German Chancellor Gerhard Schroeder and conservative rival Angela Merkel faces a third round of talks Wednesday on forming a 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.
Social Democratic chairman Franz Muentefering gave little ground.
"This situation is unknown in Germany, that two who are the same size discuss whether to form a coalition," said Muentefering, who has argued that the leadership question should be addressed during formal coalition talks. "Anyone setting preconditions is not doing justice to the challenge."
Another senior conservative, Juergen Ruettgers, sounded a conciliatory note Wednesday, telling ARD that he envisions the two parties being "on the same level" in a coalition.
But he too insisted that Schroeder's party must relinquish the chancellery. "We are going to have to ask the Social Democrats today how they are thinking of continuing," Ruettgers said, reports the AP.