Rivals hold new talks on resolving German political crisis

The parties of German Chancellor Gerhard Schroeder and conservative rival Angela Merkel opened a third round of talks Wednesday on forming a possible coalition, seeking to end a two-week political crisis and resolve a deadlock over who should lead Europe's biggest economy.

Both Schroeder's Social Democrats and Merkel's Christian Democrats insist they are willing to enter formal coalition talks after each failed to secure a majority in Sept. 18 parliamentary elections. But the conservatives demand that Schroeder's party drop its campaign to prolong his seven-year term.

While Schroeder has signaled he would step down if his party tells him he must, the Social Democrats have stuck to their claim that he should lead any new government.

Merkel's Christian Democrats and the Bavarian Christian Social Union argue that since they are the largest parliamentary bloc, their candidate should be chancellor, and that detailed talks make no sense until the matter is settled.

Dieter Althaus, a senior conservative, said the two parties would have to delay more detailed negotiations if the Social Democrats do not give in.

"This situation is unknown in Germany, that two who are the same size discuss whether to form a coalition," said Social Democratic chairman Franz Muentefering, who has argued that the leadership question should be addressed in formal coalition talks. "Anyone setting preconditions is not doing justice to the challenge."

Failure to agree could leave Germany with a weak minority government at a time when many are calling for potentially unpopular action to fix the economy - or more turmoil through new elections. Both parties publicly oppose that, saying Germany needs stable leadership quickly to tackle its high unemployment, sluggish growth and budget deficits and provide leadership in the European Union.

Merkel and Schroeder are negotiating over a so-called "grand coalition" because neither won a majority for their preferred coalition in inconclusive Sept. 18 elections, the AP reports.