German grand coalition plan in turmoil

Efforts to build Germany's grand coalition government descended into chaos on Tuesday as Edmund Stoiber, Bavarian premier, said he was no longer willing to join the cabinet of Angela Merkel, the chancellor-in-waiting.

Mr Stoiber's surprise decision not to become economics and technology minister means that Germany's unprecedented political crisis has now spread to the conservative parties following the unexpected resignation earlier this week of Franz Müntefering, leader of the Social Democrats, over an internal party power struggle.

Ms Merkel said on Tuesday night that she "accepted and respected" Mr Stoiber's decision, but could do little to hide fears in the Christian Democratic Union, her own party, that plans to form a coalition with the SPD could be falling apart.

Dieter Althaus, CDU premier of the state of Thuringia and a close Merkel ally, admitted that the coalition negotiations "are in a serious crisis".

In a statement in Munich, Mr Stoiber, chair of the Bavarian Christian Social Union, said Mr Müntefering's resignation as SPD chairman had led to his decision to remain Bavarian premier.

He said that, as SPD chairman and designated vice-chancellor, Mr Müntefering "would have acted as a pillar in the cabinet". But Mr Stoiber said the SPD leader's resignation "altered the political composition" of the planned government.

In a sign that he was distancing himself from the proposed coalition, he said "the direction and predictability of the SPD is no longer so clear", adding that this meant the basis on which he had planned to enter the cabinet "had changed".

Mr Stoiber was also annoyed that his proposals for a "super economics ministry", encompassing aspects of the economics, technology and finance portfolios, had been watered down by Ms Merkel, analysts said. There are now fears in the CDU that Mr Stoiber, who failed in the 2002 election to become chancellor and has strained relations with Ms Merkel, will attack the coalition from his Bavarian power base.

Adding to the political confusion in Berlin, SPD officials confirmed on Tuesday night that it was likely despite suggestions to the contrary that Mr Müntefering would still join the cabinet as vice-chancellor to Ms Merkel.

Officials close to Mr Stoiber said this would not affect his decision to remain in Bavaria. Mr Stoiber said that Michael Glos, the CSU's veteran parliamentary leader, would become economics minister. A decision on who will replace Mr Müntefering as party leader is expected today at an emergency meeting of the SPD's executive.

Ms Merkel used a live press conference on Tuesday to reassure Germans that the grand coalition would "fulfil the voters' mandate" arising from the September 18 election, in which the CDU/CSU emerged as the largest party in a hung parliament, narrowly ahead of the SPD.

Business leaders urged Germany's two largest parties to form a government as quickly as possible and criticised the SPD executive committee for triggering Mr Müntefering's resignation.

SPD and CDU leaders said they still aimed to conclude a coalition agreement by their self-imposed deadline of November 12, but would continue negotiating if this target was not met.

If they fail to reach an agreement, then both parties could try to form alliances with other, smaller parties. Fresh elections would be called if no coalition is formed.