New Merkel Government Fate Lies with German Party Poll

Germany's center-left Social Democrats will announce the result Saturday of an unprecedented party vote that will determine whether it will form a "grand coalition" to see Chancellor Angela Merkel into her third term.

If the party members give their blessing to a tie-up with Merkel's conservatives, she can be formally re-elected by the Bundestag lower house of parliament Tuesday.

After nearly three months of political limbo in Berlin, the Social Democrats (SPD) were counting the postal ballots from their nearly 475,000 members and due to reveal the high-stakes outcome in the afternoon.

Party treasurer Barbara Hendricks, set to take the environment brief in the new government, said she was confident.

"I expect approval of around 70 percent," she told national news agency DPA.

SPD chief Sigmar Gabriel told his party this week that the grand coalition was its best shot at leaving its mark on Europe's top economy.

"Rejecting the coalition pact would create more social injustice for millions of people in Germany," he said. He admitted, though, that an alliance with Merkel was "not a love match".

"This is a coalition of sober reason."

Despite the new complexion of the government, the expected cabinet line-up showed remarkable continuity, based on leaks to media.

Finance Minister Wolfgang Schaeuble, one of the main architects of Germany's tough-love response to the eurozone crisis, is to stay on, as is Defense Minister Thomas de Maiziere.

Frank-Walter Steinmeier of the SPD is awaited back at the foreign ministry, where he served during Merkel's first term from 2005-2009.

Meanwhile Gabriel is to head up a "super-ministry" in charge of the economy and Germany's ambitious energy transformation away from nuclear power and toward renewables.

High stakes

While a clear "yes" vote is predicted, grumbling among party leftists and its youth wing about the coalition agreement hammered out over seven weeks after the September 22 general election have left Merkel and her potential partners wary.

A failure to win approval would likely see a purge of the SPD leadership, create weeks of further political uncertainty and trigger new elections.

Merkel and her CDU triumphed in the September vote, winning 41.5 percent on the back of a strong economy, falling just short of what would have been an extraordinary absolute majority.

The Social Democrats, a 150-year-old political force, limped to second place with 25.7 percent in their second worst showing since World War II.

The pro-business Free Democrats, Merkel's junior partner during her second term, crashed out of parliament for the first time since 1948.

Gabriel called the rank-and-file vote to rally his often fractious party around the left-right government and drove a hard bargain during the coalition talks.

He extracted a number of concessions including Germany's first national minimum wage, permission for dual citizenship for children of immigrants, restrictions on temporary jobs and a lowering of the retirement age to 63 for those who paid into the system for 45 years.

"For a party that was the big loser of the election three months ago, that's already huge," the daily Sueddeutsche Zeitung wrote Saturday.

Analysts said such trophies were likely to be enough to win over most Social Democrats but questioned the wisdom of rolling back key decade-old measures that had put the economy in fighting form.

"If the deal is ratified by the SPD membership, it will result in strong government, stability and more help for the eurozone. However, there is little momentum for economic reform," Matthias Born of Allianz Global Investors said.

"Re-regulation of the labor market is negative for the German economy although the effects will only become apparent over the next few years."

A poll for public broadcaster ZDF published Friday showed that 49 percent of Germans would welcome a grand coalition while 33 percent opposed it.

Political scientist Jens Walther of the University of Duesseldorf said that the alliance's huge majority would nonetheless ensure political stability.

"It will give them a lot of leeway to deal with dissent within the parties," he told Agence France Presse.