Merkel takes power as first female chancellor

MPs voted 397 to 202, with 12 abstentions, well more than the 308 votes she needed.

Merkel must now coax action from a joyless coalition made up of her conservatives and left-wing Social Democrats. The election results showed little popular support for tough action many economists and business groups say is needed to attack 11% unemployment and sluggish growth.

She faces foreign policy challenges such as nursing a recovering relationship with the US.

Merkel, who heads the Christian Democratic Union, will begin her term in office – four years, if the coalition lasts – with visits to France and Britain on Wednesday and Thursday, and a visit to Washington expected in the next few weeks.

Merkel’s more pro-American outlook contrasts with Schroeder’s criticism of the war in Iraq. She also has suggested that Berlin will place less emphasis on relations with Paris and Moscow, and says she views Europe as a partner, not a counterweight, to the US.

Still, two close Schroeder allies – French President Jacques Chirac and Russian President Vladimir Putin – were quick to offer their congratulations today.

In a potential sign of trouble ahead at home, more than 50 members of Merkel’s 448-MP coalition voted against her. Still, the alliance’s parliamentary strength allowed her to win easily with 397 votes for and 202 against.

Merkel needed 308 votes in the 614-seat lower house, or Bundestag.

Merkel, typically reserved in public, broke out in a smile after the vote.

Her only public reaction: “I accept the result.”

Schroeder, who clung to his demand to remain as chancellor for three weeks after his party finished a close second in the election, was the first to walk over and congratulate her.

Merkel was sworn in later. The Protestant minister’s daughter, who grew up in officially atheist East Germany, added the optional words “so help me God” to her oath, a phrase Schroeder had left out.

She is the first chancellor to have grown up behind the Iron Curtain. Until the fall of the Berlin Wall in 1989, the trained physicist was an unknown researcher at the East German Academy of Sciences.

But she rose quickly through the ranks of her party after Germany was reunited in 1990, serving in the cabinet of former conservative Chancellor Helmut Kohl.

Today’s vote came exactly six months after Schroeder announced that he was seeking national elections a year early, saying after a disastrous state election defeat that he no longer had a mandate for his attempts to streamline the expensive welfare state.

The inconclusive election forced Germany’s biggest parties into talks on a so-called grand coalition. Their main area of agreement was that Germany’s budget deficit must be brought within an EU-imposed limit by 2007.

That led them to agree on tax increases, including raising the top income-tax rate on people earning over €250,000 annually from 42% to 45%, and hiking value-added tax to 19% from 16%.

They put off the VAT increase, however, until 2007, aware that the economy is only slowly picking up speed, as fearful consumers are not spending normally.

The government predicts 0.8% growth for this year, and 1.2% for 2006. Exports into a growing world economy account for most of the increase.

Economists and business leaders say Germany’s chief problem is the high cost of labour, particularly non-wage costs such as payroll taxes for unemployment insurance, pensions and old-age care.

To get into the chancellery, Merkel had to give away many of her campaign promises, including a proposal to cut back on the regional wage bargaining that unions prefer and many companies dislike.

A pledge to cut top and bottom income tax rates also went overboard. The Social Democrats won half the cabinet posts, including foreign affairs and finance.

Still, the overwhelming feeling today was one of relief.

“A lot of time has passed since May,” President Horst Koehler said as he formally appointed Merkel’s cabinet.

“It is good that Germany once again has a government that is capable of acting.”