Merkel Warns Of ‘Big Obstacles’ In Final Push For New Govt

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.”

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 center-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 labor party should once again govern in Merkel’s shadow.

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