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Merkel Sees Coalition Deadlock Resolved as Party Frets Over Cost

German Chancellor Angela Merkel faced down growing frustration in her party over concessions made in coalition talks with the Social Democrats, saying that she’s confident the two sides will strike an accord within days.

Merkel’s Christian Democrats, their CSU Bavarian sister party and the SPD have entered a “decisive phase” in negotiations on forming her third-term government, Merkel told reporters in Berlin yesterday. The chancellor has set a deadline of Nov. 27 to complete a draft coalition pact.

“I’m still convinced that it will work,” Merkel said after meeting with Norwegian Prime Minister Erna Solberg. “Whether we manage to do it, we’ll see in the coming days.”

Negotiators meet again today as they struggle to overcome a deadlock on matters including SPD demands for a national minimum wage and an CDU refusal to free up funds, disagreements that threaten their goal to have a new government by Christmas. Party officials have begun floating the possibility of new elections as an option if the talks break down.

More than eight weeks after Merkel’s Sept. 22 election victory, there is growing unease on each side over the amount of concessions extracted by the other. Whereas some SPD members used a party convention last weekend to oppose a coalition with Merkel, there are now signs of unrest in the chancellor’s bloc.

“Is Merkel giving way on all CDU positions to secure the Chancellorship?” Bild newspaper said in a headline in yesterday’s edition over an article that said the CDU had bowed to SPD demands in 10 of 12 main policy areas.

SPD Successes

Bild included a commitment to some sort of minimum wage among the concessions. Others were on quotas for women on company boards, a planned financial-transaction tax and rent controls. The CDU has won through on pensions for mothers of children born before 1992 and on its refusal to support euro-area bond issuance, according to Bild.

Regional CDU members in the states of Baden-Wuerttemberg, North Rhine-Westphalia and Rhineland-Palatinate plan to debate whatever accord is reached, Die Welt newspaper reported.

“At the moment, the CDU is helping the SPD roll back its own Agenda 2010 reforms” that were pushed through by former Chancellor Gerhard Schroeder, Kurt Lauk, president of the business wing of Merkel’s party, said in an interview.

The SPD campaigned on a statutory minimum wage of 8.50 euros ($11.50) an hour throughout Germany, and says it is a precondition for entering into coalition. Merkel’s bloc wants wages to be set by industry and labor.

Andrea Nahles, the SPD’s general secretary, said that while negotiators had agreed on forming a commission to set the wage, differences remained implementation.

Speaking yesterday, Merkel called the labor-market debate “among the more difficult issues” in the talks. She declined to speculate on whether a collapse in the talks would trigger new elections or another partner in government.

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