Berlin (CNN)Four months after Germans went to the polls, the country still doesn't have its new government in place. And Thursday may be the last chance for Chancellor Angela Merkel to strike a deal or face the prospect of a new election.
Why Germany still doesn't have a new government, four months after vote
A historically poor showing for Merkel's Christian Democratic Union (CDU) in September's vote has left the Chancellor scrambling to hammer out an agreement with the second largest party in parliament, the center-left Social Democrats SPD.
Going into the final round of "exploratory talks" between the parties, Merkel appeared upbeat but admitted that there were still "major obstacles" to overcome.
"We have done a lot of preparatory work but there are still major obstacles to clear," she told reporters Thursday. "This will be a hard day. But I'm starting this day with a lot of energy because we know that people expect us to find solutions".
The party's leaders are all too familiar with each other. The so-called "grand coalition" between the CDU and SPD has been in power for the last 12 years, and it has lost its luster with German voters.
Despite winning the most votes in the September election, both the CDU and the SPD suffered a record loss of voters. A recent poll from public broadcaster ARD showed that 52% of respondents did not think another grand coalition was a good idea.
A grand coalition would also leave the controversial Alternative for Germany as the lead opposition party in parliament. The AfD's virulently anti-immigration platform proved popular with voters. Founded in 2013, the AfD surged into third place in September's election, the first time in decades that a far-right, openly nationalist party had won seats in Germany's federal parliament.
Immigration is a key issue in coalition talks. Conservative critics in the CDU have blamed their election losses on Merkel's 2015 decision to allow as many as a million refugees into the country, and they are looking to put a cap on immigration and cut back on refugee benefits.
The SPD, on the other hand, is strongly opposed to restricting immigration and benefits. Instead, party negotiators are hoping to score concessions on labor, health and education as well as greater integration with the European Union. The party's leader, Martin Schulz, envisions Germany as part of a "United States of Europe."
Even if the CDU and SPD agree to move on to coalition talks, there will still be months of negotiations ahead as the two parties carve up ministerial portfolios. April or May is the earliest a new government could be in place.
But if no deal is reached between the two parties on Thursday, Germans may have to go to the polls again -- an uncertain outcome for a country that prides itself on its stability.