Germany Coalition

BERLIN — After five weeks of negotiations, Chancellor Angela Merkel’s conservatives reached an agreement on Wednesday with their Social Democratic rivals on a program for a new coalition government, with concessions to the left that pleased labor leaders and almost immediately drew criticism from business interests.

The 475,000 members of the Social Democratic Party must still vote on the agreement before it can take effect.

The 185-page document calls for establishing a national minimum wage — a first for the country — as well as increased pensions for some recipients and early retirement eligibility for others. It would offer dual citizenship to Turks and other foreigners who are born and raised in Germany, and it promises a new law by next summer to revitalize plans for renewable energy.

More broadly, though, it reaffirms Germany’s current course in Europe, much criticized by southern Europeans as burdening them with austerity. And the plans for improving Germany’s ailing infrastructure seemed likely to fall far short of the extra 7 billion euros, or $9.5 billion, a year in spending that a commission of government experts said was needed.

Ms. Merkel, who has moved her Christian Democrats considerably to the center over her eight years in office, agreed to the concessions because “she saw that she really had no alternative to the grand coalition” with the Social Democrats, said Uwe Jun, a politics professor at the University of Trier.

“This is very much in Ms. Merkel’s pragmatic style of government,” he said, noting that the concession she made had polled well among all Germans. The parties, he added, could promote the program as a favorable one for average, hard-working citizens.

Ms. Merkel, who appeared tired after long hours of negotiations in recent days, presented the program at a news conference on Wednesday alongside Sigmar Gabriel, the chairman of the Social Democrats.

“We came into the negotiations with very different positions, so it took a little while,” Ms. Merkel said. “But I found the talks very positive.”

Despite loud criticism from his party’s rank and file, Mr. Gabriel said he was confident that his members would back the agreement when the party vote concludes Dec. 14. Only then will the new cabinet ministers be named.

Wolfgang Schäuble, 71, the current finance minister, is considered virtually certain to keep that job, so it is likely that a Social Democrat would run the Foreign Ministry; speculation centered on Frank-Walter Steinmeier, who was the foreign minister in Ms. Merkel’s first grand coalition government from 2005 to 2009.

But the focus on Wednesday was more on the program, which one leading analyst, Prof. Jürgen W. Falter of the University of Mainz, noted contained many nebulous passages and vague promises.

Germany’s important business lobby echoed fears expressed by the government’s Council of Economic Advisers this month that Ms. Merkel and her partners were moving away from the labor and welfare overhaul policies of the last Social Democratic chancellor, Gerhard Schröder. Those policies are widely seen as a foundation for the country’s success in overcoming the 2008 financial crisis and weathering the euro zone’s troubles since.

The council “was right with its evaluation that this could lower German growth in the long term,” said Jörg Krämer, the chief economist of Commerzbank, in a telephone interview.

Even so, he said, “I expect that Germany will continue to outperform the rest of the euro zone in the coming years,” because of low interest rates and the lag in effect of any policy shifts.

Establishing a minimum wage of €8.50, or $11.54, an hour was a central demand of the Social Democrats, but the agreement puts off its effective date until 2015, and three years later for sectors of the economy that already have minimums set by collective labor agreement.

Still, Ver.di, Germany’s largest service workers union, praised the agreement for setting clear goals to improve the lives of workers. “Millions of people will enjoy larger paychecks and better working conditions,” said Frank Bsirske, the union’s chairman.

By contrast, one of the nation’s most important industry groups, the Association of German Engineers, said the coalition pact “lacks the spirit of big ambitions: too little change, too backward looking and too many blank checks.”

“What we miss above all is any impulse for more private investment” in Germany, the association said in a statement.

Ms. Merkel’s conservative ally, Horst Seehofer, the premier of Bavaria, appeared satisfied that he would get his main demand, to institute a highway toll that could generate hundreds of millions of euros each year from foreign motorists and business vehicles. But analysts and even some prominent members of Ms. Merkel’s bloc noted that the toll would be instituted only if it was compatible with European laws and only if German motorists incurred no additional cost.

Both Ms. Merkel and Mr. Gabriel emphasized at their news conference that getting the country’s ambitious energy policy right would represent what she called “a huge chance for Germany.” Mr. Gabriel said that “the whole world is watching this country” and that failure could hurt Germany’s competitiveness, a watchword of the coalition accord and a pet theme of Ms. Merkel’s.

Referring to the recent rift with the United States over its electronic eavesdropping, the program noted that a new trade deal with America was vital, but that it should embrace European standards for protecting data, consumers, the environment and the food supply
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