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Key meeting on German chancellery

By Chris Burns
CNN

BERLIN, Germany (CNN) -- German Chancellor Gerhard Schroeder and conservative challenger Angela Merkel met face to face Thursday evening to negotiate who would lead a grand coalition government between their two camps.

But leaders on both sides predicted no decision until at least Sunday, and Schroeder's Social Democrats said coalition talks could drag on for weeks.

The meeting from 7 p.m. (5 p.m. GMT) to about 11 p.m. was the fourth round of exploratory talks since the September 18 national election in which Merkel's conservatives won by a narrow 1 percent plurality over Schroeder's Social Democrats.

The leaders left the talks without making any statements. Another round was planned for Sunday evening.

Talks up to now have deadlocked over who would be chancellor, and how much the conservatives' reforms would be compromised in such a deal.

The conservative Christian Democrats and Bavarian sister party Christian Social Union, or CDU/CSU, have only a four-seat plurality in parliament.

Unable to form a governing coalition among traditional allies, they are considering a so-called "grand coalition" with the Social Democrats, or SPD.

But the SPD had insisted that they are the largest party if the CDU and CSU are considered separately, and thus should keep the chancellery.

The conservatives have rejected the idea, though German media, including state radio, reported Thursday of a possible compromise in which Merkel would be chancellor and the Social Democrats would have the presidency of the Bundestag.

But at a Thursday afternoon news conference after a meeting of conservative leaders, Merkel responded to a reporter's question about the speculation: "It's not an issue."

She also sidestepped any specific questions about tax and other policy discussions.

The usually reserved Merkel joked with reporters asking her if there could be a decision at the Thursday evening meeting: "No information is planned tonight. You can calmly go out tonight," she grinned.

The SPD also denied a quick decision.

"Chancellor Schroeder will not resign Thursday," said Jan Almstedt, an adviser at the press office of the Social Democratic Party.

After a party meeting Thursday, SPD chief Franz Muentefering appeared to keep a hard line, saying Schroeder remained their chancellor-candidate, that coalition talks could take "a few weeks" and that a final agreement would have to be approved by a part convention that begins November 5.

Muentefering said the party leadership would meet on Monday to decide whether to go ahead with formal coalition talks with the conservatives.

"You can have a quiet weekend," he said.

The SPD chief said his side aimed to have, "A government that has Gerhard Schroeder at the head."

Though asked if he would present his party leadership on Monday a proposal for coalition talks that includes who would be chancellor, he was vague, saying he hoped he could present an "acceptable" proposal.

The SPD has played a high-stakes poker game since the election, insisting on the chancellery as they hold out for more concessions from the conservatives, who aim to slash taxes, spending and labor market rules to spur hiring and fight 11-percent unemployment.

Schroeder's party roared back from 23 points behind in the polls to 1 percent behind the conservatives in the election by attacking Merkel's program as too extreme.

Schroeder also reminded voters his seven-year-old government kept German troops out of Iraq and called on Washington to abandon the military option in pressuring Iran to halt its nuclear program.

Germany had a left-right grand coalition from 1966-69, credited for helping pull the country's then "economic miracle" out of a recession. Though critics say some of that government's measures on labor market reform are slowing the economy now.

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