German Social Democrat Olaf Scholz said on Wednesday he had reached a coalition deal to form a new government that will try to modernize Europe's largest economy and bring the curtain down on the Angela Merkel era.
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Scholz's center-left Social Democrats (SPD), the ecologist Greens, and the libertarian Free Democrats (FDP) want to accelerate the transition to a green economy and digitization while maintaining fiscal discipline, according to a 177-page agreement.
The alliance – named a traffic-light coalition after the three parties' respective colors – has a majority in the lower house of parliament and hopes the government will be sworn in early next month after the parties ratify the coalition pact.
The first alliance at a federal level between the ideologically disparate parties will end 16 years of Merkel-led conservative government, marking a new era for relations with Europe and the rest of the world.
Merkel leaves big shoes to fill. She has navigated Germany and Europe through multiple crises and been a champion of liberal democracy in the face of rising authoritarianism worldwide.
Her critics say she has managed rather than solved problems and leaves her successor tough decisions on many fronts.
Scholz's incoming government faces immediate challenges, with Europe grappling with the fallout from Brexit, a crisis on the European Union's border with Belarus, and surging COVID-19 cases.
While Germany's electoral campaign was largely focused on domestic issues, the coalition pact shed light on the next government's foreign policy priorities.
The parties agreed to strengthen the EU's economic and monetary union and signaled an openness to reform the bloc's fiscal rules, also known as the Stability and Growth Pact.
They also agreed Germany would remain part of NATO's nuclear sharing agreement, a move that will prevent a rift in the Western military alliance at a time of rising tensions with Russia.
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