition" deal comes three months after the general election.

The administration will take office on Thursday, with Social Democrat leader Alfred Gusenbauer becoming chancellor.

He will replace Wolfgang Schuessel of the People's Party, who headed a coalition with the far-right Freedom Party for six years.

The deal follows weeks of bargaining which often faltered over policy differences and accusations of bad faith.

The People's Party was narrowly beaten into second place in the 1 October vote.

The post of vice chancellor is expected to go to the People's Party, which also secured the ministries of finance, foreign affairs, the interior, economy, health, agriculture and science.

The Social Democrats will run the ministries of defence, education, justice, infrastructure and social affairs.

The deal followed a breakthrough at the weekend when agreement was reached on about 1bn euros (674m; $1.3bn) of extra government spending.

Country profile: Austria
12 Dec 06 |  Country profiles

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