German coalition talks: differences persist as deadline looms

Exploratory talks on a new German coalition went down to the wire on Thursday amid ongoing disagreement over big-ticket items: refugee policy and reform of the tax, pension and health systems.

After a disastrous election in September, and one round of failed talks behind her, acting chancellor Angela Merkel began five days of talks on Sunday with the centre-left Social Democratic Party (SPD), hoping to woo them back into power.

Heading into their final day of talks on Thursday Dr Merkel, leader of the centre-right Christian Democratic Union (CDU) and her SPD opposite number, Martin Schulz, said they were anxious to secure a deal and end nearly four months of political limbo.

After working groups failed to bridge gaps on key policy points this week, it fell to political leaders to conclude a high-stakes round of horse trading into the small hours.

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“I expect it to be a tough day,” said Dr Merkel. “We’re keeping our eye on finding the right policies”.

Outside the SPD headquarters, the venue for the talks for a second time, protesters braved the rain and chill to hold up posters reading “Make Europe Great Again”. With the EU effectively at a standstill until Berlin gets its act together, Mr Schulz, the ex-European Parliament president, insisted Europe was uppermost in his mind.

“We will make clear in the last day of talks that a new government has to bring about a new departure for the EU,” he said. “What we need in Europe is the same as at national level ... namely more solidarity.”

Second poll

But any preliminary coalition agreement may yet fall apart. SPD delegates will have their say on the preliminary coalition deal at an extraordinary party conference on January 21st. If they back full talks, entering government hinges on a second poll, of all SPD members, on any final coalition deal. All going well, a new government in Berlin is not likely before Easter. A collapse of talks, or negative SPD vote, would mean fresh elections.

Until now the CDU has opposed key SPD proposals: to raise the top tax rate, merge private and public healthcare and reinstate provisions for some refugees to bring over their families.

Based on limited leaks, observers so far see no grand ambition for domestic or EU reform. "Germans have been waiting more than 100 days for a government and they've had enough," thundered the Bild tabloid, asking Dr Merkel: "Where is your plan?"

Political scientists agree that that Germany’s third grand coalition in 12 years could be a lowest-common-denominator government.

“They will either only do cosmetic politics and lazy compromises,” predicted Prof Rudolf Hickel of the University of Bremen, “or we will have a government where they’ll fight over details day and night.”