German Chancellor Angela Merkel said on Tuesday she was ready to make "painful compromises" as negotiators from her conservative bloc and the Social Democrats rushed to clinch a coalition government deal after months of political uncertainty.
The impending coalition deal, however, seems to take an unusual swipe at Israel over its Judea and Samaria settlement enterprise, even though the draft agreement reiterates the fact that "Israel's right to exist is irrefutable for us and a pillar of German politics."
Both sides had billed Tuesday as "decision day" but were still negotiating late into the evening on the stance of any future coalition on reform of the healthcare system and job contracts.
Merkel's failure to cobble together a government more than four months after a national election has raised concerns among investors and its allies at a time when Europe is facing multiple challenges – including eurozone reform and Britain's departure from the EU.
"Each of us will have to make painful compromises and I am ready for that," Merkel told reporters.
"When we see the movements on the stock markets over the last hours, we live in turbulent times and what is expected of us as popular parties … is that we form a government for the good of the people, one that brings stability," she said.
Germany could face a new election or an unprecedented minority government if Social Democratic Party (SPD) members – who must approve any final coalition deal – vote it down.
Andreas Scheuer, secretary general of the Christian Social Union, Merkel's Bavarian ally, said there was no chance of extending the talks beyond Tuesday. "So we have to come to an agreement tonight. Anything else would be unreasonable for our citizens."
Two negotiating sources later said the parties had come closer together over health policy, but Hans Michelbach, another senior CSU member, cautioned that the talks would probably last a "very, very long" time.
The two blocs also took an unusual swipe at Israel over its Judea and Samaria settlement enterprise, but the draft coalition deal underscored that "Israel's right to exist is irrefutable for us and a pillar of German politics."
German governments have made strong relations with Israel a priority since World War II, when 6 million Jews were killed by the Nazis. But relations have grown tense in recent years as Germany questioned Israeli Prime Minister Benjamin Netanyahu's commitment to a two-state solution with the Palestinians.
Germany has had a caretaker government since the Sept. 24 election returned no clear outcome and even if the parties agree to a coalition deal, the SPD's roughly 464,000 members will get the final say on whether to go ahead.
The SPD, which had initially vowed to rebuild in opposition, has seen an influx of new members hoping to get a chance to have their say on any coalition agreement, with more than 24,000 new members joining since the beginning of the year, SPD General Secretary Lars Klingbeil said.
Some conservatives fear that rushing ahead with European integration would be too costly to German taxpayers – concerns fuelled by former European Central Bank chief economist Otmar Issing, who described the January coalition blueprint as "a farewell to the idea of an EU aimed at stability."
An Insa poll on Monday showed support for the SPD dropping to 17%, below its election result of 20.5%. The conservatives slipped to 30.5%, suggesting there would be no majority for a grand coalition if an election were held now.
