Angela Merkel won her personal battle with Gerhard Schröder over who would become chancellor, but victory came at a price.

The deal that ended three weeks of political limbo will see Schröder's Social Democrats (SPD) take eight ministries, including the powerful portfolios of foreign affairs, labor and justice, as well as health, development aid and cooperation, transport, and environment, party sources said.

Merkel's Christian Democrats (CDU) will have six portfolios -- economy, interior, defense, agriculture, education and family.

On Tuesday, both sides retreated to discuss their strategies for the process of sorting out the fine print of their coalition agreement -- a process that could stretch well into November.

Already, Merkel is facing criticism from politicians within her own ranks as well as from the SPD who fear that the coalition will prove untenable. The two parties are more comfortable in their role as rivals, and there is concern that they will be unable to work together for the good of the country.

Merkel as policy-maker

Merkel's ability to steer the government's course has been called into question by both sides. SPD party leader Franz Müntefering said that, in such a coalition, the chancellor's duty to make policy is "not viable." Were Merkel to attempt such a role, the coalition would be over, he warned.

Merkel's Bavarian ally, Christian Social Union leader Edmund Stoiber, also said her policy-making power would be severely limited.

CDU party manager Volker Kauder, however, stressed that the parties would agree on common goals during their coalition negotiations. In those goals, and in new challenges that would arise, Merkel would have a "leadership function that she will exercise."

Finding common ground

Andreas Wuest, political scientist from Mannheim University, said the parties must now smooth over their differences.

"It is not easy, they have to find agreement on their policies," Wuest told AFP. "But Angela Merkel may still be a successful chancellor, there is nothing to say that it cannot last for a few years."

For a start, he said, they agree sufficiently to allow them to work together to reduce rampant unemployment, which at more than 11 percent, is perhaps the worst of Germany's ills.

"I do not see a problem moving forward to tackle unemployment," Wuest said. "The parties may not manage to agree on labor reforms that affect people in jobs, but they will try and do something about the jobless."

Helping matters further for the new coalition, Wuest said, is the fact that, as Schröder began to introduce controversial reforms of the labor market, he was "moving very much in the direction the Christian Democrats wanted him to go for a long time."

He predicted that the first change the new coalition would make would be to strengthen federalism to give the country's 16 states more power to act independently.

Deutsche Bank chief economist, Norbert Walter, agreed that there was common ground for left-right cohabitation.

"I'm thinking of reform of the federal system, but there could also be a common denominator in some areas in pension provisions and labor market policy that could enable small reforms to be pushed through," Walter said.