Coalition wrangling looms for Chancellor after German poll

Chancellor Angela Merkel may be on track to win a fourth term in Sundays election, but exactly what Germanys next government will look like is anyones guess as thorny coalition talks loom.

Despite having a double-digit poll lead, Merkel's conservative CDU/CSU bloc is expected to fall short of a parliamentary majority and the kingmakers they choose could shake up Berlin's stance on anything from eurozone reforms to refugee policies.

For the first time since reunification in 1990, a record six parties are set to enter parliament. And with the right-wing populist Alternative for Germany (AfD) possibly becoming the third-strongest party, an election campaign widely described as boring could spring a few surprises yet.

"We really don't know what kind of government we will get," said Sudha David-Wilp, deputy director of the German Marshall Fund in Berlin. "The political suspense will begin after the vote on Sunday."

The latest survey by the Emnid institute for the Bild newspaper showed a slight dip in support for the CDU/CSU to 36 percent, with the Social Democratic Party (SPD), led by Merkel's main rival Martin Schulz, trailing at 22 percent.

With neither side eager to continue their loveless "grand coalition", attention is shifting to the race for third place between four smaller parties -- all polling at around eight to 11 percent.

"I'm telling everyone that this election hasn't been decided yet," Merkel said in an interview with broadcaster RTL on Tuesday.

With two recent surveys suggesting 25 to 39 percent of voters remain undecided, it seems there's everything to play for.

"There's still a lot of volatility in the polls," said Thorsten Benner, director of the Global Public Policy Institute in Berlin.

'Complicated'

The liberal and pro-business Free Democrats (FDP), re-energised by youthful leader Christian Lindner, are hoping for a comeback as Merkel's junior coalition partner after embarrassingly crashing out of the Bundestag in 2013.

But the latest surveys suggest the two natural bedfellows may need the help of a third party, the left-leaning Greens, to clinch a majority.

Such a three-way tie-up, dubbed a "Jamaica coalition" in the country's colour-coded politics, would be unprecedented in Germany and involve some serious horsetrading given the stark ideological differences.

These would "likely be fairly drawn out and complicated negotiations", said Benner.

The FDP's desire to take over the powerful finance ministry portfolio from the CDU's veteran Wolfgang Schaeuble promises to be one major bone of contention, while the Greens can expect stiff resistance to their demand for an end date on polluting diesel engines.

Merkel could also find herself hamstrung on the European stage if the FDP maintains its objections to closer eurozone integration, as pushed for by French President Emmanuel Macron.

For Merkel, another left-right coalition with the Social Democrats may be the most straight-forward choice.

"If she is true to what she has insinuated with President Macron, she wants European reforms," said Benner, which she could carry out with the support of the staunchly pro-EU Schulz, a former European Parliament chief.

Rise of the AfD

But four more years of the same risks angering grassroots Social Democrats eager to step out from under Merkel's shadow, and could drive more disgruntled voters to the fringes.

In a sign of the growing discontent, the anti-euro, anti-Islam and anti-immigration AfD is tipped to become the first hard-right party to clear the five-percent bar to win seats in the national parliament since the end of World War II.

Seemingly undiminished by months of infighting and scandal, the AfD has been inching ahead in the polls in recent weeks and could now surpass the far-left Die Linke as the largest opposition party.

But any stronger-than-expected showing by the AfD -- which capitalised on anger over Merkel's open-door asylum policies -- would send shockwaves through the political establishment.

Benner said the AfD appeared to be resonating with voters fed up with the status quo after 12 years of "Mutti" (mama) Merkel.

"The election campaign has been sleepy between the SPD and the CDU. But there's a lot of anger too," said Benner, in a nod to the AfD protesters who have jeered and booed Merkel on the campaign trail.

Mainstream parties have vowed to close ranks on the AfD, shunning it from any coalition talks.

The SPD in particular will be keenly aware that one way to prevent the AfD from becoming the loudest opposition voice in parliament, is to lead the opposition itself.

The AfD's entry into parliament would be "a disgrace for Germany", Schulz told the Tagesspiegel daily.