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Conservative leader Friedrich Merz secures German government coalition after months of political drift

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Conservative leader Friedrich Merz secures German government coalition after months of political drift
  • Friedrich Merz of the CDU is expected to become the next chancellor, replacing Olaf Scholz after Germany’s center-right Christian Democratic Union (CDU) and center-left Social Democrats agreed to form a coalition government. 
  • The coalition has already advanced plans for increased defense spending and infrastructure investment, marking a shift in CDU’s fiscal stance.
  • The deal was hastened by international tensions, including U.S. tariffs and doubts about transatlantic alliances, as well as domestic political pressure from rising far-right support and economic stagnation in Germany.

Conservative and center-left parties reached a deal to form a new German government on Wednesday after weeks of negotiations, paving the way for new leadership in Europe’s biggest economy after months of political drift.

Friedrich Merz, the leader of the center-right Christian Democratic Union, is expected to become Germany’s next leader under the agreement, replacing outgoing Chancellor Olaf Scholz. The parties involved sent an invitation to a news conference on the coalition deal at 3 p.m. (1300 GMT).

Merz’s two-party Union bloc emerged as the strongest force from Germany’s election on Feb. 23. Merz turned to the Social Democrats, Scholz’s center-left party, to put together a coalition with a parliamentary majority.

GERMANY’S CONSERVATIVE ELECTION TURN POINTS TO ‘TRUMP EFFECT INTERNATIONALLY,’ EXPERT SAYS

The wait isn’t quite over yet

It’s still going to be a little while before parliament can elect Merz as chancellor, perhaps in early May. Before that can happen, the coalition deal will need approval in a ballot of the Social Democrats’ membership and by a convention of Merz’s CDU.

Details of the agreement weren’t immediately available.

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Friedrich Merz is expected to become Germany’s next leader after the center-right Christian Democratic Union and the center-left Social Democrats reached a deal to form a new German government. (Michael Kappeler/dpa via AP)

But already last month, the two sides pushed plans through parliament to enable higher defense spending by loosening strict rules on incurring debt and to set up a huge infrastructure fund that’s aimed at boosting the stagnant economy.

That was an about-turn for Merz, whose party had spoken out against running up new debt before the election without entirely closing the door to future changes to Germany’s self-imposed “debt brake.”

The election took place seven months earlier than planned after Scholz’s unpopular coalition collapsed in November, three years into a term that was increasingly marred by infighting and widespread discontent. Germany, the 27-nation European Union’s most populous member, has been in political limbo since then.

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Pressure from abroad and at home

The market turbulence caused by U.S. President Donald Trump’s announcement of sweeping tariffs added to pressure for Merz’s Union and the Social Democrats to bring their coalition talks to a conclusion.

The tariffs threaten to add to the woes of an export-heavy economy that shrank for the past two years, and generating growth will be a central task for the new government.

Increasing doubts about U.S. commitment to European allies also played into the prospective coalition’s decision to enable heftier defense spending. Merz said last month that Germany and Europe must quickly strengthen their defense capability and that “‘whatever it takes’ must also go for our defense now.”

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Another factor in the haste to reach an agreement was a decline for the Union in the opinion polls, showing support slipping from its election showing, while the far-right Alternative for Germany, which finished a strong second in February, gained as the political vacuum persisted.

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The prospective new coalition brings together what have been post-World War II Germany’s traditional big parties, but the Union’s election-winning performance in February was lackluster and the Social Democrats dropped to their worst postwar showing in a national parliamentary election.

Together, they have 328 seats in the 630-member lower house of parliament, the Bundestag.

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Bodies of four missing Italian divers found inside ‘shark cave’ in Maldives days after they vanished

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Bodies of four missing Italian divers found inside ‘shark cave’ in Maldives days after they vanished

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Rescuers located the bodies of four Italian divers deep inside an underwater cave in the Maldives, days after the group vanished during a dangerous dive far beyond recreational limits, Italy’s Foreign Ministry said Monday.

Officials said Finnish cave-diving specialists found the bodies in the innermost section of the cave system in Vaavu Atoll, where the divers disappeared Thursday while exploring at a depth of about 160 feet. The recreational diving limit in the Maldives is 98 feet.

“As was previously thought, the four bodies were found inside the cave, not only inside the cave but well inside the cave into the third segment of the cave, which is the largest part,” Maldives government spokesman Ahmed Shaam said, adding the victims were found “pretty much together.”

The Thinwana Kandu cave system where the bodies were found is known locally as “shark cave.”

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RESCUE OPERATION FREES INJURED MAN TRAPPED 130 FEET UNDERGROUND IN ITALIAN CAVE

Monica Montefalcone, one of five Italian scuba divers who died near Alimathaa in the Maldives archipelago while exploring an underwater cave, is shown in this undated photo released by Greenpeace Italia on May 15, 2026. (Greenpeace Italia/AP)

Recovery crews plan to retrieve two bodies Tuesday and the remaining two the following day, officials said.

The discovery came after authorities resumed the search following the death of a Maldivian military diver involved in the rescue mission. Mohamed Mahdi died Saturday from decompression sickness after attempting to reach the trapped divers.

Mohamed Mahdi, a member of the Maldivian National Defense Force, died from decompression sickness during the dangerous mission, officials said. (Maldives National Defense Force)

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A fifth Italian diver, identified earlier as a diving instructor, was previously found dead outside the cave.

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The specialized Finnish team used advanced closed-circuit rebreather systems, allowing for longer and deeper dives in the cave’s confined environment.

Divers prepare to search for four missing Italian divers near Alimathaa Island, Vaavu Atoll, Maldives, on May 15, 2026. (Maldives President’s Media Division/AP)

Rough seas and hazardous underwater conditions repeatedly delayed search efforts as crews mapped and marked the cave entrance before pushing deeper inside.

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Authorities continue to investigate the situation and what led to the divers’ deaths.

The Associated Press contributed to this report.

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‘Feminist’ top diplomat Kallas takes aim at male-dominated diplomacy

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‘Feminist’ top diplomat Kallas takes aim at male-dominated diplomacy

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The bloc’s foreign policy chief Kaja Kallas has criticised the overwhelmingly male nature of peace negotiation teams, linking it to contemporary diplomacy’s tendency toward short-term results.

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“This is a bigger problem we see around the world with different peace talks when we see that they don’t actually address the issues of long-standing peace,” she said at a press conference in Tallinn, Estonia on Sunday.

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The ceasefires many talks yield, she said, too often simply declare hostilities over without resolving the “underlying issues” that perpetuate future violence.

Another problem, she said, is the lack of female input.

“There are also studies that show that when women are part of the negotiations, these peace (efforts) last longer,” Kallas expanded, adding that “the picture that we saw from the US China talks, (was) a lot of masculinity in the room”.

“Women have a role,” she said.

Various studies and international bodies, including the UN Security Council, argue that women’s participation in conflict resolution improves outcomes, but mediators and negotiating parties often leave women out of their teams.

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According to data compiled by the Council on Foreign Relations, women represented only 16 percent of negotiators in active peace processes led or co-led by the United Nations in 2022.

Security and defence analyst Iana Maisuradze of the European Policy Centre think tank argues that the EU is a firm supporter of the UN resolution calling for more female participation during conflict resolution – and that it is not “sexist argument” to believe that women are beneficial to negotiations. She told Euronews the data backs this up.

“The argument is that women focus on things that male-dominated negotiators are not focusing on such as education, health, victims’ rights, social reconciliation (and) community: things that really bring people together rather than a zero-sum game, which men tend to do,” Maisuradze said.

“Having women at table works because we also bring different perspectives to the resolution of the conflict, and also to the implementation of peace agreements.”

A seat at the table

Kallas’ comments came amid wider chatter in the Belgian capital regarding whether the EU should have a seat at the table for negotiations between Russia and Ukraine – and who should represent the bloc if so.

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Putin recently floated appointing former German Chancellor Gerhard Schröder as the EU’s lead negotiator in potential peace talks on Ukraine. This notion was widely dismissed by European heads of state, and the discussion of who Europe’s mouthpiece should be continues.

Diplomatic sources in Ukraine have said that Russia would “never” accept a woman as lead negotiator.

A diplomatic source in Brussels reiterated this, saying there is no possibility a female figure is being considered as part of the discussions. But another source in the Belgian capital told Euronews that “equality is an important factor”.

Regardless of their differences on the gender issue, most EU officials argue that appointing any envoy before a major European Council (EUCO) summit in June could be unrealistic.

European Commission spokesperson for foreign affairs Anitta Hipper said in response to a question by Euronews on Monday that Kallas is a “feminist” and “has a lot of practice back home”. She was the first female prime minister of Estonia from 2021 to 2024.

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Hipper said the Commission could not comment on whether Russia would want a woman at the table, but reiterated that European heads of state will meet in Limassol in Cyprus in the coming weeks to discuss what form any future talks with Ukraine, Russia and Europe might take before June’s EUCO.

“What will be discussed is what our position is in terms of the demands and the ask and what unity we have in demanding our lists of asks from Russia,” Hipper said.

“This is something that we will be looking into – into the what, and not into the who.”

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Stocks fall and oil prices gain after Trump warns the Iran ‘clock is ticking’

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Stocks fall and oil prices gain after Trump warns the Iran ‘clock is ticking’

HONG KONG (AP) — Asian stocks mostly retreated and oil prices jumped on Monday after U.S. President Donald Trump warned Tehran that the “clock is ticking” as U.S.-Iran negotiations over a permanent end to the war stall.

U.S. futures fell and markets in Japan and South Korea pulled further back from their records. Tokyo’s Nikkei 225 fell 1% to 60,815.95, a decline led by technology-related stocks. It reached all-time intraday high levels last week above 63,000.

The yield on the 10-year Japanese government bond surged to as high as 2.8%, its highest level since the late 1990s, part of a shift toward higher yields as the Bank of Japan gradually raises interest rates and higher energy costs raise expectations of rising inflation. That’s up from around 2.55% just one week ago.

Seoul’s Kospi climbed 0.3% to 7,516.04 after trading lower earlier in the day. It crossed the 8,000 mark for the first time on Friday, supported by buying of technology shares driven by the boom in artificial intelligence, but later declined partly on profit-taking by investors.

Hong Kong’s Hang Seng lost 1.4% to 25,596.68. The Shanghai Composite index edged 0.1% lower to 4,131.53, after China reported weaker-than-expected retail data for April.

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Australia’s S&P/ASX 200 declined 1.5% to 8,505.30.

Taiwan’s Taiex dropped 0.7%, while India’s Sensex fell 0.1%.

Oil prices rose after Trump warned Iran in a social media post that “the Clock is Ticking, and they better get moving, FAST, or there won’t be anything left of them” following a call with Israeli Prime Minister Benjamin Netanyahu.

Trump has set deadlines for Iran and then backed off, so investors have remained cautious about the situation in the Strait of Hormuz and how it is impacting global energy flows, including oil and gas. The strait is still mostly closed, and the U.S. has also imposed its own sea blockade on Iranian ports since last month.

A drone strike over the weekend on a United Arab Emirates’ nuclear power plant added to worries over a potential escalation in the conflict.

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Brent crude, the international standard, gained 0.7% to $110.02 per barrel. It was trading at roughly $70 a barrel in late February before the start of the Iran war. Benchmark U.S. crude was trading 0.8% higher to $106.31 per barrel.

“Re-escalation risks are increasing,” ING commodities strategists Warren Patterson and Ewa Manthey wrote in a research note. While there has also been a pick up on shipping activities over the past week around the strait, they said, “this can change quickly.”

The pair also noted that the oil market was reacting to the lack of tangible results on the Iran war after last week’s widely-watched summit between Trump and Chinese President Xi Jinping in Beijing, even as the White House said both the U.S. and China had agreed that the Strait of Hormuz must remain open.

U.S. officials had hoped that Beijing could use its influence, given its economic ties with Iran, to help broker a peace agreement and reopen the strait. Trump said last week in an interview that Xi told him China “would like to be of help” in negotiating an end to the war. So far it’s been unclear how Beijing might do that.

The yield on the U.S. 10-year Treasury was at around 4.60%, up from 4.47% last Thursday and sharply higher than the nearly 4% level it was holding at before the Iran war.

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On Friday, the benchmark S&P 500 dropped 1.2% from the record it set the day before. The Dow Jones Industrial Average fell 1.1% and the technology-heavy Nasdaq composite lost 1.5%.

In other dealings early Monday, the U.S. dollar rose to 158.86 Japanese yen from 158.62 yen. The euro was trading at $1.1635, up from $1.1622.

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