Refugee issue complicates Chancellor's bid to form government

Merkel met for private talks with her Bavarian CSU allies led by Horst Seehofer, who blames her open-door policy that has brought over one million asylum seekers since 2015 for the rise of the far-right Alternative for Germany (AfD) party.

Beleaguered Seehofer -- who after a vote drubbing faces internal challengers, and state elections next year -- has revived his calls to cap the national refugee intake at 200,000 a year, a demand Merkel has consistently rejected as unconstitutional.

In an opening salvo Sunday, the CSU published a 10-point list of demands, including a refugee "upper limit", a broad return to the conservative roots of the centre-right alliance, and a committment to "healthy patriotism".

"We must fight the AfD head-on -- and fight to get their voters back," said the text published in mass-circulation Bild am Sonntag, which suggested that "conservatism is sexy again".

The talks were expected to last deep into the night, with Bavarian interior minister Joachim Herrmann conceding the situation was "not easy", and a party colleague asking journalists whether they had "brought their sleeping bags".

Merkel's CDU too is nervous ahead of a Lower Saxony state poll next Sunday, where it is running neck-and-neck with the centre-left Social Democrats (SPD) -- a party badly in need of a win after their bruising defeat in September 24 elections.

SPD leader Martin Schulz, gleefully watching the family squabbles in Merkel's conservative camp, charged that the "madhouse" CDU-CSU dispute showed that "in reality, they are enemy parties".

Odd bedfellows

The emergence of the anti-immigration AfD, which scored 12.6 percent, has stunned Germany by breaking a long-standing taboo on hard-right parties sitting in the Bundestag.

Its success came at the expense of the mainstream parties, making it harder for Merkel to form a working majority.

Her best shot now -- if she wants to avoid fresh elections that could further boost the AfD -- is an alliance with two other parties that make for odd bedfellows, the pro-business Free Democrats (FDP) and the left-leaning Greens.

Such a power pact -- dubbed a "Jamaica coalition" because the three party colours match those of the Caribbean nation's flag -- would be a first at the national level in Germany.

In the talks to come, likely to take weeks, all players will fight for ministerial posts and issues from EU relations to climate policy. All must give a little to reach a compromise -- but not too much, to avoid charges from their own party bases that they are selling out in a grab for power.

The smaller parties will seek to avoid the fate of Merkel's previous junior coalition partners: both the FDP and SPD have suffered stunning losses after governing in the veteran chancellor's shadow.

Poker games

Until the high-stakes poker games between party chiefs result in a working government, Merkel will be restrained on the global stage and in Europe, where French President Emmanuel Macron is pushing for ambitious reforms.

EU and euro politics, in turn, are shaping up as another divisive issue.

Merkel and the Greens have cautiously welcomed Macron's plans, but FDP chief Christian Lindner, who is eyeing the powerful finance minister's post, has assumed a far more sceptical tone.

He rejects any kind of "transfer union" -- code for German taxpayers' money flowing to weaker economies.

Lindner has praised, however, Seehofer's tougher stance on migration, declaring that refugee numbers "must be reduced".

The Greens, for their part, reject an upper limit for refugees, want to stop deportations of rejected asylum seekers to war-torn Afghanistan, and favour steps to help Syrian refugees bring their families.

Even if these issues can be resolved, the Greens will also push their ecologist core demands in talks with the pro-business parties -- including phasing out coal plants and fossil fuel vehicles.

The Greens' co-leader Cem Ozdemir, voicing some impatience with the divided conservatives, warned that they "must not block the formation of a government for weeks".