A top aide to Chancellor Angela Merkel said a partnership with the environmental Green party is realistic, potentially raising the pressure on the opposition Social Democrats as weeks of coalition talks loom. Merkel's Christian Democratic Union and the Bavarian Christian Socialists will hold exploratory discussions with the leadership of the Greens on Oct. 10. While the factions would have to overcome differences on tax policy, Peter Altmaier, the CDU environment minister and Merkel confidant, said the prospect of forming a government with the Greens is greater now than it was after the Sept. 22 parliamentary elections. "The chances for an alliance with the Greens have gone from ‘theoretical' to ‘conceivable' in the last few days," Altmaier told Der Spiegel. "The conditions have to be right in the end. The tax issue will be very central." Talks with the Greens may shake up the political dynamic, giving Merkel more leverage in negotiations as she seeks first to establish common ground with the Social Democrats and form a "grand" coalition for her third term as chancellor. A partnership with the Greens may present the only alternative to a grand coalition short of attempting a minority government or holding new elections. The CDU and CSU held exploratory discussions with the SPD on Oct. 4 and will regroup on Oct. 14. At last week's three-hour meeting, Merkel's bloc and the SPD declined to tackle the policy areas of greatest contention. The 21 negotiators opted instead to hold more detailed discussion of matters such as taxes at their next gathering. ‘Open-Minded' Merkel's talks with the SPD took place in an "open-minded atmosphere," Andrea Nahles, the party's general secretary, told reporters after the first meeting. Nahles last week held out the prospect of coalition talks lasting until January. With 311 seats in the 630-seat lower house, or Bundestag, Merkel's bloc is five short of an absolute majority. CDU and CSU leaders have largely ruled out a minority government, which means that Merkel will have to find a coalition partner in the SPD or Greens to avoid new elections. Tax policy is emerging as a key sticking point to coalition building, with SPD members calling on Merkel's party to drop its opposition to income-tax increases. Daunting Negotiations SPD Chairman Sigmar Gabriel over the weekend stopped short of making tax increases a condition for the SPD, telling Bild newspaper that an increase "isn't an end in itself." The party campaigned on the premise that higher taxes are necessary to reduce government debt and to increase spending on education and infrastructure, Gabriel said. "If the CDU and CSU don't want that, they have to explain what alternatives there are for financing these responsibilities," Gabriel told the newspaper. Negotiations with the Greens on taxes could prove more 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. Former Green leader Joschka Fischer, Germany's foreign minister under Chancellor Gerhard Schroeder, called the party's "leftist path" a "fatal mistake." Speaking to Spiegel Sept. 24, Fischer criticized party leaders for "not only failing to win new voters, but also scaring away lots of old voters." Trittin, the co-chairman of the Greens' parliamentary caucus, said he won't seek another leadership post after the party won 8.4 percent of the vote, down 2.3 percentage points from 2009. Exploratory Talks Green leaders have supported exploratory talks with Merkel's CDU. Winfried Kretschmann, the Green premier of the southwestern state of Baden-Wuerttemberg, has said he favors showing voters that the party is able to govern. Members of the CDU leadership have also urged the party to take any talks with the Greens seriously. Some CDU officials reached out to individual Green leaders last week to assure them that the party's overtures were substantive rather than tactical, Frankfurter Allgemeine Zeitung reported Oct. 4, without saying where it got the information. Mike Mohring, a member of the CDU's board and leader of the party's assembly caucus in the eastern state of Thuringia, has been outspoken in favor of a Merkel-Green coalition, warning against an outsized grand coalition. "The CDU and the Greens are close together" on issues such as sustainability, education and energy, Mohring told Thueringische Landeszeitung the day after the election. 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." Energy Policy While the Greens are calling for faster expansion of renewable energy and municipal ownership of power generation, Merkel prefers a more market-based approach to rein in prices. The biggest difference lies in tax policy. The Greens campaigned 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 dug in on its rejection of hikes. Merkel's current partner, the pro-business Free Democrats, failed to win any seats after missing the 5 percent threshold. The SPD has 192, the Greens 63; the anti-capitalist Left Party, with which the main parties have refused to negotiate, has 64. Source : bloomberg
