Merkel seals German coalition

With a handshake, it was done. Chancellor Angela Merkel and liberal leader Guido Westerwelle have formally signalled their intention to form a new governing coalition, after the liberals did enough to consign Germany’s uneasy left-right ‘grand coalition’ to history.

The big winners of Germany’s election can look forward to the next four years, after voters backed a conservative, pro-business coalition to lead them back to prosperity.

Merkel though, was careful to project a human face on victory:

“Obviously we have to make sure that we keep the balance between employers and employees here in Germany,” she said. “We are going through tough economic times, and we must ensure that the balance between hire- and fire- is reasonable.”

The Chancellor’s new partners must feel like they’ve won the lottery.They’re in government and can put their ideas into practice.

“I think we Germans can make a valuable contribution to the debate on disarmament,” said Westerwelle. “We want negotiations so that the last nuclear weapons still stationed in Germany, relics of the Cold War, can be removed.”

Germany will soon know the make-up of its new government, but talks are expected to be tough, as theFDP has more ambitious plans than Merkel’s conservatives. The atmosphere is so far said to be excellent, but Merkel has let it be known she will not shift too far to the right.

Brussels’ battle against bankers’ bonuses

A curb on bankers’ bonuses looks more likely after EU leaders agreed on a common stance ahead of a G20 summit next week.

The bloc’s presidency says rich nations have a crucial role in regulating to prevent another crisis.

Banks bailed out with taxpayers money, it says, must not take advantage of better results in the future.

The Swedish Prime Minister, Fredrik Reinfeldt, current holder of the EU presidency, said: “The bonus bubble burst tonight. We cannot accept that bank profits are private gains and bank losses are the tax payers’ responsibility.”

Agreement was reached after France reportedly softened calls for a strict cap on bonuses, as long as other controls are adopted.

President Sarkozy said the sticking point was the “overall limit of the size of the bonus”, but insisted that was “not a problem in the framework of the European position”.

The EU leaders agree that the size of bonuses should be linked to long-term performance and boards of directors have to have oversight.

Also, if a bank’s performance deteriorates, the leaders agree that bonuses could be reclaimed.

Nuclear scandal excites German campaign

Claims that a controversial atomic energy report has been buried by a German cabinet minister have pushed nuclear power back into the election headlines. The scandal threatens to become a political hot potato less than two weeks before the vote, with many Germans deeply wary of nuclear plants and how to handle its waste.

The German edition of the respected Financial Times newspaper claims Research Minister Annette Schavan has been sitting on plans for new atomic plants, despite an official policy of phasing them out. Indeed, Berlin has just approved the building of thousands of new wind turbines in the Baltic, to appease critics who say they are ugly and ruin the countryside.

The nuclear issue is unlikely to harm Chancellor Angela Merkel as she heads into an election as the expected victor. But it gives her rival Frank-Walter Steinmeier an opportunity to attack her, especially as she is eyeing a post-election coalition with the Free Democrats, who have long been keen supporters of atomic energy.

German Chancellor Merkel regrets Afghan deaths

In the German Parliament, the Bundestag,German Chancellor Angela Merkel spelled out the government’s position regarding the recent Nato-led air attack in Afghanistan that reportedly killed civilians as well as Taliban insurgents.

She said, “Innocent injured and dead following German involvement, that is something I deeply regret.”

However, the Chancellor was in no mood to go along with much of the widespread criticism of the German military decision of call in an allied air strike last Friday.

“I also want to stress that we don’t accept pre-judgements. I won’t accept that from any quarter whether in Germany or elsewhere.”

Merkel told the Bundestag the question of civilian casualties in the air strike on two fuel tankers hijacked by the Taliban is still to be cleared up.

She justified the involvement of German troops in Afghanistan pointing out that the local population does not want to be abandoned.

The German Chancellor insisted that following the recent Afghan presidential election the time has come for the leadership in Afghanistan to take over more responsibility for its own security. Merkel noted that talks should take place later this year to develop the proposal by Germany, France and Britain to help re-build Afghanistan politically and economically.

Merkel’s CDU faces local election upset

Election-watchers in Germany will be analysing three separate state ballots tomorrow, for an indication of how the country itself will vote in next month’s general election. Nationally, Chancellor Angela Merkel’s CDU is expected to win, perhaps in coalition with the Free Democrats.

But locally, there is growing support for the left. Three states are voting: Saxony, Saarland and Thuringia. Saxony is expected to stick with Merkel’s CDU, but the races in the other two are close.

The Chancellor’s personal poll ratings are high, with two-in-three German voters wanting her to win another term. Her CDU is also doing well, but has a history of blowing pre-election leads, notably in 2002 and again four years ago.

SPD leader Frank-Walter Steinmeier had been facing an ignominious defeat next month, but good results tomorrow would give his party a much-needed shot-in-the-arm. However, he may be criticised for taking the SPDtoo far to the left.