German coalition government ends dispute after marathon negotiations

BERLIN (Reuters) -Germany’s ruling coalition government on Tuesday presented the results of 30-hour negotiations aimed at resolving a spat that has threatened to delay major policy initiatives in Europe’s top economy.

Finance Minister Christian Lindner said while discussions had been intense the outcome was “good”, adding there would be no major impact on the government budget as a result of the decisions taken.

The agreement covers an overhaul of climate protection laws, the strengthening of roads and rail traffic as well as a carbon surcharge on Germany’s truck toll from 2024 to pay for some of the initiatives, party leaders of the three-party government said.

Compromise has also been reached with regard to the replacement of oil and gas heating with climate neutral alternatives, while industry as a whole will be measured towards CO2 reduction targets, rather than individual sectors.

The coalition of Chancellor Olaf Scholz’s Social Democrats, the Greens and pro-business Free Democrats (FDP), has been wrangling over various proposals since last year, raising worries over policy deadlock in Europe’s largest economy.

The lack of progress and increasing friction between the FDP and the Greens have raised questions about whether Scholz’s government will be able to push through its ambitious agenda to modernise the economy. The opposition has accused the government of damaging dysfunction.

When forming in 2021, the coalition had resolved to avoid the sort of marathon talks into the night and on weekends that were seen under Scholz’s predecessor Angela Merkel, arguing that these tended to impair decision making.

But this week’s talks began at 1830 CET on Sunday and lasted for 20 hours, until a sleep-deprived Scholz and several Cabinet members had to jet to the Netherlands for scheduled bilateral consultations.

Scholz, whom critics have accused of not providing sufficient leadership, played down the differences among the parties by suggesting the coalition reached “some very good agreements” but did not give details.

Earlier this month Finance Minister Christian Lindner of the FDP delayed his presentation of the draft budget due to coalition rifts. Notably, the FDP wants to rein in spending while the Greens want to invest more in the transition to a carbon neutral economy.

(Reporting by Andreas Rinke, Christian Kraemer, Alexander Ratz, Holger Hansen and Markus Wacket; Writing by Christoph Steitz and Matthias Williams; Editing by Chris Reese, Cynthia Osterman and Jonathan Oatis)