CSU head Edmund Stoiber (L-R), German chancellor designate Angela Merkel, outgoing SPD leader Franz Muentefering and his designated successor Matthias Platzeck pose for a photograph in Berlin November 11, 2005.

    BERLIN, Nov. 11 (Xinhuanet) -- German conservative leader Angela Merkel confirmed on Friday that a grand coalition agreement had been reached.

    "The coalition agreement is completed. I'm convinced that the coalition creates a genuine opportunity for Germany, " Merkel told a news conference.

    The finalizing of the agreement of more than 130 pages between Merkel's Christian Democratic Union/Christian Social Union (CDU/CSU)and the Social Democrat Party of outgoing German Chancellor Gerhard Schroeder has put an end to nearly two months of political uncertainty in Germany.

    The deal is a last-minute horse-trading on contentious issues such as new taxation and the future of the country's nuclear powerplants.

    The parties agreed to raise the main value-added tax rate by three points to 19 percent from 2007 to contain budget deficit andlower non-wage labor costs to promote employment.

German Chancellor designate Angela Merkel smiles during a news conference after coalition talks came to an end in Berlin November 11, 2005. (Xinhua/AFP)

    The conservatives also agreed to levy more tax on high income earners and to phase out all nuclear power plants in Germany over the next two decades as Schroeder's government had committed itself to doing so.

    On foreign policy, the new government will seek improved ties with the United States, which have been soured over German opposition to the Iraq war, and strengthen relations with European Union partners.

    They also accepted a compromise formulation on Turkey's bid to join the European Union.

    The accord is to be approved by separate party conventions on Monday to pave way for the parliament to elect Merkel on Nov. 22 the first female chancellor in Germany's history.

    Germany has been locked in political uncertainty since an inconclusive September 18 election, which forced the both parties to open coalition talks.

    The last time Germany had a grand coalition was in the late 1960s. Enditem