Germany’s election. Between Caesar and Chernenko

A broad left-right coalition is the only way out of Germany's stasis

TWO weeks after Germany's voters spoke in ambivalent terms about their next government, you might think the political barons would be edging towards a deal. Instead, they are awaiting another verdict - from the 219,000 voters of Dresden, whose poll has been delayed until October 2nd by a candidate's death.

As many as three seats in the Bundestag, the lower house, may be decided. The Christian Democrats (CDU) are in the odd position of hoping they do not get too many votes, because under the rules they might then forfeit a seat elsewhere. Even more strangely, the politician at risk is called Cajus Julius Caesar.

It is unlikely that the by-election will allow the Social Democrats (SPD), which now have 222 seats in parliament, to pull even with the CDU and its Bavarian sister party, the Christian Social Union (CSU), which together hold 225 seats. If this happened, Gerhard Schroder's hopes of remaining chancellor would obviously rise. Yet the Dresden vote, tipped to end in a photo finish, matters. Whichever camp does best in Dresden will press its claim to lead the next government. And since all other attempts at forging a majority have failed, the vote will probably mark the start of tortuous talks between the conservatives and the SPD over the terms of a “grand coalition” of all their parties.

After a show of defiance on election night, Mr Schroder is being less inflexible. He is now promising to do his best to make a grand coalition work, hinting he would step aside if need be. Other SPD leaders are implying that, if the reward was big enough, they might sacrifice Mr Schroder. Franz Muntefering, the SPD's chairman, says his party wants “to stay in government, keep Mr Schroder as chancellor and push through as much of the SPD's election programme as possible”. Decoded, this may mean the chancellor is worth giving up - for, say, half the ministries, the speakership of parliament and an SDP-influenced government agenda.

The SPD wants to talk policy first, and then bargain over jobs - the opposite of the CDU's approach. Its candidate for the chancellorship, Angela Merkel, says there will be no serious talks until the SPD agrees that it lost the election and she must be chancellor. She also wants a “common basis of trust”: the SPD must eschew other options, such as a new election.

Though the SPD will balk at these terms, Ms Merkel looks better placed than her foe. She failed to win a majority for her reform agenda, but the CDU and CSU combined are the biggest parliamentary group. Ms Merkel may yet prevail in the same steely way that she overcame her party rivals. Much will depend on the solidity of her support within the CDU. Some blame her for squandering a big lead. But nobody wants to weaken her now. Her fiercest rivals - Christian Wulff and Roland Koch, premiers of Lower Saxony and Hesse respectively - sound loyal.

This unity makes it unlikely that the CDU would accept a deal to let Mr Schroder keep power for a year or two before yielding the chancellery. It is just possible that both Mr Schroder and Ms Merkel will go. If so, few would expect them to be replaced by the people first in line: Mr Koch and Peer Steinbruck, a former SPD premier. More likely would be the “double Chernenko” option, named after a decrepit Soviet leader: Edmund Stoiber, the veteran CSU boss, as chancellor and Mr Muntefering in some other top job.

Defining an agenda may be easier. Although the two parties diverged during the campaign, they have a history of working together. In 2003, Mr Koch and Mr Steinbruck jointly presented a proposal to slash subsidies. In 2004, Mr Stoiber and Mr Muntefering almost managed a reform of the federal system. And last spring, Mr Schroder and Ms Merkel agreed, among other things, on cutting corporation tax.

A grand coalition might also be able to tackle other problems, like the baffling tax system, high non-wage labour costs and, not least, the budget deficit. But to be truly successful, such an alliance would have to go further, for instance, by reforming Germany's “financial constitution”, a cobweb of tax-revenue equalisation and joint public spending (introduced by the first post-war grand coalition of 1966-69).

If history is any guide, a new marriage of elephants would neither disappoint nor over-perform. The first grand coalition was productive: passing emergency laws, and achieving judicial reform and Keynesian demand management. But it drove some voters towards extremism. Conditions may now be right for a better outcome: Germany's big parties know they must show some results, such as job-creation, or even more voters will turn to the smaller parties, perhaps even the extremist ones. Much will depend on the chemistry between coalition leaders. If the first grand coalition was a partial success, it was mainly because Karl Schiller, the SPD economics minister, and Franz Joséf Strauss, the CSU finance minister, got on well, gaining the nickname “Plisch and Plum”, after two dogs in a famous poem.

For Germans, it comes as a relief that their leaders are heading for serious discussions, though they will hardly agree by October 18th, when parliament is due to reassemble. Just as the economy has recently perked up, so hope now flickers that politics may bring a nice surprise.

A broad left-right coalition is the only way out of Germany's stasis.

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