After almost a month of backroom wrangling, the Germans finally have a government. Thanks to a hair's-breadth victory for the center-right, Gerhard Schroeder will step down as German chancellor after seven years, allowing Angela Merkel to become the first female German chancellor in history. Her allies had to cough up a number of ministerial positions to get her there first:

The way has been cleared for Angela Merkel of the conservative Christian Democrats to become Germany's next chancellor. But the Social Democrats are also expected to come out of talks strong -- garnering as many as eight key ministerial posts, including the foreign ministry.

Germany's conservative Christian Democrats have reached an agreement with the center-left Social Democrats to create a grand coalition government with Angela Merkel as the country's first-ever female chancellor, the news agency DPA is reporting. ...

The Social Democrats, meanwhile, are expected to lead eight key ministries out of a total of 13. They include the foreign ministry, the finance ministry, the justice ministry, the labor ministry, the health ministry, the transportation ministry, the environmental ministry and the development ministry.

The Christian Democrats, meanwhile, would lead the defense, economics, education and research, interior, agricultural and consumer protection, and family ministries.

The direction created by such a coalition will have markets buzzing for a while. Merkel ran on a reformist platform, promising some fundamental free-market based changes in the way Germany operates. Her narrow plurality cannot carry that kind of legislative change on its own, and now that they have created a supermajority with the alliance between the CDU/CSU and the SPD (Schroeder's party), that outcome looks even less likely.

The SPD wound up with more ministries than Merkel's coalition, but Merkel may have held onto the most critical ministries for her reform package. Der Spiegel reports that the CDU has retained the Economics Ministry and the Interior Ministry. Undoutedly, that will help Merkel move forward with sensible and long-overdue changes to reduce the burden of the nanny-state in Germany. However, most of the changes will require Bundestag approval, which might prove difficult to push through without a clear CDU/CSU majority.

Merkel may have won the battle, but clearly she has yet to win the war. Gerhard Schroeder undoubtedly lost, as he didn't even make the list of ministers, especially the foreign minister slot he reputedly offered as a settlememt the last couple of days. His anti-American rabblerousing will not be missed on this side of the Atlantic.

UPDATE: First female German chancellor in history. Thanks to CQ reader Bill for the correction.

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