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German coalition suffers a big setback

Incoming German chancellor Angela Merkel insisted late on Monday that she would continue her attempts to form a coalition government despite a bombshell decision to quit by the leader of the Social Democrat Party (SPD), the party she is in talks with.

SPD chairman Franz Muentefering, who has been named to serve as vice-chancellor and labor minister in the grand coalition government under conservative leader Merkel, signaled he may turn down the post after suffering a rebellion within his party's ranks.

"I left my decision open as to whether I would belong to the Cabinet after the next party congress" on Nov. 14-16, he said.

Muentefering, 65, decided to stand down as party leader after the unofficial leader of the SPD's left wing, Andrea Nahles, won a vote by the party's board to become the next general secretary, roundly beating Muentefering's hand-picked candidate.

"I can no longer be party chairman under these conditions," he told reporters.

Muentefering, who was viewed as key to holding together a potentially fractious coalition, put on a brave face late on Monday after leading the SPD through a fourth round of talks with Merkel's Christian Democrat (CDU/CSU) alliance.

"Our intention of forming a grand coalition still remains unchanged," he said, but conceded: "We face a complicated situation."

He said he would steer the SPD through the remainder of the negotiations and hoped the task would be completed before the SPD's congress, but refused to say how he saw his future beyond that date.

Merkel stressed her determination to carry on building the coalition despite the news.

"We intend to reach an agreement," she said after the talks.

Muentefering's shock announcements caused ripples on the other side of the negotiation table, with Merkel's key ally and economy minister-designate Edmund Stoiber hinting that his participation in the next government was also in doubt.

"We are now dealing with a changed political climate," Stoiber, the leader of the Bavarian sister party of the CDU, told reporters after the talks.

"Franz Muentefering was a cornerstone of the coalition and this has now changed. This has an impact and we now have to discuss it and see where we go from here."

Outgoing Chancellor Gerhard Schroeder of the Social Democrats appealed for calm and said Muentefering's decision should not be allowed to derail the negotiations, due to wrap up on Nov. 12.

"Germany needs a stable government, and in the current situation, only a grand coalition is possible," he said.

Merkel said she remained intent both on creating the so-called grand coalition and on making Stoiber her economy minister, a tough post given the woes besetting the German economy.

"There is a lot of work ahead but where there is a will there is a way," she said, adding that experts from the parties would meet in small groups on Thursday to thrash out "remaining points of contention."

"We will then plot the way forward for the last week of talks," she said.

The upheaval in the SPD came just weeks after an inconclusive general election on Sept. 18 in which neither the Social Democrats nor Merkel's party could muster a ruling majority.

The election deadlock prompted both Merkel and Schroeder to claim a governing mandate. Schroeder finally backed down in that standoff in mid-last month and has ruled out serving in the new government.
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