Germany coalition talks: Merkel aides see breakthrough

Angela Merkel attends a joint statement after the exploratory talks between Merkel's conservative bloc and the Social Democrats on forming a new German government in Berlin Germany Friday Jan. 12 2018. (AP

The deal includes efforts to strengthen the European Union, improve domestic security and control the flow of refugees.

Should the SPD party conference in Bonn approve the preliminary deal this month, the negotiating partners will embark on weeks of formal coalition talks to set the agenda of the new government.

But Social Democrat (SPD) leader Martin Schulz will have to work hard to persuade a party congress on Jan 21 to endorse that move.

The blueprint will next be presented to party members for approval.

The section on Europe, entitled, A New Awakening for Europe, is the most concrete response so far from Berlin to French President Emmanuel Macron's ideas for reforming the European Union, spelled out days after the German election in September in a speech at the Sorbonne University in Paris.

"If we succeed, these could be four very, very good years - I am already speaking of these years because I believe we will succeed", he said. That decision was popular with members.

Merkel initially attempted to form a coalition with two smaller parties.

The conservatives also performed poorly in the election, and the three coalition parties' support dropped by a total of almost 14 percentage points.

"In close partnership with France, we want to sustainably strengthen and reform the eurozone so the euro can better withstand global crises", the parties said. "If we join a government it will be on the condition that it makes Europe strong".

The parties agreed to limit numbers of refugees and migrants coming to Germany to around 200,000 following arrival of more than 1million asylum seekers since 2015.

Christian Democrat and Social Democrat leaders also agreed to lower the tax surcharge introduced to fund the reunification of east and west Germany by €10bn (£9bn) by 2021.

The three parties didn't officially give up Germany's target of a 40 percent cut in carbon dioxide emissions by 2020 compared with 1990, which a draft earlier this week had suggested they would.

Macron in September offered an ambitious vision for European renewal, but has had to wait since for a response from EU powerhouse Germany, with much on hold there after parliamentary elections.

They pledged to fight tax dumping and evasion in Europe, pushing for "fair taxation of big companies" including the internet giants Google, Apple, Facebook and Amazon, and called for unspecified minimum rates for corporate tax.

Although Merkel's Christian Democrats differ with many of French President Emmanuel Macron's proposals for sweeping reforms of the European Union, Merkel expressed hope they would hammer out compromises to address major challenges facing the bloc.

"In the seemingly long period of time since the election, we've seen that the world is not waiting for us", said Merkel.

A continuation of the coalition with the SPD is considered the only viable alternative and could help avoid a minority government led by Merkel or snap federal elections. The SPD leader plans to tour local party chapters next week to sell the deal, while the SPD's youth organization plans protest rallies to lobby against it.

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