Merkel warns of 'big obstacles' as coalition talks come down to crunch
Chancellor Angela Merkel said Germany's top parties still had "big obstacles" to surmount before reaching a new coalition deal, ahead of a last-ditch round of negotiations Thursday.
The veteran leader, who is battling to form a new government to salvage her political future, warned it would be a "tough day" of talks, which were expected to stretch well into the night.
She said her conservative Christian Democrats would "work constructively to find the necessary compromises but we are also aware that we need to execute the right policies for our country".
September's inconclusive elections left Merkel without a majority and struggling to find partners to govern Europe's biggest economy.
After her earlier attempt at forging a coalition with two smaller parties collapsed, she is now pinning her hopes on renewing an alliance with the Social Democrats (SPD).
SPD leader Martin Schulz also spoke of "big obstacles" as he arrived for the final day of preliminary talks on whether there is enough common ground to move on to formal coalition negotiations.
He said his party wanted to ensure that the new government committed "above all to working toward renewal of the European Union".
However, he sounded a more upbeat note than Merkel, saying there was "broad agreement on the fundamentals of European policy".
The chancellor badly needs the talks to succeed, as do Schulz and the leader of her Bavarian allies, Horst Seehofer, said political analyst Karl-Rudolf Korte of Duisburg-Essen University.
"The negotiations are not just about a coalition, but also their careers.
It would be the end for all three if this coalition does not come about," he told public broadcaster ZDF.
Late on Thursday the parties are due to declare if they will push on with efforts to forge a new government by around March or April.
Along the way, negotiators need to compromise on policy differences -- the SPD is seeking welfare gains while the conservatives are pushing for tax cuts as Germany's public coffers bulge.
As the clock ticks into a fourth month of political paralysis in Germany, Berlin's biggest EU partner France waded in, with its Finance Minister Bruno Le Maire on Wednesday echoing the SPD's demand for greater investments from Berlin.
Beyond fiscal and spending issues, the parties are struggling to fend off the encroaching far-right, which has seized on anger over the influx of refugees and netted a record showing at the polls in September.
To halt a haemorrhage to the far-right, Merkel's alliance wants a tougher stance on immigration, something that is hard to sell to the centre-left SPD.
Even if negotiators find a deal, it can still be torpedoed when SPD delegates and later rank-and-file members get to vote on whether the traditional labour party should once again govern in Merkel's shadow.
SPD vice chairman Ralf Stegner underlined the great uncertainty about a possible deal, tweeting that "scepticism was, is and remains justified".
The SPD's youth wing chief Kevin Kuehnert is also energetically running a resistance campaign against any agreement with the conservatives.
"I am very optimistic for the party congress: we can still stop the grand coalition," Kuehnert told Spiegel weekly.
The SPD's youth movement leader believes that governing for another four years under Merkel would deal a death blow to the Social Democrats, who were slapped with a historic low score in September's elections.
Instead, Kuehnert favours the option of a minority government led by Merkel, even though her conservatives have rejected that option as too unstable.
Latest opinion polls suggest that a potential new grand coalition enjoys little favour with Germans.
A survey published by Focus magazine found that 34 percent of Germans prefer new elections, while only 30 percent favoured a return of the conservative-SPD alliance.
Another poll published by public broadcaster ARD found that only 45 percent of Germans view a new grand coalition positively, while 52 percent considered it a bad option.
And a third survey, for business paper Handelsblatt, showed that a majority - 56 percent - believed Merkel would not see out her four-year term.