Merkel clinches hard-fought deal on new government

Christian Democratic Union leader and German Chancellor Angela Merkel Christian Social Union leader Horst Seehofer and Social D

Horst Seehofer, CSU chief and designated interior minister in the new government with the CDU and the Social Democrats (SPD), is to head the committee which is set to meet at 10 am (0900 GMT) in Munich.

From next week, Nahles tours Germany to win over SPD members to a coalition agreement she insists carries a "big, fat social democratic signature".

And in Berlin they demanded that Germany return to the European Union leadership position.

"Therefore, I hereby declare that I am withdrawing my bid to enter the federal government, and sincerely hope that this would end the candidacy debate within the SPD", Schulz said in a written statement.

Josef Joffe, a member of the editorial council of Die Zeit in Hamburg, called Ms Merkel's decision to hand SPD critical cabinet posts such as foreign ministries, family and labour as "anything to stay in power".

Social Democrats' boss Martin Schulz, who previous year led the party to its worst national election result since World War II, looks headed for the Foreign Ministry.

The SPD has had to swallow its pride and perform an awkward volte face on its refusal, after the election, to engage in coalition talks.

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In a marathon, 24-hour session at the headquarters of Merkel's Christian Democratic Union (CDU) alongside a tree-lined canal in central Berlin, the chancellor handed key Cabinet posts to the SPD, including the finance ministry her party has held for the last eight years.

After the SPD's losses in the September 24 national election, Schulz announced that the SPD would go into coalition and that he wouldn't hold talks with Merkel. For good measure, he has also been forced to stick to his promise to give up the party leadership.

He added that his personal ambitions "must be placed behind the interests of the party".

"Now these SPD politicos, most of whom are relatively unknown outside Berlin, will be the ones to shape the politics of Europe and Germany, the EU's mightiest member, in the years to come".

The foreign ministry is now held by Sigmar Gabriel, who handed the Social Democrats' leadership to Schulz a year ago and has become one of Germany's most popular politicians.

Schulz was Merkel's defeated challenger in September.

After a failed attempt to forge an untried alliance with two smaller parties, Merkel opted to woo back the reluctant SPD-her junior partner for two of her three terms since 2005. Hinging on the vote, by extension: the Nahles promotion, the credibility of her party - and Merkel's fourth term.

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