Germany and Europe have breathed a sigh of relief at the news that Angela Merkel has been named chancellor, ending weeks of political paralysis.The hard bargaining over cabinet posts now begins. Merkel, who is poised to become Germany’s first female leader, says she is confident common ground can be found with the Social Democrats in a grand coalition. “I don’t think it will be any more difficult to thrash out a compromise on the domestic agenda than on the foreign agenda. I think there is a foundation of common positions which we can build on. Sometimes it is just a difference of emphasis,” she said. Commentators agree that on many foreign policy issues such as Iraq there will be a difference in tone, not in substance. But the prospect of Merkel’s conservative ally and confirmed Eurosceptic Edmund Stoiber taking on the Europe portfolio is likely to alarm leaders such as Jacques Chirac. Gerhard Schroeder is not expected to take up a cabinet post. Some analysts say he has played a clever game, first insisting he would stay on as chancellor and then standing down in return for getting a juicy deal for his party in the grand coalition. According to sources close to the Social Democrats, they are poised to take some of the most prestigious portfolios, including foreign affairs, finance, labour and justice. But whoever gets the plum jobs, the big question is whether the parties can put their differences aside to push through reforms they both say are in the national interest.