Merkel strikes migration deal with CSU to averts coalition crisis
German Chancellor Angela Merkel has averted a political crisis and saved her government coalition after agreeing a deal on migration with Bavarian sister party, the Christian Social Union.
Horst Seehofer, leader of the CSU, on Sunday night reportedly offered to step down from his post as the government's interior minister over Merkel’s handling of the migration issue with fellow European Union leaders in Brussels.
Last week, EU leaders agreed on measures to help Mediterranean countries that were struggling with the inflow of migrants.
Merkel had also tabled her own draft version of a plan to tighten authorities' control over Germany's borders and presented it to the governing coalition, including officials from her own CDU and others from the CSU.
Seehofer had threatened to unilaterally - and against Merkel's instructions - take steps to turn away asylum seekers at the German border.
The interior minister was persuaded overnight by CSU colleagues to meet Merkel for negotiations and try to reach an agreement to avoid sending the country into a political crisis.
Eventually both sides agreed to establish transit centres close to the border with Austria where asylum seekers already registered in another European Union country will be processed before being returned to that country where possible. If not possible, the parties have agreed the asylum seekers will be sent back across the border to Austria.
Merkel said the deal was a "good compromise after tough negotiations and difficult days."
Seehofer said "I'm pleased we managed to get this agreement -- it has shown again it's worth fighting for something like this. Now we have a tenable clear agreement for the future."
The news was well received by the stock markets, with the Dax index on track to claw back all of its losses from the previous session, after popping higher on the open.
Jasper Lawler, analyst at London Capital Group, said: “News that Merkel is safe and the fragile German coalition will live to see another day has encouraged traders back into the Dax, which had been suffering at the hands of investor anxiety about new snap elections.”
Meanwhile the euro was up 0.2% to $1.1660, having sunk to around $1.155 since May as the migration deal looked like threatening the coalition.
"With eurozone retail sales expected to dip lower in May, the common currency could struggle to catch a bid,” Lawler added.