Merkel ready for ‘painful compromises’ to seal government deal

As negotiators from Merkel’s CDU party, her Bavarian CSU ally and the Social Democratic Party (SPD) gathered for one last push to clinch an agreement on a renewed “grand coalition”, Merkel said it was time to end the political uncertainty.

“We live in turbulent times,” she said, pointing to heavy losses in recent days on global stock markets.

“We need a government that offers dependability in the interests of the people.”

Merkel said all sides would “still need to make painful compromises” to get a deal.

Despite the protracted haggling, the parties sounded upbeat on meeting Tuesday’s self-imposed deadline.

“I think that today will be the decisive day as to whether the three parties — CDU, CSU and SPD — will finish a joint coalition agreement on whose basis a stable government for Germany can be built,” said SPD chief Martin Schulz.

Adding to the optimism, Merkel’s CDU scheduled an 11:00 am (1000 GMT) on Wednesday for top brass to discuss the end result.

Party sources said the main remaining sticking points were disputes over healthcare, labour policy and defence spending.

– SPD to have final say –

Merkel, in power for over 12 years, has pinned her hopes on a repeat alliance with the SPD after September’s inconclusive election left her without a ruling majority.

But commentators have already dubbed the tie-up a “coalition of losers” after both parties slumped to their worst results in decades in the polls, while the far-right Alternative for Germany (AfD) took nearly 13 percent of the vote.

Even if both sides end up signing a coalition agreement that lays out the next government’s policies, a new Merkel-led government is not yet guaranteed.

Schulz has promised to put any coalition accord to a yes-or-no referendum by the SPD’s rank-and-file — whose numbers have swelled by more than 24,000 since January to some 460,000 members.

Observers expect the vote to be tight, with the SPD’s left and youth wings still fuming over Schulz’s decision to consider a third Merkel alliance despite initially vowing to take the party into opposition.

The SPD’s youth wing chief Kevin Kuehnert, who is campaigning against another grand coalition, has been urging supporters to join the party just to vote “no”.

The referendum result is expected during the first weekend of March. If all goes well for Merkel, a new government could be in place by the end of next month.

A thumbs-down would leave Merkel facing a snap election that could further boost the AfD, or the prospect of heading an unstable minority government.

– Stumbling blocks –

Although Merkel is often described as Europe’s most powerful woman, her struggles to form a government have harmed her political standing at home and abroad.

Germany’s European partners in particular are eager for an end to the gridlock in Berlin that has held up decision-making just as French President Emmanuel Macron is pushing for major EU reforms.

While Merkel’s bloc and the SPD are both pro-EU, the SPD is more enthusiastic about some of Macron’s more ambitious proposals for deeper eurozone integration.

In a draft version of the coalition pact seen by AFP, the parties have agreed to support Macron’s reform drive and tentatively backed his idea for a eurozone investment budget.

But they are still at loggerheads about the SPD’s demands to limit short-term work contracts and overhaul Germany’s two-tier healthcare system.

A new poll for Bild newspaper found that the lengthy wrangling has hurt both main parties.

Support for the CDU/CSU fell from 33 to 30.5 percent, while the SPD slipped from September’s historic low of 20.5 percent to 17 percent — leaving the coalition hopefuls without a combined majority.

The AfD meanwhile scored a record 15 percent.