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Spend on defence, Merkel’s allies say, differing with SPD

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BERLIN: Chancellor Angela Merkel’s Bavarian sister party (CSU) has proposed increasing Germany’s defence spending to a level that widens a policy gap with the Social Democrats (SPD) ahead of talks on forming a governing coalition. A deal between Merkel’s conservative camp and the centre-left (SPD) is her best chance of securing a fourth term in office but her possible coalition partners are angling for concessions before talks start in the new year.


The CSU said in a draft resolution seen by Reuters on Friday it wanted defence spending to reach Nato’s target of 2 per cent of national output and more money spent on the military, drones and transportation infrastructure.


“Getting the best possible equipment, training and care for the soldiers as well as strengthening and modernising the army costs money,” read the draft, which urged an increase in the defence budget to achieve these goals. But more defence spending demanded by the CSU on Merkel’s right flank could make a deal with the SPD on her left harder.


The SPD has rejected Nato’s defence spending target and accused Merkel and her conservatives of kowtowing to the demands of US President Donald Trump. The document was sceptical about deeper European integration, rejecting the idea of “ever closer union” as advocated by SPD leader Martin Schulz, who has called for a “United States of Europe” to be achieved by 2025.


On immigration, where the two parties also disagree, the CSU draft said Germany can no longer be the main destination for refugees and the European Union mission that rescues refugees’ boats cannot be a shuttle service to Europe.


The party also proposed that African countries that agreed to take back refugees could be rewarded with more investment.


“In plain language: if you cooperate, you profit,” the draft said.


Inflation beats forecasts: Meanwhile, German inflation slowed slightly in December, but still beat forecasts for the second month in a row, official data showed on Friday, in an encouraging sign for the European Central Bank.


Consumer prices in Europe’s biggest economy rose by 1.7 per cent year-on-year this month, according to figures from federal statistics authority Destatis, faster than the 1.5 per cent growth predicted by analysts. But the figure was still 0.1 percentage point lower than in November.


The Harmonized Index of Consumer Prices — the ECB’s preferred yardstick — also slipped by 0.2 percentage point to 1.6 per cent, Destatis calculated.


As the 19-nation euro zone’s biggest economy, Germany is closely watched as a bellwether for the currency bloc, where the ECB has intervened massively in the economy to push inflation towards its goal of just below 2.0 per cent.


Although German inflation has flirted with the target in recent months, inflation across the whole euro zone remained sluggish at 1.5 per cent in November. — Reuters/AFP


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