Merkel Poised to Become German Chancellor

Angela Merkel is set to become the new German chancellor after the country's two biggest parties concluded a power-sharing agreement, German media reported today.

The deal - which ends a three week stand-off following the September 18 election - means Gerhard Schröder will resign and Ms Merkel will become both the first woman and the first former East German to lead the Berlin government.

Her Christian Democrat party (CDU) and its Bavarian sister party took the largest number of seats in the Bundestag, the German parliament, but it was not enough to form a governing coalition with other centre-right parties.

A so-called "grand coalition" with Mr Schröder's Social Democrats (SPD) became increasingly likely after the SPD first ruled out an alliance with the Left party.

The Greens, citing differences over social policy and nuclear energy, then put a stop to speculation of a coalition with the CDU and the Free Democrats.

The CDU won four more seats than the SPD, giving Ms Merkel the right to form a government. Both parties, and the Bundestag, must still approve the power-sharing deal.

The talks were opposed by the left wing of the SPD, which regards Ms Merkel as too neo-Thatcherite to become chancellor.

It is not yet known whether Mr Schröder will have a role in the new government, but the SPD extracted a high price from the CDU and will take two more cabinet seats than Ms Merkel's party.

A report on the German television station ZDF said the SPD would get eight ministerial posts, giving the party control of the foreign, finance, justice, labour, health, transport, environment and international development ministries.

The CDU also made concessions on policy as the SPD attempted to force through as much of its manifesto as possible.

Mr Schröder and Ms Merkel met for a final round of talks at the end of last week to determine who would head the government.

The SPD leader, who has been chancellor since 1998, had earlier said he would not stand in the way of a grand coalition.

However, SPD members were believed to want to keep him in office and alive as a bargaining chip in order to secure a better deal from the CDU. Late into last week, leading SPD figures were insisting he had to keep his job.

The SPD-CDU grand coalition is Germany's first since the 60s. Ms Merkel has said the arrangement would "not be the lowest common denominator" but would instead be a "coalition of new possibilities".