Green Party could prove vital to securing stable government for Chancellor Merkel, after her Christian-Democrats failed to win governing majority in Sunday's election
German Chancellor Angela Merkel is expected to reach out to the Green Party and the Free Democrats (FDP) to form a coalition government after the German election results on Sunday failed to deliver her a clear majority in the Bundestag.
Merkel's party, the Christian-Democrats (CDU), won 33 per cent of the vote, enough to return Merkel to the position of German Chancellor for a fourth term but not enough to win outright.
Since 2013 Merkel has governed in coalition with the centre-left Social Democrats, but after they suffered their worst result since the Second World War she is now set to turn to the smaller Green Party and the FDP to get her vote share over the 50 per cent threshold needed for a majority in parliament.
Merkel has already ruled out forming a government with Alternative für Deutschland (AFD), the far right party which secured 13 per cent of the vote, giving it seats in the Bundestag for the first time.
The Green Party won 8.9 per cent of the vote, broadly matching the level of support it secured in 2013, while the FDP won nearly 11 per cent.
The results reflect a fracturing of German politics from the mainstream two parties, with the AFD and FDP both recording a vastly improved performance compared to the 2013 elections, while the two main parties suffered significant losses in vote share.
Speaking at her party headquarters in Berlin, Merkel said she was "confident" Germany would have a new government in place by Christmas, despite warnings the coalition negotiations to form the first three-part government since the 1950s are likely to prove tricky.
The Social Democrats have ruled out returning to coalition with Merkel, with many of its members now convinced it needs to return to opposition to restore its appeal to its core voters.
Meanwhile, the Green Party have significant ideological differences with the 'pro-business' FDP, and are likely to be concerned about the risk of angering their core voters if they go into coalition with a conservative government that fails to deliver significant environmental concessions.
Speaking to the FT earlier this month, Green leader Simone Peter warned her party would only form a coalition with the CDU if it won concessions on the immediate closure of coal-fired power plants and a commitment to ban new petrol and diesel cars by 2030. But the FDP, with its more laissez-faire approach to economic policy, is expected to oppose such policies.
However, new research just last week warned the country could yet miss both its emissions and renewable energy targets for 2020, providing the Greens with an immediate basis for their demands for a more ambitious policy approach.
Moreover, the so-called 'Jamaica coalition' is seen as one of the only viable routes to a majority government for Merkel, so talks are expected to begin in earnest in the coming days.
Green businesses and campaigners will be hoping the delicate negotiations translate into an ambitious revamp for a German environmental strategy that has delivered a multi-billion dollar clean energy industry and won plaudits the world over, but has struggled to deliver the deep emissions cuts Merkel previously promised.
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