Schroeder and Merkel hold power crisis talks

Chancellor Gerhard Schroeder and conservative rival Angela Merkel head into a third round of talks today on forming a possible coalition to resolve a deadlock over who should lead Germany.

A deal would end the two-week political crisis in the EU’s largest nation.

Both Schroeder’s Social Democrats and opposition conservatives insist they are willing to enter formal coalition talks after each failed to secure a majority in September 18 parliamentary elections.

But Merkel’s conservatives have demanded that Schroeder’s party drop its campaign to prolong his seven years in office. While Schroeder has signalled he would step down if his party told him he must, the Social Democrats have stuck to their claim that he should lead any new government.

Merkel’s Christian Democrats and the Bavarian Christian Social Union argue that since they are the largest parliamentary bloc, their candidate should be chancellor, and that detailed talks make no sense until the matter is settled.

Dieter Althaus, a senior conservative, said the two parties would have to delay more detailed negotiations if the Social Democrats did not give in.

“It’s about accepting the rules of the democratic game: that the strongest faction provides the head of the government,” Althaus said on ARD television.

He said today’s talks would address problems with government finances, high unemployment and the stretched pension system, but said he saw no sign of an overall compromise.

Social Democratic chairman Franz Muentefering gave little ground. “This situation is unknown in Germany, that two who are the same size discuss whether to form a coalition,” he said. “Anyone setting preconditions is not doing justice to the challenge.”

Failure to agree could leave Germany with a weak minority government at a time when many are calling for potentially unpopular action to fix the economy – or more turmoil through new elections.

Both parties publicly oppose that, saying Germany needs stable leadership quickly to tackle its high unemployment, sluggish growth and budget deficits and provide to leadership in the European Union.

Germany, which has the continent’s largest economy, plays a major role in the EU as it wrestles with thorny issues such as membership negotiations with Turkey and whether to let Romania and Bulgaria in on schedule.

Merkel and Schroeder are negotiating over a so-called “grand coalition” because neither won a majority for their preferred coalition in the inconclusive elections. Merkel’s Christian Democrat-Christian Social Union group has an edge of four seats, 226-222, over the Social Democrats in the 614-seat lower house, or Bundestag. To build a government, a bloc needs at least 308 seats.

Parliament must convene by October 18. If it cannot choose a chancellor in three rounds of secret-ballot voting, President Horst Koehler can name the candidate with the most votes to head a minority government – or dissolve parliament for another election campaign.