Second coalition of CDU and SPD looking likely in Germany

Chancellor Angela Merkel and her Christian Democratic Union (CDU) are steering towards a second grand coalition with the Social Democrats (SPD) after holding a second round of exploratory talks yesterday in Berlin.

Three weeks ago, Dr Merkel steered her CDU to its biggest election win in more than 20 years, but fell five seats short of a parliamentary majority for her third term.

Preliminary talks, aimed at sounding out the best coalition partner, began last week. A second round continues this week, with more formal talks likely to commence in the coming week at the earliest.

More than nine weeks elapsed in 2005 before the SPD agreed to join a CDU-led grand coalition as Dr Merkel’s junior partner – only the second such alliance in German post-war history. Officials on all sides are optimistic that, third time around, agreement will be reached more quickly.

But they concede that talks, when they begin, could get bogged down in detail.

Political dance
Before real coalition negotiations begin, Dr Merkel holds a final exploratory meeting today with the Green Party. The talks are seen as more a matter of political choreography than a concrete step towards a CDU-Green alliance.

Dr Merkel is said to be intrigued by the idea – a premiere for the one-time ideological enemies – and has sidelined many barriers to just such a coalition by phasing out nuclear energy and military service.

However, she knows an alliance with the Greens might be the political straw that breaks the back of her party's longsuffering conservative camp.

After today’s talks with the CDU, Green Party leaders are expected to announce tomorrow whether they will recommend opening coalition talks at a weekend party conference.

If, as expected, the Greens opt for opposition, it trips a green light for talks on a second Merkel-lead CDU-SPD coalition. Yesterday afternoon in Berlin, some 21 CDU and SPD officials met for a second round of exploratory talks on education, transport and European affairs.

But domestic, particularly fiscal, matters are likely to dominate eventual coalition talks.

The two sides disagree on tax hikes for top-earners and a minimum wage – the SPD is in favour, the CDU opposed – but already yesterday signs of compromise began to emerge.

"We need concrete agreement on a minimum wage to make it worthwhile to open coalition talks," said Andrea Nahles, SPD general secretary.

Without a clear CDU concession, SPD leaders say they cannot guarantee that 200 delegates on Sunday will back opening coalition negotiations with Dr Merkel.

Many SPD state premiers are concerned by the idea, arguing the party has never recovered from its last cohabitation. But, crucially, most senior SPD figures like the idea of another alliance with the CDU.

Behind the scenes, Dr Merkel’s ostensible political rivals admit they are fans of her no-drama, consensus-style politics.

Their combined four-fifths Bundestag majority – and backing of the upper house, the Bundesrat – would allow them progress big political projects.

Top of the list is a reform of Germany’s complex federal structure, in particular ending a state involvement in education that has created a confusing patchwork of school standards.

Other big projects requiring agreement include new eurozone structures and the so-called "energy transition" to shift Germany away from nuclear to renewables in the coming decade.

While content is important, however, the keystone in coalition talks will be who secures the finance ministry – the most powerful seat at cabinet beside the chancellor.

Valuable Schäuble
Dr Merkel is anxious to hold on to Wolfgang Schäuble – at 71, he is her most senior minister. But she has worked with an SPD finance minister before and, if the SPD makes an energetic play, Dr Schäuble might shift to the foreign ministry.

There is no preferred SPD finance ministry candidate. Many have cooled on the early idea of summoning Jörg Asmussen, an SPD party member, back from the European Central Bank to the Berlin ministry where he once served as deputy minister.

Another hopeful is Frank Walter Steinmeier, foreign minister in the last grand coalition.

The name of SPD’s lowprofile party treasurer, Barbara Hendricks, has been mentioned as a dark horse candidate.

Another scenario would see the SPD, in a nod to its weak election result, dropping its finance demand in exchange for a new super economics ministry to oversee the high-profile energy transition.