Merkel Nears Pick of Coalition Ally in Fourth Week of Search

German Chancellor Angela Merkel moved toward picking her third-term ally as the opposition Social Democrats cited common ground in coalition talks.

Merkel and her Christian Democratic bloc met SPD leaders for eight hours in the longest negotiations since German elections on Sept. 22, breaking up after midnight before a second sounding-out session with the Greens starting at 5 p.m. in Berlin today.

“This is the week of clarity and it began well,” Alexander Dobrindt, chief negotiator for the Merkel-allied Christian Social Union party, told reporters. “There still is some fog that needs to be negotiated away.”

More than three weeks after securing the biggest election victory since German reunification, Merkel aims to pick one party for formal coalition talks before the first post-election session of Germany’s lower house on Oct. 22. Two days later, she plans to attend a European Union summit in Brussels for talks on topics including the EU’s banking-union plans.

The Social Democrats, the biggest opposition party, “were able to recognize common ground on some issues,” while others remained in dispute, general secretary Andrea Nahles told reporters after the meeting last night.

The Christian Democrats and SPD may hold a third round of discussions on Thursday, said Hermann Groehe, the general secretary of Merkel’s Christian Democratic Union. The SPD is due to hold a small convention on Oct. 20 when delegates can approve or reject formal coalition talks. The Greens will hold a separate congress on Oct. 18-20.

Greens Decision

Greens leaders have cast doubt on their talks with Merkel, citing a lack of clarity on her renewable-energy goals and how she plans to finance infrastructure projects without tax increases. The party will decide by early tomorrow whether to engage in full coalition talks, Anton Hofreiter, the co-leader of the Greens’ parliamentary caucus, said on ZDF television.

Germany’s power grid operators raised the pressure for government action with the announcement today of an increase in the surcharge consumers pay for renewable energy to a record, meaning the charge has quintupled since 2009.

Merkel “must act on forming a government and make potential coalition partners an offer,” Greens lawmaker Kerstin Andreae said on Deutschlandradio today.

Merkel laid down markers during her campaign, rejecting SPD calls for a statutory minimum wage of 8.50 euros ($11.52) an hour in favor of an industry-by-industry approach with wages set by collective bargaining. The SPD campaigned for an increase in the 42 percent income-tax rate, citing a growing rich-poor gap, while Merkel dismissed tax raises as “poison” for the economy.

Red Lines

The chancellor went in to yesterday’s talks holding firm to her rejection of tax rises and of joint euro-area bonds, while leaving all other topics open for negotiation, a person familiar with her strategy said on condition of anonymity.

One of the main differences emerged over the financing of infrastructure and education, with the SPD pushing for tax increases that Merkel refused to consider.

“Merkel’s group didn’t budget in the slightest over finance issues,” Joachim Poss, the SPD parliamentary finance spokesman, said by telephone. “Blocking, that’s all we’ve had so far. That’s not the stuff of coalition-building.”

Dobrindt of the Bavarian CSU said that nothing was agreed last night. “But we signaled to each other a readiness to talk,” he said.

Greens Leverage

Wielding the option of allying with the Greens gives Merkel leverage as she sounds out the SPD, the junior partner during her first term “grand coalition” between 2005 and 2009. While the election cemented her stature as Europe’s foremost political leader, Merkel fell short of the majority of seats in the lower house, or Bundestag, that she needs to govern alone.

Everything now is about strategy as the political parties jostle for position and profile, said Juergen Falter, a professor of politics at the University of Mainz. Merkel is unwilling to concede anything before the SPD has commited to full coalition talks, and the SPD is desperate to show that the party leadership is fighting its corner, he said.

“The SPD leadership is ready to go into a grand coalition, but it needs results,” Falter said. Members have been promised a ballot on the terms of a deal, and “the final membership vote is the real danger for the coalition,” he said. “Everything else for now is tactics.”

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