Christian Lindner (FDP Chairman) announcing that the Liberals are walking away from exploratory coalition talks.

After eight long weeks since the federal election, the outlook for politics in Germany seems bleaker than ever. An election that saw the rise of right-wing populism in form of the Alternative for Germany (AfD) now has resulted in a situation that once seemed reserved for countries like Italy or Belgium: with nothing more than an interim government and no prospective coalition in sight.

After the liberal FPD vacated the negotiation table late Sunday night, the idea of a three party coalition between the CDU/CSU, the Greens and said liberals is off the table for good. After four weeks of exploratory talks, which were as much an extended trust building exercise as they were contract negotiations between embattled partners, the bridges are burnt. Tales of the events are spun already.
For the FDP, their decision to not enter a coalition supposedly was a matter of principle. The Liberals are wary of the experience of their last government under Chancellor Merkel, when they were marginalized and failed to re-enter the Bundestag in subsequent elections. Even though they seemed be able to secure substantial parts of the their policy demands in the exploratory talks, they again felt that they were marginalized between Merkel’s CDU/CSU and the Greens. Strategically, they now have the chance to follow a national-liberal course that would place them well between Merkel’s conservatives and the AfD.
Unlike the Liberals, Conservatives and Greens both felt that substantial progress was made even at the last hour. As such, many of those who took part in the negotiations were stunned when the FDP walked away. With a supposedly almost finished compromise on the table, it felt like it was a move that was very much planned ahead. Even worse was the sentiment, that the FDP stopped to negotiate in good faith quite some time ago.
This leaves Germany in a precarious political situation. The only other viable coalition to have a majority in parliament is the Grand Coalition of CDU/CSU and the Social Democrats (SPD). The latter however made it clear that they will not enter a coalition with the CDU/CSU again, a stance they re-affirmed on Monday. Out of six parties elected to the Bundestag (seven when counting the Bavarian CSU separately), only Conservatives and the Greens want to govern.
Under these circumstances, Federal President Frank-Walter Steinmeier now is the key decision maker. He will have the final say on whether he appoints a minority government – possibly between Greens and Conservatives – or if he calls for a snap election. For now he is trying to get all parties to the negotiation table again, but these efforts are very likely to be futile.
It isn’t entirely unlikely that Germany is headed to an extended period of political uncertainty. A minority government is wanted by nobody and a snap election – as of polls from Monday – is unlikely to show results much different from the September vote. The picture might become a bit more clear over the next few days, as President Steinmeier is meeting with the leaders of all parties, trying to gauge the situation.
If the German people were to make the decision, the choice would be overwhelmingly clear. 65 percent of voters want a snap election, only 29 percent a minority government.

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