By Noah Barkin

BERLIN (Reuters) - Angela Merkel's conservatives and Gerhard Schroeder's Social Democrats clashed over who won Germany's election before starting talks on Thursday to determine whether they can share power in a future government.

Only minutes before the parties were due to hold their first meeting since Sunday's tight vote, Merkel ally Edmund Stoiber, head of the Bavarian Christian Social Union (CDU), demanded the SPD's Schroeder accept defeat.

"I want to make clear that the SPD has to begin to understand that they did not win the election, they lost the vote," said Stoiber, standing alongside Merkel after talks with the liberal Free Democrats (FDP).

"We need a stable government and this complicated election requires talks but it also demands quick results," he added, pointing to concerns about the political deadlock's impact on the German economy.

Earlier, SPD chief Franz Muentefering sparked a flurry of CDU recrimination by suggesting Merkel's party should be considered separately from Stoiber's CSU even though parliamentary rules recognise them as a single bloc.

If the CDU and CSU, which received a combined 35.2 percent of the vote, were seen as separate, the SPD with 34.3 percent support could claim it was the top vote-getter in the cliff-hanger election, strengthening its bid to keep Schroeder in the Chancellery.

Merkel has been forced into coalition talks with the SPD because her party failed to win enough support to form a ruling coalition with its preferred partners, the FDP.

The feuding parties began a meeting at 2 p.m. (1:00 p.m. British time) and were due to give statements when the discussions ended. Both Merkel and Schroeder were due to take part in the talks.

BEST OF BAD OPTIONS

The formation of a "grand coalition" between Germany's two largest parties is now seen by many experts as the best of several less-than-desirable options for Germany.

Other possibilities include a coalition between the CDU/CSU, FDP and environmentalist Greens party, or an alliance between the SPD, FDP and Greens.

Neither of those two combinations has been tried at the federal level and some fear they would produce unstable governments. But a new poll by the Emnid institute on Thursday showed Germans preferred those options to a "grand coalition".

Prospects for a CDU/CSU deal with the SPD have been complicated by Schroeder's insistence he remain chancellor and bitter animosity between the two camps, aggravated by Schroeder's election-night taunting of Merkel on national television.

Merkel had been vowing deep reforms of Germany's economy, but her party will probably struggle to push through its programme if it ends up governing with the SPD, which attacked Merkel during the election campaign as a cold radical bent on destroying the country's cherished welfare state.

The deadlock, which must be resolved before October 18 to avert the prospect of new elections, could hinder European Union-level decisions on reforms needed to boost the bloc's economy and re-energise the EU after rejection of a planned constitution.

Prolonged political inertia could also damage Germany's struggling economy. German growth is now the slowest in the 25-nation EU. Unemployment topped the 5-million mark this year for the first time in the post-war era.

"Should coalition-building talks drag, or if the new government falters because of a fragile or shrinking majority, this could further unsettle consumers and above all investors considerably," Germany's RWI institute said on Wednesday.
http://today.reuters.co.uk/news/news...archived=False

Looks like this is another no win situation. Kind of reminds me of the Bush/Gore election. Should be real interesting how this pans out!!
Psycho4Bud Reviewed by Psycho4Bud on . Feuding German parties struggle to break deadlock By Noah Barkin BERLIN (Reuters) - Angela Merkel's conservatives and Gerhard Schroeder's Social Democrats clashed over who won Germany's election before starting talks on Thursday to determine whether they can share power in a future government. Only minutes before the parties were due to hold their first meeting since Sunday's tight vote, Merkel ally Edmund Stoiber, head of the Bavarian Christian Social Union (CDU), demanded the SPD's Schroeder accept defeat. "I want to make clear that Rating: 5