German parties agree coalition deal to make Olaf Scholz chancellor

Germany’s new three-way coalition government of Social Democrats, Greens and liberals has addressed the public for the first time, pledging to put climate protection at the top of its agenda, but stressing its first priority was to control the pandemic.

Replacing Angela Merkel as leader after 16 years, Olaf Scholz of the Social Democrats used his opening speech to deliver a dramatic appeal to Germans to get vaccinated, announcing a seven-point plan to tackle the health emergency, which he called “very serious”, stressing that hospitals were close to capacity, and that his government would be considering the introduction of a vaccine mandate.

The three parties, known as the “traffic light coalition” owing to their colours – red, green and yellow – hammered out the deal during two months of intense negotiations after the Social Democrats (SPD) won a slim margin in the 26 September national election.

Under Scholz, the acting finance minister, as new chancellor, Annalena Baerbock of the Greens is widely expected to become foreign minister, the first female in the role and Robert Habeck, her partner as co-leader of the party, will receive a new “super minister” role combining the economics ministry with environmental protection goals.

Christian Lindner, leader of the pro-business Free Democrats (FDP), will become the new finance minister. Hubertus Heil of the SPD is reported to be the only minister from the old government – a grand coalition between the SPD and Merkel’s conservative CDU/CSU – who will retain his post, as labour minister.

The SPD will also fill the roles of the health, interior and defence ministries.

It will be the first three-way alliance on a national level in German history and the first to put tackling the climate emergency, which will be a priority in each of the ministries, at the top of its agenda.

As part of its goal for Germany to become climate neutral by 2045, the parties have agreed to commit to phasing out coal by 2030, in principle to outlaw combustion engines, and to end gas power generation by 2040. Renewable energies are to be expanded considerably, to cover 80% of all energy needs by 2030.

Social policies include increasing the minimum wage to €12, which Scholz said would benefit 10 million Germans. A newly-founded housing ministry will oversee the construction of 400,000 new homes, a quarter of which are to be publicly subsidised to tackle a growing housing crisis by creating more affordable homes, in what the agreement refers to as “the social question of our age”.

An insurance policy for children, promoted by the Greens, is also to be introduced to tackle growing child poverty as well as a heating subsidy for low-income households.

But its most immediate challenge will be to control Germany’s worst wave of Covid-19 since the pandemic began, especially increasing the number of vaccinations. Scholz said he would establish a crisis management team reporting to his chancellery, to be made up of virologists, epidemiologists, psychologists and sociologists, to advise on a way out of the emergency.

He said €1bn would be set aside to fund bonuses for health workers.

The government will be one of Germany’s youngest in terms of its members’ ages.

There is much speculation as to how the three parties will cooperate, owing to their considerable differences. The Greens have pushed for a huge investment programme to fight the climate crisis, as well as to spruce up Germany’s out-of-date infrastructure. During the election campaign they pledged to raise taxes and loosen debt rules to free up money to cover increased spending.

Leading economist Marcel Fratscher called the coalition deal “very very ambitious”, but “well-thought through”. But he added he believed that its economic goals were “not forward-thinking enough”.

But the FDP, which is known for its fiscal caution, has repeatedly ruled out tax increases. With Lindner of the FDP having secured the finance ministry, their preferences are likely to shape the new government’s monetary policy more than those of the Greens, after Scholz announced debt rules would not be relaxed.

The party leaders looked relieved after two months of intense talks, as they posed for photographs on the banks of the River Spree in Berlin ahead of setting out their plans under the slogan “embrace progress”.

The coalition negotiations involved 22 working groups and 300 negotiators. Unusually, next to no information was leaked, even though some participants, most recently Baerbock, admitted there had been some exasperating moments.

Habeck said the talks had been “extremely strenuous” at times. He said the new government was aware of the scale of the challenges it faced as it took over power “at a time of crisis … of fear, worry and insecurity” but he said “we’ll do everything to break the fourth wave”.

The new government is expected to be sworn in during the week of 6 December. Before that, the coalition agreement has to be approved at the SPD and FDP party conferences, while the Greens will put it to a members’ vote, a 10-day process expected to start on Thursday.

Scholz said that the ‘Traffic Light’ name given to the coalition would stand it in good stead. “In 1924 the world’s first traffic light was erected on Berlin’s Potsdamer Platz. It was considered an unusual bit of technology, and people asked: ‘can it work?’ But now we cannot imagine life without it: it helps us to get to where we want to go in a fast and safe manner.” He said his goal was “that this coalition is similarly pioneering for Germany”.