Germany’s Social Democrats, the country’s second strongest party, agreed Thursday (7 December) to kick off exploratory talks with Chancellor Angela Merkel’s conservatives that could lead to a new coalition government early next year.

The centre-left SPD approved “open-ended” talks expected to start next week that could lead to either a new right-left “grand coalition”, the toleration of a Merkel minority government or, if negotiations fail, new elections.

Ten weeks after inconclusive elections left German politics in a stalemate, SPD chief Martin Schulz had pleaded with his party to give him the green light for such talks, promising to push key demands from improving social welfare to strengthening the European Union.

“We don’t have to govern at any price, but we must not reject governing at all costs either,” Schulz told the Berlin congress of 600 delegates, many of whom loathe the idea of once more governing in Merkel’s shadow as the SPD has for the past four years.

Germany's SPD to move on talks to form new Merkel government Germany’s centre-left Social Democrats meet from Thursday (7 December) to decide on whether to help Chancellor Angela Merkel end a months-long political stalemate in Europe’s biggest economy.

Schulz, the former president of the European Parliament, vowed to extract a high price if the SPD supports Merkel for a fourth term from early 2018 at the helm of Europe’s biggest economy.

He demanded Berlin join French President Emmanuel Macron and other proponents of major EU reforms in boosting the bloc and its currency union, including by raising investment and giving the eurozone a common finance minister and budget.

The SPD motion said the party was “aware of its responsibility to our country” and “not indifferent” to whether a new government is formed, but pledged that any government that emerges must drive forward “the fundamental renewal of Europe”.

Many hurdles remain on the road to a new government in Berlin. Whatever the outcome of exploratory and then possible formal coalition talks, any deal will have to be agreed by SPD delegates and, finally, a rank-and-file vote.

‘United States of Europe’ by 2025

In his more than hour-long speech, Schulz made a passionate call for a “United States of Europe” by 2025, which will mark the 100th anniversary of an SPD meeting that first proposed such a federal union.

I want a new constitutional treaty to establish the United States of Europe. A Europe that is no threat to its member states, but a beneficial addition. — Martin Schulz (@MartinSchulz) December 7, 2017

This would include “a new constitutional treaty” that would be submitted to all EU member states for ratification. “Any state that won’t ratify this treaty will automatically leave the EU,” he added.

A convention shall draft this treaty in close cooperation with the civil society and the people. Its results will then be submitted to all member states. Any state that won’t ratify this treaty will automatically leave the EU. — Martin Schulz (@MartinSchulz) December 7, 2017

“Europe is our life insurance,” said Schulz. “It is the only chance we have to keep up with the other great regions of the world.”

Schulz said only a more united EU could meet major challenges such as combating climate change, managing mass migration or stopping multinational companies from dodging taxes.

He argued that only a strong EU would stop the advance of right-wing nationalists, citing gains they had made in Germany as well as Austria, Denmark, Finland, France and the Netherlands.

“If we don’t change course, if we don’t strengthen Europe in very practical and concrete ways, then these forces will win,” he warned, condemning the “right-wing radicals and pitiful German nationalists” of the far-right AfD party.

Commission wants single eurozone seat at IMF plan adopted by end of mandate The European Commission is pushing for the adoption, by mid-2019, of the proposal to create a unified seat at the International Monetary Fund, as part of its package to strengthen the economic and monetary union presented on Wednesday (6 December).

Merkel, asked about the “US of Europe” proposal at a press conference, gave a cautious reply.

She said she wanted to help “crisis-proof” the union but said her goal for 2025 was not a federation but better cooperation in fields such as defence, foreign and development policy, education and research and development.

The more outspoken Alexander Dobrindt, of Merkel’s Bavarian CSU allies, called Schulz a crusading “Europe radical” who wanted to abolish nation states within the next seven years, while the Greens labelled the target date “arbitrary”.

Lack of German government puts eurozone integration plans on hold The collapse of talks on a new German government means that the eurozone’s ambitious plans for deeper economic integration could be put on hold, officials said on Tuesday (21 November).

‘Crisis of trust’

For Schulz, a willingness to sound out a power pact with Merkel represents a U-turn after he repeatedly vowed to go into opposition following his party’s dismal showing in the September 24 elections.

Schulz only relented after Merkel’s talks with two smaller parties collapsed just over two weeks ago, sparking heightened political uncertainty.

At the start of the three-day congress, Schulz faced some fierce opposition from the party’s youth wing, which bitterly rejects the humiliating option of the SPD again playing second fiddle in a grand coalition.

Their leader, Kevin Kuehnert, warned that, after four election defeats in a row, joining another grand coalition would threaten the very existence of the party, and that the leadership’s backflip had sparked “a deep crisis of trust” among the base.

Schulz became the SPD’s top candidate a year ago but, after an initial surge in support, led the party to its worst showing since World War II, scoring just under 21 percent.

Schulz apologised for the poor result but said he could not “turn back the clock”, vowing to drive a rejuvenation of the SPD so “we can do a better job”.