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The leader of the Social Democrats (SPD) Martin Schulz leaves after a joint meeting with Horst Seehofer, the head of the Bavarian Christian Social Union (CSU) and Chancellor Angela Merkel, hosted by the German President Frank-Walter Steinmeier, in Schloss Bellevue in Berlin, Germany, November 30, 2017. REUTERS/Axel Schmidt(reuters_tickers)
By Michelle Martin and Michael Nienaber
BERLIN (Reuters) - The leader of Germany's Social Democrats (SPD) said on Friday he ruled out no option for forming a new government but stressed that a re-run of the outgoing "grand coalition" with Chancellor Angela Merkel's conservatives was not a done deal.
Germany, Europe's political and economic powerhouse, has been struggling to build a new government since a Sept. 24 national election. Merkel's conservative bloc and the SPD lost support in that vote, while an anti-immigrant party surged into parliament, seriously complicating the coalition arithmetic.
Merkel, her own political future on the line after 12 years at the helm, is making overtures to the centre-left SPD - her partner in government over the past four years - after her bid to form a three-way coalition with two smaller parties failed.
The SPD, which had wanted to go into opposition to rebuild after suffering its worst post-World War Two election result, fears its distinctive identity and policy ideas will again be smothered in any tie-up with Merkel's bigger centre-right bloc.
"Regarding the formation of a new government, there was broad support for not ruling any option out," SPD leader Martin Schulz said after party board discussions in Berlin.
Schulz, who held talks late on Thursday with President Frank-Walter Steinmeier, Merkel and her Bavarian ally Horst Seehofer, denied he had agreed to another grand coalition.
"I can clearly deny the media report about me having given the green light for grand coalition negotiations. This is simply wrong," Schulz said, adding that the report appeared to be based on sources within Merkel's conservative CDU/CSU bloc.
He said whoever circulated such reports was damaging trust.
Malu Dreyer, an SPD member and premier of the state of Rhineland-Palatinate, said she was sceptical the SPD could agree a "convincing, substantive proposal" with conservatives.
"The majority (of the SPD) is against a new grand coalition," she told the General-Anzeiger and Rhein-Zeitung newspapers in an interview to be published Saturday.
Relations between the SPD and conservatives - who are still sharing power in a caretaker capacity - soured this week after a conservative minister backed continued use of a weedkiller at the European Union level against the SPD's wishes.
"We have a lot of options for building a government. We should talk about each of these options. That's exactly what I will propose to the party leadership on Monday," Schulz said.
The SPD will hold a party congress in Berlin on Dec. 7-9, where it is expected to debate its options.
NEW GOVERNMENT BY MARCH?
Other options apart from a grand coalition include a minority conservative government - which the SPD could support on a case-by-case basis, or fresh elections. Merkel has said in the past she does not want to lead a minority government.
Merkel's camp said the ball was in the SPD's court.
"It's now up to the SPD to provide clarity," said CDU manager Klaus Schueler. "The fact we underlined today that we are prepared to enter such talks with the SPD shows that we're aiming to bring these talks to a successful conclusion."
Another senior member of Merkel's Christian Democrat Union (CDU), Mike Mohring, said he was hopeful for an eventual grand coalition and expected a new government to be formed by March.
"The way for a grand coalition has been paved," Mohring told Reuters after taking part in a teleconference where Merkel had briefed the CDU federal board on Thursday night's talks with Schulz and the president.
Schulz, a former president of the European Parliament, is pushing for changes in Germany's approach to the European Union and in economic and social policy.
In an interview with Der Spiegel magazine, Schulz said the SPD backed French President Emmanuel Macron's call for closer eurozone integration, including a new finance minister for the currency bloc - ideas that face resistance from conservatives.
"Giving Emmanuel Macron a positive answer will be a key element in every negotiation with the SPD," Schulz was quoted as saying in the interview made available on Friday, adding that he also backed a joint EU tax policy.
(Additional reporting by Andreas Rinke and Andrea Shalal; Editing by Gareth Jones/Mark Heinrich)