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A coalition that smacks of desperation and political fatigue is on the verge of ruling Germany again. Only the populist parties are happy about it.

On Sunday, four months after Germany's inconclusive federal election, the centre-left Social Democratic Party (SPD) faces a crunch party vote in Bonn on whether to endorse formal coalition talks with Chancellor Angela Merkel's Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU).

While endorsement seems likely, the proposal is so fiercely opposed by the SPD's youth wing and the party's members on the left that a No vote cannot be ruled out, a scenario that would trigger another election or force Ms. Merkel into a lame-duck minority government. The sizeable rebel arm of the SPD does not want to see a revival of the same "grand coalition," known as GroKo, that formed the last government. It argues that the ailing SPD, led by the embattled Martin Schulz, needs a stint in opposition to renew itself, not another four years languishing in Ms. Merkel's shadow.

Ms. Merkel has been overseeing a caretaker government since the election, when the CDU/CSU took a beating in the polls, forcing it into coalition talks even as it remained the single biggest force in the Bundestag, the German parliament.

The vote's biggest winner was Alternative for Germany (AfD), the xenophobic, anti-Muslim nationalistic party on the far right that entered the Bundestag for the first time in September, shocking millions of liberal-minded Germans, some of whom labelled the AfD "fascists." AfD took 13 per cent of the vote, and 94 seats, enough to make it the top opposition party.

The eyes of all of Europe are focused on the vote and the outcome of the coalition negotiations. Germany is the European Union's economic powerhouse, a status only reinforced by Britain's exodus from the EU, and Ms. Merkel is the region's effective leader. The EU cannot endorse any ambitious strategies, from enacting a minimum corporate tax to a common refugee policy, without Germany's approval. At the moment, there is no effective German government, meaning nothing significant can be approved within Germany or the EU.

"Angela Merkel needs to make credible commitments but there is no strong government in place and she can't be a caretaker only," Pepijn Bergsen, the Germany analyst for the Economist Intelligence Unit, said in an interview. "And to be a bigger player in the world, Germany needs a stable government."

Indeed, Ms. Merkel is seen by many Europeans as the anti-Donald Trump, a calm, centrist leader who endorses liberal values, supports free trade, is open to immigration and pursues a non-aggressive, non-militaristic foreign policy (much to the annoyance of Mr. Trump, who accused Germany of shirking on its defence-spending commitments under NATO).

A revival of GroKo was the scenario that neither Ms. Merkel nor Mr. Schulz wanted. While coalitions are the norm in German politics, Ms. Merkel had hoped to win enough seats to allow her to form a partnership with a minor party, not the troublesome centre-left SPD, which had accused Ms. Merkel of taking credit for some of the SPD's initiatives, such as the introduction of a minimum wage.

In the event, "Merkel fatigue" set in, as did many Germans' desire to punish her for having opened the borders to a million asylum seekers in 2015.

While she won a fourth election, making her one of the longest-serving heads of government in the democratic world, the CDU-CSU lost 65 seats in the 709-seat Bundestag, taking it down to 246 seats. Mr. Schulz's SPD, a former political powerhouse that had controlled many post-Second World War governments, fared miserably, too; it lost 40 seats, taking it to a mere 153 seats, its worst showing since the war. When Mr. Schulz ruled out forming a new GroKo, Ms. Merkel tried to cobble together an unlikely alliance composed of the CDU/CSU, the pro-business and somewhat Euroskeptic Free Democrats (FDP) and the Greens.

In late November, the attempt fell apart after the FDP bolted. Disagreement on fundamental issues, such as immigration policy, was blamed. With a government, and her own party, in limbo, Ms. Merkel banged on Mr. Schulz's door. He reluctantly agreed to open coalition discussions. After having reached tentative, if vague, agreements on issues ranging from European integration to how Germany's fat budget surplus should be spent, Mr. Schulz agreed to put the coalition outline to a party vote. If he wins on Sunday, formal negotiations will start and are expected to wind up – or collapse – by Easter.

A new GroKo remains unwanted by the SPD party's young members and is largely unpopular among Germans. A recent poll found that only 40 per cent of respondents approved a new GroKo. Some Germans view a repeat of the old coalition (in diminished form) as emblematic of the waning power of the centre-right and the centre-left in general, and Ms. Merkel in particular. Together, the vote share won by the CDU/CSU and the SPD fell by 13 percentage points over the 2013 election.

The parties' leaders are seen by many Germans and commentators as tired and bereft of new ideas. "Merkel and Schulz will govern but won't inspire," Josef Janning, senior policy fellow at the European Council on Foreign Relations, said this week in a note. "This grand coalition will symbolize the beginning of the end of one era, rather than the launch of a new one."

The obvious beneficiary of the waning enthusiasm for a new GroKo is the AfD, which has been channelling ant-immigrant anger and the feeling among many conservative voters that Ms. Merkel steered her party too far to the left as she met some of the SPD's coalition demands.

Mr. Bergsen, of the Economist Intelligence Unit, says the AfD will profit from the extension of the stale Merkel-Schulz coalition, if it is formed. "This coalition would allow the AfD to go a bit further," he said. "Germans see this coalition as a debate killer in the Bundestag," adding that the AfD has been expert at exploiting security and immigrant-integration fears.

What seems certain is that Ms. Merkel's shabby result in the election, and the painful effort to form a government, indicate clearly that Europe's most durable leader is well past the peak of her power. One way or another, the Merkel era is winding down.

German Chancellor Angela Merkel's job is on the line as she embarks on five days of negotiations to form a coalition government with her party's rivals, the Social Democrats

Reuters

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