German Chancellor and head of the German Christian Democrats (CDU) Angela Merkel and Horst Seehofer, governor of Bavaria and head of the Bavarian Social Union (CSU), attend preliminary coalition talks at the Baden-Wuerttemberg state representation on November 19, 2017 in Berlin | Sean Gallup/Getty Images German coalition talks collapse Most likely scenarios include another election or a minority government in the EU’s largest country.

Germany was thrust into political disarray late Sunday as talks to form a new government collapsed, raising the prospect of a new election while clouding Angela Merkel’s future as chancellor.

Negotiations between Merkel’s conservatives, the liberal Free Democrats (FDP) and Greens ended abruptly just before midnight after FDP leader Christian Lindner said he saw no hope the parties could break a stalemate that had dogged the discussions for days.

“It’s better not to govern, than to govern badly,” Lindner told reporters as he left the talks in Berlin.

He added that despite weeks of talks, leaders of the parties had failed to build “a foundation of trust.”

Refugees and climate

Though it was clear from the outset the discussions would be difficult, given the significant ideological divide between the conservatives and Greens, party leaders insisted until late Sunday they were optimistic a deal could be reached. They initially set a deadline for last Thursday to reach a deal but extended it to Sunday evening. In the end, the talks became bogged down by differences over refugee and climate policy, among other issues.

The failure means Germany is unlikely to have a stable government for months, hobbling Berlin’s ability to make pressing strategic decisions on everything from foreign policy to eurozone reform. With Europe facing a host of serious challenges, including disputes over the rule of law in Poland and Hungary and Brexit, the political instability in the EU’s largest country could hardly have come at a worse moment.

The greatest uncertainty surrounds Merkel’s own future. Her failure to clinch a coalition with the liberals and Greens is likely to further weaken her standing in her party.

She exuded confidence about the prospects for a coalition throughout the talks, insisting as recently as Thursday she still believed the groups could resolve their differences.

Though she led the Christian Democrats to victory in the September election, they lost a substantial chunk of support compared to 2013. Criticism of her within the conservative ranks has been growing louder ever since.

Merkel’s personal popularity among Germans has remained high. Yet news of the talks’ failure is bound to unnerve many in a political culture that prizes stability. One big worry is that another round of elections and the picture of disarray left by the mainstream parties will only strengthen the far-right Alternative for Germany (AfD) party, which finished third in September with nearly 13 percent of the vote.

Whether Merkel is prepared to confront her critics and run what promises to be another bruising campaign is far from certain.

For now, her caretaker government with the Social Democrats (SPD) will remain in place.

“I will do everything I can to ensure this country is well led during these difficult weeks,” she told reporters early Monday.

No 'grand' out

The three-way constellation under discussion was the only viable coalition option after the SPD said it would not renew a so-called grand coalition with Merkel’s Christian Democrats.

Andrea Nahles, a senior SPD official, reiterated that stance late Sunday before the talks collapsed.

“We were ready to reach a compromise up until the last minute” — Green leader Cem Özdemir

Though the SPD and conservatives have governed together for eight of the past 12 years, many Social Democrats believe the arrangement eroded their party’s identity and blame the grand coalition for their poor showing in the September election.

It is up to President Frank-Walter Steinmeier to steer Germany out of the impasse. Under Germany’s constitution, the president plays a central role in establishing a new government, a process that is usually straightforward.

This time, Steinmeier has a narrow band of options. One would be a minority government with Merkel as chancellor.

Under such an arrangement, the conservatives would have to find partners to push through legislation on an ad-hoc basis. That would likely mean Merkel would find herself dependent on the AfD in some cases, an outcome she and her party want to avoid at all costs.

Even without that complication, minority governments are by definition unstable. Merkel has made no secret of her aversion to the idea. At the same time, Steinmeier has made it clear he’s not a fan of new elections.

"I expect all sides to live up to their responsibilities and this also means not to return the mandate to voters," Steinmeier told Germany’s Welt am Sonntag newspaper before the talks collapsed.

Elections, sooner or later

Still, if the SPD doesn’t reverse course, a return to the polls is almost inevitable. Even if Steinmeier, a former SPD vice chancellor and foreign minister, tried to force a minority government, Merkel could quickly dissolve it by calling (and losing) a vote of confidence.

In the meantime, the parties appeared poised to engage in a protracted blame game over who was responsible for the collapse of talks.

“A compromise would have been possible,” Green leader Cem Özdemir said early Monday. “We were ready to reach a compromise up until the last minute.”

Though the Greens, whose positions were furthest from the other parties, made a series of what they called “painful” concessions during the month-long process, it was ultimately not enough.

Green negotiator Jürgen Trittin accused the FDP of effectively sabotaging the talks on Sunday, saying both Merkel’s bloc and his party wanted to continue negotiating.

“It was the FDP that was ready to walk out,” he said on German television, adding, “we weren’t really surprised.”

Horst Seehofer, leader of the Christian Social Union (CSU), the Bavarian sister party of Merkel’s CDU, echoed that view, saying a deal was “within reach."

“An agreement would have been possible,” said Seehofer.

Yet it was Seehofer’s insistence that war refugees not be granted the right to bring relatives to Germany that bedeviled the talks more than any other issue.

Merkel, who was greeted by applause from her party’s senior ranks when she emerged from the talks, struck a more conciliatory note.

She said that while she regretted the liberals’ decision, she respected it.

“We tried everything,” she said.

Emma Anderson contributed to this report.