Merkel And SPD Plan "Stable And Effective" German Government

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The initial phase of talks between Chancellor Angela Merkel's conservative bloc and Martin Schultz's Social Democrats (SPD) end today-the parties will now decide whether to proceed to formal coalition negotiations.

Merkel's immediate destiny now lies in the hands of rank-and-file Social Democrats whose party leaders will ask them on January 21 to back Friday's deal, a repeat of the grand coalition that governed from 2013 to 2017.

Party sources said they had agreed to a blueprint for formal coalition negotiations in a move that could ultimately end months of political deadlock in Europe's largest economy after the election last September.

However, Schulz, a former president of the European Parliament, said any new government needed to "strengthen Europe". But the success of the populist Alternative for Germany, which became the first far-right party to win seats in parliament since World War II, made it impossible for Merkel to command a majority without the support either of the Social Democrats or of a disparate group of minor parties.

However, the parties managed to reach an agreement on yearly limits for refugee arrivals in Germany, according to the DPA news agency, defining the desired limit on the number of refugees coming to Germany stays within the range of 180,000-220,000 per year.

As the negotiations got underway, Merkel acknowledged there was a lot of work ahead, but said she was "optimistic" the parties could reach an agreement.

At least that's the plan of Chancellor Angela Merkel and her political allies, who Friday crafted a deal aimed at ending Germany's 3 1/2-month political crisis. It was n that possibility of forging a new great coalition with Social Democrats, like one that has ruled in Germany for eight of last 12 years, was resurrected.

The hope was to form a new government "before Easter", which falls on April 1, said the CSU's Seehofer.

"We want to ensure economic and political power for Germany is put towards creating a stronger Europe", he added.

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"Who is going to fight for an exit from coal or a real reduction of Carbon dioxide emissions in the "grand coalition"?" asked Robert Habeck, who is running for the Green party's leadership.

Merkel has also agreed to a "soft" immigration cap of 200,000 per year, although the Social Democrats feel uneasy this.

Weakened by an election setback in September, Mrs Merkel turned to the left-leaning SPD to renew their grand coalition after the collapse in November of talks on a three-way coalition with the Greens and Free Democrats (FDP).

Issues surrounding finance were emerging as key sticking points even as Germany posted sterling growth for 2017 and a record surplus.

Another coalition with the SPD therefore remains the only feasible option open to the chancellor, aside from the never-before-used option of a minority government.

The all-night session confirmed the doubts of leading SPD opponents to another grand coalition, who favour rebuilding their party in opposition.

"It is welcome that the goal of a United States of Europe, which sounds great and which perhaps sometime in the future can be a long-term objective, is not included in this coalition agreement", said Detlef Seif, the deputy European Union spokesman for Merkel's conservative parliamentary bloc.

A survey published by Focus magazine found that only 30% of Germans favor a return of the conservative-SPD alliance, while 34% prefer new elections. They feared of the party being further minimalized under the Union.