SPD leader Schulz paves way for coalition talks with Merkel

The Social Democratic Party (SPD) has decided to open preliminary talks with German Chancellor Angela Merkel's Christian Democratic Union (CDU) to form another grand coalition — though the center-left party was careful to underline that it wanted to keep open the possibility of a softer "cooperative coalition," while the CDU is mainly interested in forming a grand coalition.

The decision was announced at SPD headquarters in Berlin on Friday by leader Martin Schulz after a meeting of the party's 45-member leadership committee. "We will go into the talks openly and constructively," Schulz said in a press conference, before adding that the talks would begin at the start of January. The SPD has tentatively pencilled in a party congress on January 14, when it will aim to vote on the results of the exploratory talks.

Schulz said that he would meet Angela Merkel, along with other CDU and SPD leaders, before Christmas to discuss the form the talks would take. "The CDU is taking it seriously. We are also taking it seriously," Schulz said, though he was cautiously added that "there are different models of how a stable government can be formed."

Merkel for her part welcomed the move, saying she had "great respect" for the SPD's decision.

The announcement represents something of a climb-down for Schulz, who announced that the SPD would go into opposition in the immediate aftermath of a historically bad election result on September 24. But the CDU's subsequent failure to form a "Jamaica" coalition with the Greens and the pro-business Free Democratic Party (FDP) has left Germany at an unprecedented impasse, and the SPD voted last week to enter new talks.

But many in the SPD are wary about entering into another alliance with Merkel, with pundits blaming the party's slump in the polls on its failure to distinguish itself from the CDU during the last four years. The consensus for many inside and outside the party was that the SPD needed some time in opposition to reassess its policies and win back credibility in its base. 

For that reason, the Social Democrats want to make sure that any preliminary coalition talks keep various options open. So how could it pan out?

'GroKo' - Grand coalition

This currently seems like the mostly likely option, though in the current fluctuating situation that is no certainty. Some 68 percent of SPD supporters are in favor of a new grand coalition, according to a poll by public broadcaster ARD, though the "Juso" SPD youth wing and the left of the party are against it.

A grand coalition would also be the CDU's preference, since it would ensure a stable working majority in the Bundestag — though it would mean sharing the cabinet ministries with the SPD.

But this would also carry risks. Fatigue at the grand coalition's relentlessly centrist approach was perceived as one reason why both parties lost ground in September's election (the CDU lost 9 percentage points, while the SPD lost 5), and a continuation of the same policies — under Merkel's passive management style — could see Germany's biggest parties lose even more favor. Another problem is that this iteration of the grand coalition will be functioning on a much slimmer majority.

Read more: Opinion: Germany, a paralyzed nation

'KoKo' - Cooperative coalition

The left wing of the SPD is less keen on allying with Merkel, and suggested a kind of "open relationship" with the CDU. The SPD would get to keep a few ministries, and would agree a foreshortened coalition contract that would cover only basic issues — such as the budget and Europe policy. Other issues would remain open, and would allow both parties to try to build parliamentary majorities on a range of issues. The CDU is against the idea.

CDU minority government

In this scenario, which some in the SPD actually prefer, the CDU would take all the cabinet ministries and form a government on its own, with a "toleration" agreement with the SPD that would ensure agreement on basic issues like the budget, but would leave Merkel to try to seek majorities however she can from one issue to the next.