(Updates to add Groehe statement in third paragraph.)
Oct. 7 (Bloomberg) -- German Chancellor Angela Merkel’s party allies said a partnership with the environmental Greens is realistic, raising pressure on the Social Democrats as SPD leaders showed signs of compromise on proposed tax increases.
Jostling over policies and positions continued over the weekend after Merkel’s Christian Democratic Union and their CSU Bavarian allies agreed to hold a second round of exploratory talks on forming a coalition with the Social Democrats on Oct. 14. Before then, on Oct. 10, Merkel’s bloc will hold initial discussions with the Greens.
“We’re approaching these talks with the same seriousness as we do with the Social Democrats,” Hermann Groehe, the CDU’s general secretary and a member of his party’s seven-person negotiating team, told reporters today in Berlin. He said the party didn’t pre-judge any outcome with the Greens.
Negotiations with the one-time protest party offer the prospect of a governing constellation untried at federal level while giving Merkel more leverage in her talks with the Social Democrats. After winning re-election on Sept. 22, the chancellor is first seeking to establish enough common ground with the SPD to form a “grand coalition” for her third term, mirroring her first term from 2005 to 2009.
While tax policy is a sticking point, SPD Chairman Sigmar Gabriel signaled flexibility on his party’s election platform of an increase in the 42 percent income-tax rate to 49 percent, plus introduction of a “wealth tax.”
Higher taxes are necessary to reduce government debt and to increase spending on education and infrastructure, Gabriel told Bild newspaper, yet an increase “isn’t an end in itself.”
Gabriel’s comments show that the SPD will “have to move” in negotiations, Stanislaw Tillich, the CDU prime minister of Saxony state and another member of Merkel’s negotiating team, told reporters today. The SPD is coming to realize that “some positions are incompatible” with Merkel’s bloc, he said.
With 311 seats in the 630-seat lower house, or Bundestag, Merkel’s CDU/CSU bloc is five short of an absolute majority. CDU and CSU leaders say they favor a “stable” coalition, ruling out a minority government and meaning that Merkel will have to find a partner in the SPD or Greens to avoid new elections.
A partnership with the Greens presents the only alternative to a grand coalition. While the factions would have to overcome differences on tax policy, Peter Altmaier, the CDU environment minister and a Merkel confidant, said the prospect of forming a government with the Greens is greater now than it was immediately after the election.
“The chances for an alliance with the Greens have gone from ‘theoretical’ to ‘conceivable’ in the last few days,” Altmaier told this week’s Der Spiegel magazine. “The conditions have to be right in the end. The tax issue will be very central.”
Negotiations with the Greens on taxes could still prove daunting. The Greens under lead candidates Juergen Trittin and Katrin Goering-Eckardt centered their campaign on a call for tax increases for the wealthy, a strategy that many in the party blamed for its losses in the polls.
The Greens aim to raise the top income-tax rate to 49 percent on incomes above 80,000 euros ($108,000) from as low as 42 percent. Merkel railed against proposed tax increases throughout the campaign as “poison” for the economy, and her party’s leadership has dug in on its rejection of hikes.
Claudia Roth, the Greens co-leader who spoke in favor of a coalition with the Social Democrats at the SPD party convention in April, said in Berlin today that her party will enter into exploratory talks with Merkel “on the basis of the program for which we were elected,” even though she was skeptical of the chances of success.
Fellow Greens leader Cem Oezdemir told reporters that tax increases were “never axiomatic” for his party, though without them it’s hard to see how needed infrastructure improvements can be paid for, he said.
Other Green leaders have been more supportive of coalition talks. Winfried Kretschmann, the Greens premier of the southwestern state of Baden-Wuerttemberg, has said he favors showing voters that the party is able to govern.
Some CDU officials reached out to individual Green leaders last week to assure them that the party’s overtures were substantive rather than tactical, the Frankfurter Allgemeine Zeitung reported on Oct. 4, without saying where it got the information.
The Greens and Merkel’s faction both stress the urgency of accelerating Germany’s shift toward renewable energy as the country plans to shut its nine remaining nuclear reactors by 2022, a process known as the “Energiewende.” While the Greens are calling for faster expansion of renewable energy and municipal ownership of power generation, Merkel says she prefers a more market-based approach to rein in prices.
Even as Bild reported that Merkel plans a meeting on Oct. 11 to discuss the schedule for possible coalition talks with SPD leader Gabriel and CSU chief Horst Seehofer, a potentially more substantive barrier was erected by SPD lawmaker Johannes Kahrs. Kahrs, who leads a market-oriented faction within the SPD, told Die Welt that his party assuming control of the Finance Ministry in a grand coalition was “non-negotiable.”
That assertion drew a rebuke from Volker Bouffier, the CDU state premier of Hesse and a member of the negotiating team, who said that “now is not the time” to discuss cabinet posts. Instead of other parties making demands and setting conditions, “I’d like to read a bit about how the others think that they might give in a bit on their positions,” Bouffier said.
Andrea Nahles, the SPD’s general secretary, said that Kahrs was speaking for himself and not on the behalf of the party.
“We have to keep our options open,” Annegret Kramp- Karrenbauer, Saarland’s CDU prime minister, told reporters in Berlin. “At the end of the day, we have to see with whom we can best carry out our policy priorities for Germany.”
--With assistance from Tony Czuczka, Stefan Nicola and Birgit Jennen in Berlin. Editors: Alan Crawford, Eddie Buckle