Germany's CDU, SPD Start Coalition Talks

With no clear election winner, Germany is effectively in a state of political paralysis. But the two main parties are racing to be the first to assemble a feasible coalition government.

Christian Democratic Union leader Angela Merkel and Edmund Stoiber, head of the CDU's Bavarian system party CSU, met with the Social Democrats (SPD) on Thursday to look into the possibilities of forming a government. Merkel said the differences between the parties were massive but that they would have to deal with the complicated election result in a politically responsible manner and form a stable government.

The talks lasted an hour and were overshadowed by the SPD's insistence that it had received the largest portion of votes and thus the mandate to form a government. The CDU/CSU bloc, which has worked together on a national level throughout the postwar period, received 0.9 percent more votes than the SPD. The Christian Union parties and the SPD agreed to meet again on Wednesday next week. SPD chief Franz Müntefering said the talks would then focus on content.

If the Christian Union and the Social Democrats can reach agreement, a grand coalition of the CDU and SPD seems most likely. This option, however, faces major hurdles. Chancellor Gerhard Schröder has said the SPD would not join a government under Merkel's leadership, effectively inviting her party to dump her.

But Merkel was overwhelmingly re-elected as head of her parliamentary group earlier this week, giving her a much-needed vote of confidence ahead of the negotiations.

Merkel met earlier in the day with the free-market liberal Free Democratic Party (FDP), with whom she had originally hoped to form a government. That partnership came up short of a governing majority after the general election on Sunday. The Christian Union parties and the FDP agreed on Thursday to pursue talks to form a coalition with the Green party.

Political stalemate could hurt the economy

Business leaders meanwhile are worried that the process of forming a government will drag on for weeks. This could delay urgently needed economic reforms and do nothing to cut the 11.4 percent unemployment rate.

The private sector had hoped that the 51-year-old Merkel would secure a ruling majority, equipped with a mandate to shake up the country's stagnating economy. But Merkel saw the 20-point lead her party had enjoyed early in the campaign reduced to less than one percent by Schröder's party on election day.

The conservatives' three-seat advantage is insufficient to form a government, although Merkel said she has won the right to govern the country.

This result prompted Schröder to seize the initiative and claim he had a mandate to remain chancellor despite the fact his party finished second.

SPD wants Schröder to remain chancellor

On Wednesday, the SPD became the first party to launch into talks with potential coalition partners. Müntefering tested the waters in talks with the Greens, the junior partners in the outgoing coalition. He made it clear that his aim was to see Schröder continue as chancellor for a third term.

Müntefering and the Greens said the two parties hoped to continue working together in government. But they acknowledged they would need another partner to form a ruling majority.

"We know we need a third party at the table," Müntefering said after the meeting. He added that he would like that partner to be the FDP.

The FDP, though, has ruled out helping Schröder or his party cling to power. Müntefering criticized the FDP for its refusal to negotiate.

"Those who resist, resist what democracy expects of politicians," he said.

Can green and black see eye-to-eye?

After the CDU meets the SPD, the conservatives will speak to the Greens on Friday. The pro-environment party's co-president Claudia Roth said that meeting would merely serve "to find out what we have in common."

The parties are diametrically opposed on key issues such as Turkey's bid to join the European Union, the phase-out of nuclear power and taxation policy.

"I am extraordinarily skeptical about working with the Christian Union," Roth said.

Foreign Minister Joschka Fischer, the highest-profile Green, has said it is "improbable" that his party would take part in the next coalition. Fischer announced his withdrawal from the Greens leadership should his party go into opposition.