Germany: Merkel's conservatives, rival Social Democrats begin preliminary coalition talks

German Chancellor Angela Merkel and the rival who came a distant second in last month's national election began preliminary talks Friday on forming the country's next government.

Neither Merkel nor Peer Steinbrueck gave any indication what the main points of discussion would be as they entered the talks. During the pre-election campaign Steinbrueck's center-left Social Democrats had called for a national minimum wage and tax increases on high earners — both of which Merkel's conservatives have rejected.

The two parties that make up Merkel's Union bloc won 41.5 percent of the vote but fell five seats short of a parliamentary majority. Her former coalition partner, the Free Democrats, failed to win any seats.

A coalition with the SPD, which won 25.7 percent of the vote, would have a healthy parliamentary majority and ensure Merkel a third term. But many grassroots Social Democrats and some in the party leadership are wary of again being the junior partner in a "grand coalition" like the one that governed Germany during Merkel's first term from 2005 to 2009.

Last week, SPD leaders said they would consult the party's 470,000 members before agreeing to any deal.

If Merkel fails to reach an agreement with the SPD she could cut a deal with the environmentalist Greens, who polled a disappointing 8.4 percent. But that is seen as less likely because the two parties have never had a coalition at the national level and are considered ideologically far apart on many issues.