Berlin - German Chancellor Angela Merkel of the Christian Democrats (CDU) and her new political partners agreed to the key cabinet appointments in the new government on Friday, as coalition talks drew to an end. Merkel held talks with the Free Democrats' (FDP) leader Guido Westerwelle and Horst Seehofer of the CDU's Bavarian sister party, the Christian Social Union (CSU), hammering out details of the new government charter.
Merkel is to be re-elected chancellor next week, while Westerwelle is to become vice-chancellor and foreign minister, as is tradition for the leader of the junior coalition partner.
Rising star Karl-Theodor zu Guttenberg of the CSU was nominated for the Defence Ministry, a key move for the 37-year-old who rose from obscurity to become Economics Minister earlier this year.
The biggest surprise of the day was Interior Minister Wolfgang Schaeuble's switch to the finance ministry. The CDU heavyweight, paralysed from the waist down since an assassination attempt in 1990, will play a key role in charge of the government's purse strings.
The CDU's Thomas de Maiziere, Head of the Chancellery, is likely to take over the interior ministry, leaving his current post to Ronald Pofalla, general secretary of the CDU.
Other agreed posts were Ilse Aigner, who is to remain Agriculture Minister, and Peter Ramsauer who is to become transport minister. Both are from the CSU, giving the party a total of three cabinet posts.
All appointments remained to be officially confirmed by the party heads. The government is due to be sworn in next week, after Merkel's CDU and the FDP won a majority in last month's general election.
Discussions late into the previous night brought CDU and FDP closer on key issues, including healthcare policy and taxation.
The parties agreed to grant statutory health insurers greater autonomy to set contributions, settling differences between the parties over healthcare funding.
There is a controversial public debate in Germany over whether to grant people different levels of healthcare provision according to their ability to pay.
From 2011, Germany's controversial healthcare funding mechanism is to be radically revised, in line with FDP demands.
During three weeks of coalition talks, CDU, CSU and FDP had struggled to reach political compromises in key areas including tax cuts, which they promised during the election campaign without taking into account budget constraints.
The parties were forced to reject plans for a "shadow budget," an accounting trick which would have bundled billions of euros of health and labour costs resulting from the economic crisis, leaving the new government with a purged balance sheet.
Instead, the estimated 20-billion-euro (30 billion dollar) shortfall is to be funded through taxpayer contributions, thus reducing the possibility of tax cuts.
The partners also agreed to increase investment in education and research by 3 billion euros (4.5 billion dollars) annually.
CDU, CSU and FDP have also decided to extend the life of nuclear power stations beyond the year 2020, overturning a previous government decision.
Merkel has been keen for the new government to be constituted in time for celebrations marking the 20th anniversary of the fall of the Berlin Wall, on November 9.
