Angela Merkel's Christian Union (CDU/CSU) are currently in talks with the Green party and the Free Democrats (FDP) to form a new government.
Elections at the end of September left the Union and their coalition partners the Social Democrats (SPD) badly weakened, meaning the SPD refused to contemplate joining a new government.
Merkel has thus been left with no choice but to try and forge together an awkward alliance of environmentalists, a business party and arch conservatives from Bavaria. If it happens, it will be the first time a three-way coalition has ever been formed on the federal level of German politics.
But that is still a big “if.” The parties entered the talks back in mid-October knowing that they were miles apart on major policy issues from the environment to refugees.
Initially, party leaders engaged in sabre-rattling, publicly insulting one another while insisting loudly on certain core demands.
Recently though, the parties have started to make concessions. The Greens backed down on demands that Germany immediately shut down 20 coal power stations and started fudging pledges on ending petrol engines by 2030. The Free Democrats, meanwhile, dropped their demand for a €30 billion reduction in the tax burden.
Some commentators have suggested that this is following the script of German coalition talks: parties play hard to get, signalling to their own voters that they are sticking to their guns, before graciously making concessions for the sake of the national interest.
Concrete progress has been made on reducing the chemicals used in the agriculture sector and on adding 7,000 extra police personnel in the next legislative period.
Still, not everyone is so sure that a deal will be reached by Friday. The SPD said earlier this week that they are already preparing to fight another election. Meanwhile the Green party and the conservatives from Bavaria's CSU continue to accuse the other of deliberately sabotaging the talks. According to Die Zeit, there is still disagreement on over 30 policies, from cannabis legalization to pensions for mothers.
But the least progress has been made on these four key policy areas.
Christian Lindner. Photo: DPA
Coal power stations
Germany committed itself at the Paris Climate summit in 2015 to reduce its carbon footprint by 40 percent in comparison with 1990 by the end of the decade.
One might ask how an international agreement to which the government is a signatory can become a point of contention. But Germany has done such a bad job of reducing emissions that it would have to cut C02 output by 12 percent in three years, something the FDP claim would put hundreds of thousands of jobs in danger.
“You can't just close down whole industrial sectors and ban cars - that's unimaginable for an industrial country such as Germany. We weren't elected to take away hundreds of thousands of jobs,” FDP deputy Wolfgang Kubicki said last week.
The Greens want to shut down Germany's 20 oldest coal power plants by the end of 2020 and are refusing to accept a compromise offer from the other parties of ten shut downs.
The environmentalist party have backed down on a demand for a complete closure of all coal plants by 2030. But there are still gaps here. Both the Union and the FDP don't want to rely primarily on state intervention to achieve Germany's climate goals, saying solutions should be left to the private sector.
According to Die Zeit, a tax on C02 could provide a solution which all parties can agree on.
The CDU and CSU are determined to have their agreement on an upper limit of 200,000 refugees arriving in the country every year be included in the coalition agreement. This would include family members who join refugees at a later date.
Merkel's party also don't want any war refugees to be able to reunite with families in Germany, meaning this right would only be enjoyed by refugees who are personally persecuted.
The Greens say that all refugees should have the right to reunite with their families and have not moved on this position since talks began last month.
Speaking to the Rheinische Post on Wednesday, Green leader Katrin Göring-Eckardt said the CSU needed to "loosen up," adding that the conservatives should respect the importance of the family.
But the Greens are isolated on this one.
“Only very few people would have the right to bring their families to Germany,” FDP leader Christian Lindner said on Wednesday. “I don't see any way of compromising further with the Greens."
The parties have also failed to agree on the question of asylum centres. The Union want to build asylum centres in every German state. Refugees would live in these while their case is considered. If they are rejected they will be deported straight from the centre. The Greens are reluctant to support this proposal.
Green party leaders Cem Özdemir and Katrin Göring-Eckardt. Photo: DPA
All the parties agree that more money needs to be invested in training and equipment for German soldiers.
The Union have made a clear commitment to spending 2 percent of GDP on the military, as stipulated in a NATO agreement of 2015. The Union want military spending to be increased year-on-year until 2024 and also foresee a gradual increase in the budget for developmental aid to 0.7 percent of GDP.
The Greens are the awkward ones again on this issue. In their manifesto they clearly state that they reject spending around €30 billion on the army when this could instead be spent on ecological and digital projects.
EU finance minister
It isn't just the Greens against the rest though. On the question of EU powers, it is the FDP who find themselves at odds with the other people at the negotiating table.
French President Emmanuel Macron's big idea for the reform of the EU is the creation of an EU finance minister. The finance minister would have budgetary powers inside the Eurozone.
Merkel has recently suggested willingness to go along with the idea, but has been much more vague about what competencies such a finance minister would have. The Greens are open to further European integration and wouldn't oppose this policy.
But the FDP are dead against handing Brussels further powers, and bureaucrats in Brussels are said to be fearful of the prospect of FDP leader Christian Lindner becoming finance minister.
In the first three rounds of talks the parties were unable to find agreement on this big question. All they could do was make a vague commitment to Germany being pro-European.
With these talks taking German politics into uncharted territory, it's anyone's guess whether a deal will eventually be struck.