Angela Merkel, chancellor of Germany, holds the one of the most influential and powerful women on the world. She is also the first women to ever hold the position of Chancellor in the history of Germany. Merkel, a housewife from Eastern bloc of Germany, from Christian Democrat Union (CDU) won the election forming a “grand coalition”. Her grand coalition made of fifteen ministers, seven from the Social Democrat Party (SDP), five from the Christian Democrat Union (CDU) and two from the Christian Social Union (CSU), tries to pull it through their difference for better of the country.

Sides have been taken in which out of 116 delegates at the congress only three voted against it and one abstained. The CDU voted widely in favor the grand coalition government program. On the other hand, SPD also voted by a wide majority in favor of the government program in which only 25 of the 515 delegates present were against it. Both parties may have realized that Germany is in dramatic situation and that they are in deeply debt so only a grand coalition can remedy their problems.

Franz Mϋntefering, an outgoing president of the SPD and Vice Chancellor and Employment Minister in the new government, declared that, “it is better to participate in a government with the strength that we have rather than remain in opposition without influence”.

The arrival of Angela Merkel in the Chancellery establishes the advent of the “Ossis” generation, name given by the West Germans to those from East, to positions of power.

The new government would like to consolidate the budget in order to achieve the thresholds required by the Stability Pact that Germany has not respected for nearly four years now. Economy and increases in taxes are the two main means chosen by Angela Merkel to achieve the principle objective she has established like achieving a minimum saving of 35 billion Euro in 2007. Those who earn more than 250,000 per year will now be taxed 45% instead of 42% and key measure of the CDU’s electoral program will be that VAT will rise from 16% to 19%. The additional revenue generated by these measures will go towards consolidating government finance and lowering social contributions.

The grand coalition invest around 25 billion euro to boost growth and employment. By 2010, 3% of German GDP will be to be dedicated to research. Parental salary will be created to enable parents who so wish to stop working to take care of their children. And, finally, the government will increase from 20 to 30% the digressive allowance from companies before undertaking a more general reform of company taxation. In addition, personal aid might under circumstances be tax deductible, a step designed to fight against undeclared work. In addition to the long term unemployed living in the East will have their monthly allowance harmonized with that provided in the West which personally a very generous thing to allot by Germans. At this point of time, it is apparent to see that Germany is still in the process of recovering from the pain given to them by the Cold war.

The main criticism adopted by the two main parties is the structural reform, wherein there are healthcare reform, and consolidation of government finance, which everyone agrees has been long overdue in Germany are being left . The government wants to boost the economy before tackling deeper and more painful reform. The unions and other political analysts say they are extremely skeptical about the coalition’s ability to finish its term in office for reasons that they live with different ideas when it comes to economy and government system. The two main parties have therefore put their difference on hold and will privilege vital pragmatism in an agreement on a government program.

Later this year, Franz Mϋntefering threatened to walk out from the Grand Coalition, it may be the first warning shot from the SPD. It is not clear, though, whether the SPD manages to form a coalition with relatively strong conservative and libertarian party base. Then again, there are other equally ominous risks for the FDP in tying itself too closely to the CDU, and for remaining in opposition for too long. For some reasons, the unification of SPD in the Grand Coalition is a tactical strategy because those were the time that the party was in disarray and they something that could boost their party ad also the party is consecutively receiving negative feedback from the Germans, like the 2005 election wherein they scored as little as 26% in the opinion polls while CDU is very likely to rise to above 40%. This would imply a tectonic shift of power towards the center-right.

Aside from the Grand Coalition’s conflicts, they also have lack in common agenda. It started off with a few worthwhile projects but some of the recent reforms have turned out to be much less sensible, as what some of the economists said. It seems that the grand Coalition has run out of things to do and if you would put into words, this is the perfect time to pick a fight.

Merkel have always knew that the SPD will not stick it out to the end but still she put her trust to her grand coalition because they both have the same objective, to bring Germany back to track. The disarray of Social Democrat Party makes the timing appear unrealistic, according to some political analyst in Germany. It could even threaten a coalition agreement, since analysts say Mϋntefering is one of the only figures who can impose order on its internal strife factions.

Why is Angela Merkel still popular despite all of the problems encountered by Germany? Angela Merkel has attained approval rating that politicians the world ever dream about, largely due to the way she has handled herself on international matters in visits to Washington, Moscow and Brussels. According to the poll by Der Spiegel, the newsweekly, 85% of Germans like the way Merkel is doing her job. Surveys show that citizens and businesses alike are in the kind of upbeat mood that Germany has not enjoyed in years, optimism that Merkel, and her coalition government may be able to capitalize on. Angela Merkel, 51 year old housewife from the Eastern Bloc with such a low profile, is taking into account the short span of time that the Germans are considering. Merkel had a huge lead in the polls months before the election. But the advantage dwindled as Merkel – who grew up under Communist rule in East German, holds a doctorate in physics and has worked as a chemist – began to talk about the need for sweeping reforms that would chip away at Germany’s social programs.

On the other hand, Saikat Chaudhuri, a Wharton management professor, describes the economy as “coming back and growing”. He also said that, “neither Merkel nor any other chancellor would ever be able to – nor would it be wise to – abandon the socialized system in Germany and move to a clear Anglo-Saxon model. That’s difficult to do in Germany. The bulk of opposition to Merkel is so used to it. There’s a large base that supports that system, including Eastern Germans. You can’t radically transform systems overnight. It will have to be done in a piecemeal fashion”. It is rightly said indeed but a question still remains are the means of changing their system gradually.

Germany has been struggling to face some problems for a long time now – Germany’s economic malaise is traced into to important shocks in 1990, first is the former West Germany absorbed over 16 million people from the former East Germany and, second is the reunified Germany placed its monetary policy in the hands of European Central Bank – for a number of reasons: lackluster GDP growth over the last five years, a vast overburdened welfare state, an anemic service sector, a stubborn protectionist sentiment, and an aging population that will place greater strain on the nation’s budget in years to come.

Critics have already been spoken, “She couldn’t form a coalition with a Liberal Party which certainly would like to do the economic reforms that she wanted. The second message from the election result was that radical economic reforms are still quite unpopular. This resistance to reforms is shared by the working class and middle class alike”. While the presence of SDP, which is committed to income redistribution and social justice, does put limits on what Merkel can achieve, the Social Democrats have seen their poll numbers slip. The Christian Democrats, on the other hand, have always been in favor of social market economy and in favor of strong state intervention to correct inequities in the distribution of income that arise from the working of market forces.

“Merkel has already achieved much and has the talent to do more”, says INSEAD’s Webber. “Anyone who has managed to make it to the top of the heap in the German Christian Democratic Party is a very savvy political operator. She has built up in the CDP a network of supporters which would protect her against inner party dissent if her popularity declines. The second thing is she is not a primarily an ideologue. She is a pragmatist. She is something like a political technician as opposed to being the kind of political orator.

Suffice it to say that having a two opposite political party in the coalition id really hard to put up because they have their differences but if the Germans would want to recover from their deepened problems, they should really deal with consequences given by the decisions made. There wouldn’t be any progress if all they do id to oppose each other.