Merkel's conservatives keen, but SPD still coy on German government talks

Weakened by heavy election losses to the far-right and then by the collapse last month of talks on a three-way alliance, Merkel is pinning her hopes on the SPD for a fourth term as chancellor and to avoid new elections.

Leaders of Merkel's Christian Democrats (CDU) and her Bavarian conservative allies (CSU) sought to persuade their SPD counterparts to drop their objections to a renewal of the "grand coalition" the two parties have been governing in since 2013.

"The CDU and CSU representatives made clear that they wanted to begin exploratory talks with the SPD on creating a stable government," the conservative camp said in a statement.

But an SPD official said the party first needed to hold consultations before announcing a decision on Friday. After four years of governing with Merkel, the centre left party scored its worst election result since 1933 - and few members want to repeat that experience.

Sensing that Merkel's lack of alternatives leaves it in a strong position, the SPD has said it would agree to share power only if it wins commitments on more generous social policy.

"A decisive point for the SPD is that the social agenda has more prominence in Germany," leading Social Democrat Carsten Schneider told German television ahead of the talks, demanding "fairness for ordinary heroes."

But the mood between the two parties is still sour and Merkel herself has been a frequent target of criticism by the Social Democrats.

The secrecy surrounding the talks underlined their sensitivity. With both sides having a lot to lose, the parties plan no public statements when talks conclude on Wednesday evening.

SPD leader Martin Schulz has made a pitch for EU integration leading to a "United States of Europe" by 2025, and the SPD wants a big spending boost on education, more nursery spots and a big healthcare reform. Merkel wants to maintain Germany's solid finances, cut some taxes and expand the digital infrastructure.

The SPD had vowed to go into opposition after its dismal election result and only softened its approach, agreeing to meet Merkel, due to pressure from President Frank-Walter Steinmeier, who wants to avoid new elections.

The SPD pulled no punches in attacking Merkel during the election campaign. Schulz has described Merkel, known for pragmatism rather than vision, as a vacuum cleaner of ideas and has also accused her of silencing debate on issues.

A row last month over a conservative minister breaking protocol to back an extension for an EU licence for a weed-killer despite SPD opposition hurt ties at a crucial time.

One of the SPD's deputies, Ralf Stegner, adopted a combative tone on Wednesday, saying nobody could dictate the terms to the SPD as the conservative bloc needed the party to rule.

Some in the SPD are prepared to contemplate another grand coalition, albeit with a clear SPD signature, but others prefer the idea of tolerating a minority government under Merkel.

One other option is a "KoKo" (cooperation coalition) agreement under which the SPD would agree to work with Merkel in some areas, such as the budget and European and foreign affairs, but force her to seek ad-hoc majorities for other policies.

This idea is unpopular with conservatives who prefer a grand coalition.

"We have to try it - but please, seriously," Carsten Linnemann, head of a group representing small and medium-sized businesses in the conservative bloc, told ARD television.