German Chancellor Gerhard Schroeder and conservative rival Angela Merkel head into a third round of talks Wednesday on forming a possible coalition, looking to resolve a deadlock over who should lead Europe's biggest economy and end a two-week political crisis. Both Schroeder's Social Democrats and the conservatives insist they are willing to enter formal coalition talks after each failed to secure a majority in Sept. 18 parliamentary elections. But Merkel's conservatives demand that Schroeder's party drop its campaign to prolong his seven years in office. While Schroeder has signaled he would step down if his party tells him he must, the Social Democrats have stuck to their claim that he should lead any new government. Merkel's Christian Democrats and the Bavarian Christian Social Union argue that since they are the largest parliamentary bloc, their candidate should be chancellor, and that detailed talks make no sense until the matter is settled. Dieter Althaus, a senior conservative, said the two parties would have to delay more detailed negotiations if the Social Democrats do not give in. "It's about accepting the rules of the democratic game: that the strongest faction provides the head of the government," Althaus said on ARD television Tuesday night. He said Wednesday's talks would address problems with government finances, high unemployment and the stretched pension system, but said he saw no sign of an overall compromise.
