Merkel seals Cabinet in German coalition talks

Chancellor Angela Merkel yesterday put the finishing touches on her new Cabinet in coalition talks, naming hard-nosed former rival Wolfgang Schaeuble as Finance Minister to tackle a soaring budget deficit, party sources said.

Merkel's conservatives and the business-friendly Free Democrats (FDP) won a parliamentary majority in last month's election and needed to forge compromises on the Cabinet and divisive issues like tax policy in order to seal a coalition pact and take office next week as planned. With Germany emerging from its deepest recession since World War II, the finance ministry is seen as perhaps the most important post in the new government, and Merkel was determined to win it for her Christian Democrats (CDU).

Multiple sources within the coalition talks said Schaeuble, 67, a former protégé of Helmut Kohl who has earned a reputation as a hardliner on domestic security issues as Merkel's interior minister for the past four years, was set to take over the post.

A formal presentation of the Cabinet and the new government's policy blueprint is expected today.

Her election victory allows Merkel to end her awkward four-year "grand coalition" with the Social Democrats (SPD), giving her the centre-right government she wanted but failed to get in 2005.

But there is no sign she will abandon her cautious policy approach and press for radical reforms with the FDP.