Two weeks after the recent Bundestag elections, leaders of the Union parties (CDU and CSU) and the Social Democratic Party (SPD) have reached an agreement on key contentious issues and are set to begin formal coalition negotiations.

This announcement comes after conciliatory discussions focused primarily on migration policy, a topic that has historically divided the parties.

A significant aspect of the agreement includes a commitment to allow the rejection of asylum seekers at Germany's borders, aligning with long-standing demands from the Union parties.

Until now, the SPD had expressed reservations about such measures.

However, the implementation of these border rejections is contingent on coordination with neighboring European countries, an aspect that remains uncertain as reactions from these neighbors are awaited.

Additionally, the family reunification process for refugees will face further restrictions under the proposed measures.

The proposed reforms also involve a restructuring of the basic income support system known as Bürgergeld, as well as the introduction of corporate tax reforms aimed at bolstering the economy.

Following a critical round of talks in Berlin, Friedrich Merz, the leader of the Union factions, stated that agreement had been reached on numerous substantive issues, emphasizing the constructive nature of the discussions.

Lars Klingbeil, the SPD chairman, referred to the conversations as 'constructive' as well, highlighting a shared sense of responsibility in moving forward.

Markus Söder, head of the CSU, asserted that there were no winners or losers in these discussions, introducing a notion of partnership.

During discussions, he acknowledged that the results of the negotiations would not benefit any single party but rather mark the beginning of a collaborative effort.

Both party heads plan to present the findings to their respective executive committees, with recommendations to initiate coalition negotiations.

This procedure is expected to be a formality, paving the way for the drafting of a coalition agreement delineating the projects they aim to pursue together during the legislative session and outlining which party will take on specific ministerial responsibilities.

Merz has expressed aspirations to finalize these negotiations by Easter.

In addressing critical financial concerns, the negotiators achieved a breakthrough earlier, involving the relaxation of Germany's debt ceiling and the establishment of a significant special fund for infrastructure.

The Union made considerable concessions during these financial discussions, including the abandonment of certain election promises, in hopes of securing similar cooperation from the SPD on migration issues.

Merz's campaign included a commitment to instruct the Ministry of the Interior, upon assuming the chancellorship, to deny all attempts of illegal entry into Germany from day one.

The SPD had previously raised legal concerns over such an approach, complicating this aspect of the agreement.

The Coalition plans to revisit the 'limitation' of migration as part of the residence law, while maintaining existing reforms to the nationality law introduced by the previous governing coalition.

There will be legal assessments to determine if it's feasible to revoke citizenship from supporters of terrorism or extremists who advocate for the abolition of Germany's democratic constitution, should they hold another nationality.

Controversially, the future of Bürgergeld is another focal point.

Merz described plans to redesign the existing system into a form of basic security for job seekers, indicating that those able to work and who repeatedly refuse reasonable job offers would face complete loss of benefits.

Klingbeil agreed that individuals who refuse to engage with the system should not expect the same level of support, describing this as fair.

Both parties are also considering reforms in accordance with the European Working Time Directive, which would allow for a weekly instead of daily maximum working hours and the elimination of taxes on overtime pay exceeding agreed full-time hours defined by collective bargaining agreements.

To provide financial relief to businesses and households, the Union and SPD plan to reduce the electricity tax, aligning it with the minimum rate permitted by EU law, which is expected to lower costs by at least five euro cents per kilowatt-hour.

Additionally, transmission system fees, part of electricity pricing, are to be halved in an effort to address long-standing criticisms from economic associations concerning high energy costs in Germany, which are seen as detrimental to investment.

Despite this progress, SPD migration politicians have raised concerns about what they describe as an alarming departure from fundamental human rights principles, emphasizing that the discussed border rejections pose threats to societal values and remain legally questionable.

Criticism within the SPD is evident, particularly among its left faction, which sees potential constitutional issues arising from proposed reforms in migration policy, including the prospect of establishing a second-class citizenship.

The ongoing negotiations illustrate the delicate balance required to forge a successful coalition, navigating complex and often conflicting perspectives on migration, social policy, and economic recovery, set against the backdrop of Germany's evolving political landscape.