Despite having the worst result since 1949, the CDU/CSU is nevertheless still the biggest party in the Bundestag with 32.9%.

After the disastrous results for the SPD (20.5%), the social democrat leader Martin Schulz announced the same day that his party would go into opposition.

Mathematically and politically, only a four-party coalition is possible: CDU/CSU, FDP and Bündnis 90/die Grünen.

The Linke also did well with 9.2%, but the third biggest opposition is the AfD with 12.6%. Neither of these parties is a possible coalition partner for the CDU/CSU for political and for policy reasons.

The liberal FDP can breathe a sigh of relief. After getting kicked out of parliament in the 2013 federal elections as it did not meet the 5% threshold, the party has scored 10.7% in 2017.

The Greens scored unexpectedly 8.9%, while polls had them down to 6 or 7% a few months ago.

Together, these parties would have 393 seats out of 709, the biggest parliament in the history of the federal republic.

An opinion poll conducted on Monday 25 September for the ARD indicated that 57% of people see a CDU/CSU, FDP and Green coalition as positive or very positive. Only 31% would favour a grand coalition.

CSU debacle

However, before Merkel can make these calls, she needs to sort things out with the CSU. On Monday, Bavaria’s interior minister Joachim Herrmann said on TV that his party needed to close the “right flank” which the AfD now occupied on the political spectrum and indicated that his party would insist on an upper limit for the number of refugees entering the country. Furthermore, it seems that heads might roll within the CSU, who achieved a dismal 38%; its worst result was in 2009, when it got 42%; otherwise it consistently polled over 45%.

CSU party chief Horst Seehofer has announced that before coalition talks can begin, Merkel needs to find a “common platform” with the CSU. Two “questions of confidence” need to be addressed: no repeat of the year 2015 with the refugee crisis, and a cap for the intake of refugees.  Seehofer is taking a hard line on this because the CSU needs to do well in the next Landtag elections in Bavaria next year.

The problem is that both parties have grown increasingly distant over the past decades. The CDU has become a progressive centre party which can find coalition partners both on the right and on the left. The CSU has stayed a centre-right party with the aspiration to govern alone (in Bavaria).

Meanwhile, Merkel continues as if nothing had happened. She said on election night that her party had a clear mandate to lead the next government.

Talks with FDP and Greens

Merkel indicated that she will conduct talks with the FDP and Greens to see if a coalition agreement is possible.

At the moment, it appears all parties seem to agree that a new immigration law is needed. However, there are significant differences on what it should look like; the Greens want it to be more expansive, while the CDU/CSU will be under pressure to tighten it.

The FDP’s lead candidate insists on certain policy priorities which are part of a “change of direction in politics”: digitisation, more spending on education and a reform of taxation.

For the Greens, environmental policies will be the priority: they want a phasing out of energy produced by coal power stations by 2030 and a new climate protection law. The Greens also want to allow only “clean” cars by 2030.

Wolfgang Rüdig, reader in politics at the university of Strathclyde, who studies Green parties in Europe, said in an interview with Delano that for the Greens, a strong commitment to climate change was non-negotiable, which may become an issue with the FDP.

He argued that it was an “incredibly complicated situation because you have four parties which have strong positions on many issues that are totally contradictory. It will be a real piece of art for Merkel to put this together. But one has to be careful about statements made in the past; the election is over. At the Greens, there is a feeling that with the rise of the AfD, the democratic parties have to get together and form a stable government to demonstrate that Germany can be governed properly. This puts the Greens in a position where they have a responsibility, and I am sure the same will apply to the other parties.”

He was rather optimistic and argued that the parties would “make a genuine effort”, but they would all "have to accept unpalatable compromises which their voters and members will not be very happy with. But there has to be something in the agreement that they can sell to their members.”

New elections

In any case, it is likely that coalition talks will drag on for months, even till December. Personnel questions are naturally not far away. Christian Lindner, lead candidate for the FDP, is eyeing the post of finance minister.

Several experts do not rule out that new elections might also be a possibility. The Greens and the FDP, and maybe even the CSU, will put the coalition agreement to a vote by their base. This may scupper any carefully crafted deals.

On the other hand, a minority government seems to be a non-issue at the moment.

Dan Hough, professor at the university of Sussex, claims that there are serious obstacles in both possible coalitions, and new elections might happen much sooner than expected. Clemens Fuest, who leads the Ifo Institute in Munich, said it was imperative that the parties manage to find a compromise. He warned against new elections, as the uncertainty would be bad for companies and the economy in general.