German parties struggle to reach agreement as deadline nears

(Bloomberg) German party leaders struggled to find common ground on key policies as a self-imposed deadline left them three days to determine whether Chancellor Angela Merkel will be able to build a multi-party coalition government.

With Merkel’s Christian Democrats, her Bavarian allies, the pro-market Free Democrats and the environmental Greens continuing closed-door talks in Berlin, issues including climate policy, migration and Europe emerged as the biggest potential stumbling blocks. All sides are under pressure to avoid a new election.

"The big problems are not all off the table, so it’s going to be battled out in public as well as behind closed doors," Michael Grosse-Brömer, the parliamentary whip for Merkel’s Christian Democratic Union, told broadcaster Phoenix on Tuesday.

While the parties had reached broad agreement in areas including education and research, it will take heavy lifting on the divisive issues to be able to form a government, he said.

Final Stretch

Merkel and other party leaders sat down with expert teams from various negotiating groups to disentangle differences on social, economic and foreign policy on Tuesday. Leaders want to wrap up exploratory talks that may run overnight into Friday before determining that they have enough in common to forge a government. Only then will they enter official coalition talks.

"We’re in the final stretch and have to see how we can reach the finish line," Katrin Göring-Eckardt, a co-leader of the Greens, told reporters in Berlin. "There are big chunks ahead of us still. We’ve come here with the will to negotiate, but we’ve also come with clear goals."

Should talks fail, Merkel’s options for forming a fourth government will narrow. Germany’s Social Democrats, with whom she’s governed since 2013, have vowed not to enter another coalition with the three-term chancellor after suffering their worst electoral defeat since the second world war. Barring a minority government, the only remaining option may be to hold a new election -- unprecedented in the federal republic’s 68-year history.

Holding another vote is seen as a risky prospect given the rise of the far-right Alternative for Germany, which won 12.6% in September.

The chancellor has maintained a low profile after emerging victorious but weakened in the September 24 election, focusing her energies on making the multi-party coalition work.

 Officials aim to establish a written preliminary agreement by the end of the week, which the Greens plan to put to a party conference vote on November 25. That’s viewed as the main obstacle before the groups reconvene for official coalition talks, during which they’ll draw up a blueprint for the next four years.