Although they gave up the chancellorship, the Social Democrats will receive eight places in the new cabinet, including the important Foreign and Finance Ministries. Merkel's Christian Democrats will control six spots, including Economics, Defense and Interior. Schroeder's political future is uncertain he will not serve in the new government and is widely expected to take a job in the private sector once the new government is sworn in.
The protracted negotiations over staffing the cabinet may yet prove easy in comparison to the talks currently under way over how to govern. The two sides agree in principle on the need for economic reform, but the Social Democrats are not expected to back the tougher measures advocated by the Christian Democrats, including, for example, weakening the bargaining power of labor unions.
On matters of foreign policy, as chancellor Merkel will take the lead. But the Foreign Minister, who will be a Social Democrat, will have a strong voice as well, potentially making this an area of tension for the coalition. The two parties have in recent years differed on such matters as transatlantic relations and ties with Moscow, with Schroeder cultivating a close friendship with Russia's Vladimir Putin and France's Jacques Chirac while Merkel has indicated a desire to work more closely with London and Washington. Relations between the U.S. and Germany deteriorated sharply over the Iraq war, and while Merkel did not back the war, she disapproved of Schroeder's handling of the crisis.
Merkel's party, however, has its own differences with Washington, most importantly over the question of Turkey's joining the European Union: Washington strongly backs Turkey's accession, while the Christian Democrats are openly opposed to granting Ankara full membership. The Social Democrats say admitting Turkey is a good idea.
In previous governments the Foreign Ministry has enjoyed less clout because it was held by minority parties of the governing coalition (current foreign minister Joschka Fischer, of the Green Party, being the most recent example). With the post in the hands of a major party within a grand coalition, the position is expected to gain in influence.
For Merkel, the resolution of what Germans had come to call "the Chancellor's War" comes as a relief. She had been widely expected to win the election outright until the final days before the vote, and the the final result, which gave her party just a four-seat margin over Schroeder's Social Democrats, came as a severe disappointment. Having to hammer out an agreement with the Social Democrats means that she will have to water down some of her more ambitious free-market-oriented policies. Still, the chancellorship is a major accomplishment for the daughter of a Lutheran pastor raised in East Germany. She had studied physics and taken a teaching post, only entering politics at the time of German reunification. Merkel, once a protégée of longtime Christian Democrat chancellor Helmut Kohl, is widely respected for her intelligence and her toughness in party negotiations, qualities that were on display over the past few weeks as she stuck to her guns despite criticism of her campaign performance. That toughness will be further tested in the coming weeks as Germany seeks to forge a new governing program from two different governing philosophies.