Merkel faces tough talks on new government

1 / 5
German Chancellor and chairwoman of the German Christian Democratic party, CDU, Angela Merkel, smiles as she arrives for a party's board meeting in Berlin, Monday, Sept. 23, 2013. Top party officials are meeting to talk strategy about reaching out to the center-left rivals they need to form a government, after Merkel won a stunning victory in Germany's elections on Sunday. (AP Photo/Michael Sohn)

BERLIN (AP) — German Chancellor Angela Merkel may have won an impressive third general election but she faces a delicate and lengthy task in forming a new government as party leaders met Monday to map out their next steps.

Merkel's Union bloc achieved its best result in 23 years Sunday to put her on course for a third term, winning 41.5 percent of the vote and finishing only five seats short of an absolute majority in the lower house. However, Merkel's pro-business coalition partner since 2009 crashed out of Parliament.

Germany has no tradition of minority governments, so Merkel looks likely to end up leading either a "grand coalition" with the center-left Social Democrats of defeated challenger Peer Steinbrueck — reviving the alliance that ran Germany in her first term. Less likely would be a coalition with the environmentalist Greens.

"We will provide our country with a strong government," Volker Kauder, the leader of the conservatives' parliamentary group, pledged on ARD public television before party leaders met.

Markets were fairly subdued in their response to the election results given the likely haggling over the formation of a government in the coming day and weeks. Frankfurt's DAX index of leading shares was barely changed Monday morning, slipping 0.1 percent at 8,670.

"The formation of a government is not straightforward at all," said Peter Schaffrik, an analyst at RBC Capital Markets. "If finding a new government takes too long, markets might get jumpy as regards the stability of the German government, particularly with key European issues coming up for a negotiation."

In 2005, it took more than two months after an indecisive election before Merkel was sworn in as the chancellor of her first "grand coalition."

Merkel's coalition partners in the last government, the Free Democrats, won only 4.8 percent of the vote. They had needed to win 5 percent to claim seats in Parliament, falling short for the first time in Germany's post-World War II history.

Several weeks of negotiations are expected, whether Merkel forms a coalition with the Social Democrats or with the Greens, who also lean to the left.

An alliance with the latter would be particularly complicated — there's only ever been one conservative-Green state government, in liberal Hamburg, and it collapsed. There are wide cultural and economic differences between the two parties.

"If Merkel wants, we can of course have exploratory talks with each other," Green chairwoman Claudia Roth told Phoenix television. But she said it would be difficult — "we are not a party that, because Merkel is missing a few votes, will clean up after a lost coalition partner."

"How are things supposed to go in the right direction with the (conservatives), who really stand for a completely different approach to politics," she asked?

During the campaign, Merkel rejected calls from the center-left parties for tax increases on high earners and a mandatory national minimum wage. She argued that both would hurt the economy.

The Social Democrats and Greens have also been critical of her approach to the eurozone debt crisis, though they voted for her policies in Parliament. A "grand coalition" might result in a somewhat greater emphasis on bolstering economic growth in Europe over the austerity that Germany has insisted on in exchange for bailing out economically weak countries such as Greece.

Merkel's conservatives finished far ahead of Steinbrueck's Social Democrats, who won 25.7 percent of the vote — not much better than the post-war low of 23 percent they hit four years ago. The Greens polled a disappointing 8.4 percent, while the hard-line Left Party scored 8.6 percent.

Although the three parties on the left together hold a thin parliamentary majority, the center-left parties are ruling out governing with the Left.


Geir Moulson contributed to this report.