German Chancellor Angela Merkel's rival Martin Schulz pushes for concessions to unlock her fourth term

German Chancellor Angela Merkel (left) in July 28, 2016 in Berlin and the leader of Germany's social democrats (SPD) Martin Schulz in Strasbourg on Jan 16, 2017.
German Chancellor Angela Merkel (left) in July 28, 2016 in Berlin and the leader of Germany's social democrats (SPD) Martin Schulz in Strasbourg on Jan 16, 2017.PHOTO: AFP

BERLIN (BLOOMBERG) - Germany's Social Democratic leader asked his party to open the door to coalition talks with Chancellor Angela Merkel, saying it's worth exploring how far she'll go to accommodate its demands on European policy and a fair society.

SPD chairman Martin Schulz couched his appeal in caveats that reflect broad reluctance among party members to join Merkel as junior partner for a third time in 12 years.

Delegates are voting later on Thursday (Dec 7) on whether to allow talks with Merkel without explicitly naming a renewed "grand coalition" as a goal, leaving open the option of the SPD backing a Merkel-led minority government.

"Let's first see which policies we can push through and then decide about the precise form in which we do it," Schulz, 61, said in a convention speech in Berlin. Leaving all options open increases the SPD's leverage as Merkel seeks to unlock a path to her fourth term, he said.

As the threat of a repeat election hangs over Europe's biggest economy, the three-day convention is a chance for Social Democratic leaders to start persuading members to come around. Schulz laid out demands including a push for a European finance minister and less fiscal austerity.

NOT AT ANY PRICE

"We don't want to govern at any price," Schulz said. "But we also shouldn't refuse to govern at any price."

The tally of the convention vote on sounding out a possible coalition with Merkel will give a first hint of the SPD's grassroots sentiment and Schulz's ability to shape events in the weeks ahead.

"There has to be a significant majority for the vote on entering talks with the Christian Democratic bloc, otherwise there is a big danger that the SPD fumbles in the course of negotiations," Carsten Brzeski, chief economist for Germany and Austria at ING Diba in Frankfurt, said in an interview. "Even with a good result, there's still a risk the talks could collapse."

TWICE SHY

Only 28 per cent of SPD supporters favoured reviving the alliance of Germany's two biggest parties, though even fewer wanted a new election, according to a Spiegel Online poll. Instead, a majority backed a Merkel-led minority government supported by the SPD, an untried option the chancellor has rejected as unstable.

The Social Democrats have engaged in a round of soul-searching after Schulz initially vowed not to join another Merkel government, a reaction to the party's worst result since World War II in the German election on Sept 24. At the same time, he told delegates "there's nothing automatic" about joining Merkel in a grand coalition.

Pressure shifted to the SPD after Merkel's coalition talks with the Free Democrats and the Green party collapsed on Nov 19.

Within days, Schulz eased off his rejection of Merkel, prodded by many in the party base as well as President Frank-Walter Steinmeier, a Social Democrat now pledged to a non-partisan role, who called on all parties face up to their obligation to voters.

Ending the political deadlock could take months. If Thursday's motion passes, Merkel and Schulz would be expected to meet as early as next week, with exploratory talks possibly starting in December.

 

A select group of national SPD delegates would have to clear the way for formal coalition talks, possibly in January, which would take several weeks. Any coalition pact would be put to a nationwide vote by party members, a scenario that means Merkel's new term might only begin in March.

If the SPD takes the plunge, a difficult task of aligning policies lies ahead. Schulz campaigned on greater European integration along the lines proposed by French President Emmanuel Macron, investment in infrastructure, more family-reunion rights for refugees and shoring up pensions.

Merkel is under pressure from conservatives in her bloc to avoid too many concessions.