German coalition agreement reached after months of wrangling

More than four months after the federal elections, Germany's two biggest parties have agreed to form a coalition government.

That so-called "Grand Coalition" – the same government which has led the country since 2013 – would end the long period of instability in Europe's largest economy.

German chancellor Angela Merkel would continue to lead the country under the new agreement. But her conservatives were forced to make concessions to the center-left Social Democrats who initially rejected rejoining the Merkel-led government.

Christian Democratic Union (CDU) leader and German Chancellor Angela Merkel (L) and Social Democratic Party (SPD) leader Martin Schulz arrive for a statement on coalition talks to form a new coalition government in Berlin, Germany, Feb. 7, 2018.

Merkel, who has been chancellor since 2005, sounded a positive note after the talks.

"You made two justified demands on us. First, form a government at last and make it a stable government, and second, during your talks please think about the actual needs and interests of the people,” Merkel said. "I am convinced that the coalition deal that we have reached can be all of this."

The Social Democrats would take control of the country's powerful finance ministry, a major concession from the conservatives. That could mean more momentum for European reform efforts and a less of a focus on austerity. However, elsewhere on the international stage, Berlin's positions aren't likely to change all that dramatically.

"It's the same government that we've had for the past four years," said Ulrike Franke, a policy fellow at the European Council on Foreign Relations. "So I don't expect any major course changes when it comes to the relationship with Russia or China or the United States."

But in an unusual procedure, Social Democratic rank-and-file party members – about 460,000 of them – still have a chance to approve or reject the deal. This was a condition for the party to join the talks in the first place. The voting window opens February 20, and the the Social Democrats said they will announce the results on March 4.

Their voters are concerned about social welfare issues like housing and health care. That vote will likely be a referendum on how much influence they think the Social Democrats – who are known by their initials the SPD – will have this time around.

"Most of the things that the last government achieved, was basically seen as something that Angela Merkel did rather than something between CDU and SPD," said Franke.

If the SPD voters approve the coalition, leaders are hoping to form a new government by the beginning of April.

(CGTN)