German SPD’s Chief Presses Merkel for Third-Term Investment

German Social Democratic Party leader Sigmar Gabriel said the SPD will press for more spending on education and infrastructure in a coalition with Chancellor Angela Merkel as he outlined his priorities for government.

Gabriel, in his first speech since he agreed to formal negotiations aimed at joining Merkel’s bloc in coalition, said the government needed to raise investment to ensure the country’s economic success. Fair wages, correcting Germany’s energy shift and stabilizing Europe were his other main themes in a speech to union members in Hanover today.

German industry depends “on good and developed economic infrastructure,” which “has been wearing out for years because we didn’t even invest what is needed to maintain what we have,” Gabriel said. “One of the biggest threats to Germany as a business location would be to continue that way. We need to invest.”

Gabriel was speaking the day after the SPD leadership concluded a third round of talks with Merkel’s Christian Democratic bloc with a recommendation that a party congress this weekend give the go-ahead to what will be weeks of negotiations on coalition-building beginning Oct. 23. Any final deal will then be put to a ballot of the SPD membership before the party can join Merkel in governing Europe’s biggest economy.

Putting the deal to a party vote is at once “bold and dangerous,” said Fredrik Erixon, director of the European Centre for International Political Economy in Brussels.

‘Acute Challenges’

“The SPD will agree to a grand coalition because they fear not clinching an alliance with Merkel even more than the acute challenges of forming such a coalition,” he said by phone.

The national executive of Merkel’s Christian Democratic Union met in Berlin today and unanimously endorsed negotiations toward a so-called grand coalition with the SPD, CDU general secretary Hermann Groehe told reporters. With the talks likely to last through November and another two weeks needed for the SPD vote, Groehe said he hoped an agreement could be signed by Christmas.

In a speech to the same labor conference two days ago, Merkel pledged to work for a stable euro area and push ahead with the shift to renewable energy. Tackling demographic change and financial relations between Germany’s 16 states and the federal government are the other two priorities of this term, she said.

Taxes, Wages

The CDU’s red lines in the talks are a rejection of tax increases and a commitment not to take out new debt, Groehe said. The SPD has set a national minimum hourly wage of 8.50 euros as a condition for coalition government. The CDU will push to ensure that minimum wage rules do not cost jobs, he said.

Gabriel, in his speech to members of the IGBCE chemical and mine-workers’ union, had a similar message to the chancellor on energy and on helping Europe recover from the ravages of the sovereign debt crisis that emerged in Greece in 2009.

“Germany only generates jobs when other countries around us are in good enough shape to afford our products,” he said. “The European Union and the euro is not a burden for Germany, rather, 40 percent of our exports go to the euro zone, 60 percent go to Europe.” Helping the rest of the continent “is in our self-interest,” he said. “Our economic future depends on the future of Europe.”

Coal Plea

On energy, the transition to renewable power “has huge opportunities to create industrial jobs,” he said. “But if it’s continued in the current fashion, it has the potential to destroy industrial jobs.” A new government needs to make renewable energy affordable and recognize that coal has to be part of the energy mix, he said.

Merkel led a grand coalition in her first term, from 2005 to 2009. In 2005, when Merkel saw off SPD Chancellor Gerhard Schroeder by a single percentage point and was forced into coalition with his party, her bloc won 226 parliamentary seats to the SPD’s 222 seats.

On Oct. 22, when the lower house of parliament will meet for the first time since Sept. 22 elections, Merkel’s Christian Democratic Union and its CSU Bavarian ally will send 311 members to the 631-seat Bundestag, with the SPD taking 193 seats.

Gabriel, who served in Merkel’s first-term cabinet as environment minister, may take over the Labor Ministry from Ursula von der Leyen, Die Welt newspaper reported today, citing unidentified SPD leaders. SPD caucus leader Frank-Walter Steinmeier, a former foreign minister, and chief whip Thomas Oppermann are candidates for finance minister, Die Welt said.

The CDU’s Groehe refused to comment on speculation over future cabinet posts.

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