German 'grand coalition' talks enter tense final phase

AFP , Monday 25 Nov 2013

German Chancellor and chairwoman of the Christian Democratic Union (CDU), Angela Merkel, right, and the chairman of the Christian Social Union (CSU), Horst Seehofer, left, attend a meeting with representatives of the Social Democratic Party (SPD) in Berlin, Germany, Thursday, Nov. 21, 2013 (Photo: AP)

German coalition talks go into crunch time this week as Chancellor Angela Merkel's conservatives haggle with their defeated centre-left rivals over a deal to form a joint government by year's end.

Two months after Merkel triumphed at the ballot box but fell just short of an outright majority, the unlikely political bedfellows aim to hammer out a deal by Wednesday on a left-right 'grand coalition' to rule Europe's biggest economy.

"We face long days and nights ahead, and it'll be tough," said the general secretary of Merkel's Christian Democratic Union (CDU), Hermann Groehe, as delegates braced for red-eye meetings.

With negotiations going down to the wire, Merkel has grudgingly made concessions to the Social Democratic Party (SPD), including on its core demand for a national minimum wage, but has stuck to her guns in opposing higher taxes for the rich.

Tricky details remain to be sorted out, including how to reform Germany's green energy shift, easing a ban on dual nationality for immigrants, and whether foreign drivers will have to pay tolls on German motorways.

If both sides do strike a deal on policy and cabinet posts, another wild card remains.

The SPD, in a high-stakes gamble, has promised to let its 470,000 rank-and-file members vote on the loveless political marriage by mid-December in a postal ballot, the outcome of which is anything but certain.

Many local SPD branches and the party's youth wing bitterly reject the idea of their blue-collar party again governing in the shadow of Merkel -- as it last did from 2005-2009, only to suffer two devastating election defeats in a row.

SPD leaders have therefore battled on two fronts: seeking to extract headline concessions from Merkel's conservatives, then selling these as political trophies to their ambivalent grassroots members.

Party chief Sigmar Gabriel, who would be Merkel's vice chancellor, has threatened to quit if the base rebels and rejects a final deal, while imploring sceptical members of the 150-year-old party to sign off on a compromise agreement.

"If we have a draft and it contains good policies and the SPD then says 'no' to it, then it is putting itself above the people it is meant to represent," Gabriel told party members.

Citi Research analysts said it saw "significant uncertainty" in the SPD party vote, warning that a rejection would spell "further political uncertainty and reduce the prospects for a stable German government in the near term, which would also complicate decision-making at the euro area level".

The SPD has used the threat of a membership 'no' vote as leverage to wrest concessions from the conservatives -- but CDU Finance Minister Wolfgang Schaeuble has warned they must not "overdo it with their demands".

The veteran minister, speaking to news weekly Der Spiegel, voiced sympathy for the headache SPD leaders face but argued that in the end Germany's other big "people's party" must bite the bullet and act for the greater good.

"The members' ballot cannot be taken for granted," Schaeuble said. "But sometimes you need to be aware that our first priority is to serve our country, then the party. I don't envy my (SPD) colleagues."

Merkel's Bavarian sister party the CSU has meanwhile played hardball, reminding the SPD that it lost the election and that the conservatives are unfazed by deadlines.

"We are in the middle of the second half of the coalition negotiations," said CSU general secretary Alexander Dobrindt, using a football metaphor. "Maybe we'll have to go into extra time."

Should the 'grand coalition' talks fail, the options for Merkel, currently the caretaker chancellor, would narrow sharply.

Merkel has ruled out heading a highly unstable minority government, and Germany has little appetite for fresh elections. This would force her to once more approach the Greens as a potential governing partner.

Such a scenario, considered unthinkable for decades, is now taking shape in the central state of Hesse, where CDU-SPD negotiations have collapsed and the conservatives on Monday launched formal coalition talks with the Greens.

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