World Bulletin/News Desk

German Chancellor Angela Merkel remains "empty-handed” four days after her election victory as her potential coalition partner, the Social Democrats (SPD), show growing reluctance to form a coalition government.

Merkel reached out to the main opposition Social Democrats for the first time on Monday, and stressed that Germany needs a strong and stable government.

In Sunday’s election, Merkel’s CDU/CSU alliance won 311 seats in the lower house of the federal parliament, or Bundestag, just 5 seats short of an absolute majority. The SPD has emerged as the second strongest party, winning 192 seats. A possible “grand coalition” with the SPD will give Merkel a strong majority in the Bundestag.

More importantly, the SPD has a majority in the Bundesrat, Germany's upper house of parliament, where federal states are represented. The SPD controls 36 of the 69 votes in the Bundesrat and may block any legal initiative by the federal government.

 CDU opens door for compromise

As the leaders of the SPD have shown little enthusiasm for a grand coalition so far, Merkel’s CDU has started to signal readiness for compromise on a number of key issues important for the Social Democrats.

Germany’s Finance Minister Wolfgang Schaeuble (CDU) said on Wednesday that he is not ruling out the possibility of tax increases as part of a coalition agreement with the SPD. “We should see how the talks would proceed,” he told weekly magazine Die Zeit.

The CDU’s Vice President Armin Laschet has also talked of being open to discuss SPD demands on taxes as part of possible coalition talks. 

Intra-party divisions

During their election campaign, the Social Democrats argued for raising taxes to 49 % for those who earn more than 100 thousand euros annually with the goal of generating new financial resources for education and infrastructure investments.

The CDU and its sister party CSU had long been against proposals of a tax increase. As a sign of growing intra-party divisions in Merkel’s party ahead of possible coalition talks with the SPD, CDU Secretary General Hermann Groehe clearly spoke against any compromise on increasing taxes.

“We are against tax increases,” Groehe told reporters on Thursday, underlining the promises made in their election manifesto. “Our election victory gives us a strong mandate to fight for this position,” he stressed.

The CDU/CSU alliance and the SPD also differ on a number of other key issues including pro-growth measures to overcome the crisis in the Eurozone, the introduction of a minimu wage, dual-citizenship rights for Germany's Turkish community, and EU full membership perspective for Turkey.

SPD likely to delay decision

The Social Democrats are set to gather on Friday a small party convention to discuss a possible coalition government with Merkel’s CDU/CSU alliance. Around 200 delegates will participate at this small convention.

Several leading figures of the party have already called for a “mini-referendum” among the 470 thousand members of the SPD.

According to German press reports, 8 of the 16 federal state organizations of the SPD favor the party base's stronger involvement in a possible decision on the coalition.

North Rhine-Westphalian Prime Minister Hannelore Kraft, a prominent SPD figure, is reportedly leading the voices against a “grand coalition.”

Some Social Democrats fear a repeat of the “grand coalition” experience with the CDU/CSU from 2005 to 2009, which led to the SPD suffering a great loss in the 2009 general elections.

It is still not clear what SPD leaders will decide in Friday’s meeting. SPD Party chairman Sigmar Gabriel is said to be in favor of beginning coalition talks.

German daily Leipziger Volkszeitung reported on Wednesday that SPD leaders will not take any decision before a major party convention set for November 14-16 in Leipzig. “Thus far, the SPD will keep all options open,” the daily reported.

This could delay the formation of the new German government by several months.

On October 22, Germany’s federal parliament, or Bundestag, is expected to make its first meeting after elections.

According to the constitution, the current cabinet of Chancellor Angela Merkel will continue to serve if coalition talks do not conclude before October 22.

Merkel expressed on Monday her eagerness to form a strong and stable coalition government, and that she had accordingly first contacted the SPD. But she did not rule out talks with other parties.

According to public polls after the election, 64% of Germans said they support a coalition between the CDU/CSU and the SPD.