Agreement reached on basis for negotiating new German govt coalition - lawmakers

Merkel strikes preliminary deal to hold power in German coalition

Merkel strikes preliminary deal to hold power in German coalition

"We are waiting for this quite impatiently".

The Pound Sterling to Euro exchange rate is stuck below opening levels today as the EUR receives a boost from news that Angela Merkel may be closer to forming another coalition government.

"Rather, it is always also a responsibility for Europe, and for reliability, partnership and engagement in global politics", he said. The deal includes efforts to strengthen the European Union, improve domestic security and control the flow of refugees.

"I am quite satisfied", he said.

Horst Seehofer, head of the Bavarian sister party of Merkel's Christian Democrats, said a government could be in place by Easter - March or April. And Thursday may be the last chance for Chancellor Angela Merkel to strike a deal or face the prospect of a new election.

Political scientists agree that Germany's third grand coalition in 12 years could be a lowest common denominator government. The euro's lack of a central fiscal pot to even out recessions has been discussed as one its weaknesses.

The draft document seen by Reuters, which is subject to change, also contained a pledge not to export arms to countries involved in the war in Yemen - a pledge seemingly targeted at Saudi Arabia, a major buyer of German arms.

The progress in stabilizing Germany's government propelled the euro to a three-year high versus the dollar to trade at $1.2122 as of 11:09 Frankfurt.

Merkel, weakened by an election setback in September, turned to the left-leaning SPD to renew the so-called "grand coalition" that ruled for two of her three previous terms, after her talks with two smaller parties collapsed in November.

Details were expected to be released later in the morning.

Germany's Christian Democratic Union (CDU), the Christian Social Union (CSU) and the Social Democratic Party (SPD) have reached a breakthrough to begin official talks on coalition.

The agreement, worked out by energy experts from both sides, must still be approved by party leaders. Some SPD members are also concerned that a new grand coalition would make the AfD the main opposition party.

Germany now has a caretaker government, limiting Merkel's ability to launch major initiatives at a time when French President Emmanuel Macron has pressed for ambitious reforms in the European Union.

SPD leader Martin Schulz has vowed to put any agreement with the conservatives up for a vote by party members, many of whom are opposed to another coalition of the two largest parties in parliament.

The SPD is scheduled to hold an extraordinary party conference on January 21 to seek approval from its delegates for entering negotiations for the coalition government. Annegret Kramp-Karrenbauer, a member of the negotiating team for the Chancellor's Christian Democratic Union (CDU), was slightly hurt on Thursday morning, when her vehicle crashed into a truck on the autobahn just outside Berlin, police said.

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