Leader of the Social Democrats (SPD) Martin Schulz gives a statement in Berlin
By Thomas Escritt
BERLIN (Reuters) - Germany's Social Democrats agreed on Friday, under intense pressure, to hold talks with Chancellor Angela Merkel on renewing their outgoing coalition government, but pledged that party members would have the final say on any deal.
The about-turn by the centre-left SPD, which had said it would go into opposition after suffering its worst result in 70 years in September's election, could help avert a disruptive repeat vote in Europe's economic and political powerhouse.
SPD leader Martin Schulz told a news conference the party leadership had reached the decision out of a sense of responsibility to Germany and Europe after Merkel's attempt to form a government with the pro-business Free Democrats and environmental Greens smaller parties collapsed on Sunday.
"There is nothing automatic about the direction we are moving in," Schulz said. "If a discussion results in us deciding to participate, in any form whatsoever, in the formation of a government, we will put it to a vote of party members."
Schulz told 300 members of the party's youth wing - who rejected another "grand coalition" at a conference in Saarbruecken - that nothing had been decided.
But he suggested that governing could offer better chances to achieve his primary goal of improving the lives of people in Germany and around the world.
"From which position is that best possible? What is more important? The radiance of our decisions, or the improvement of the everyday lives of people?" Schulz told the group.
He said he noted the group's position and thanked them for their support in the September election. But he said he expected their loyalty and "constructive cooperation" with whatever path was ultimately decided by the party's leadership.
Backing for a new government could mean forming a coalition, agreeing not to obstruct a Merkel-led minority government, or other options yet to be explored, SPD deputy leader Ralf Stegner told broadcaster ZDF.
Rainer Haseloff, the premier of the eastern state of Saxony-Anhalt and a member of Merkel's centre-right Christian Democrats (CDU), told Reuters: "I think opinion is moving in the direction of there being a grand coalition."
He said conservatives would look at the SPD's proposals, but the bloc would not agree to any move to replace Merkel.
QUESTION OF WHEN, NOT IF
Juergin Trittin, a senior Greens member, told Germany's RND newspaper group it was "a question of when, not if" the SPD would agree to discuss another coalition with conservatives.
Stegner, who is sceptical about another grand coalition, told broadcaster ZDF the SPD would extract a price for any deal. "The SPD won't go cheaply," he said, without elaborating.
Merkel spoke with reporters after an event in Brussels, but declined to answer any questions.
A poll conducted on Monday, before the latest SPD comments, showed half of Germans supported the SPD's initial rejection of a new grand coalition, while 44 percent would support renewing the coalition government that has ruled for the past four years.
Six out of 10 Germans would support a new election, the poll by infratest dimap for broadcaster ARD showed.
Over her 12 years in power, Merkel has embraced a succession of coalition partners who then went on to suffer painful electoral defeats. A cartoon published by Cicero magazine on Friday depicted the SPD as a mouse being enticed out of its hole by a waiting feline Merkel.
German President Frank-Walter Steinmeier will host a meeting with Schulz, Merkel and Horst Seehofer, leader of the CDU's arch-conservative Bavarian sister party, next Thursday.
Steinmeier, a former SPD foreign minister, has urged his former party to reverse its pledge to go into opposition, having made clear that he saw fresh elections as a last resort.
The crisis has arisen because Merkel's conservatives also lost votes in September as the anti-immigrant Alternative for Germany surged into parliament. With the SPD licking its wounds, an unlikely-looking three-way coalition with smaller parties had appeared the only option for the weakened chancellor.
(Additional reporting by Joseph Nasr and Andrea Shalal in Berlin, Alastair MacDonald in Brussels and Reuters TV in Saarbruecken; Editing by Gareth Jones and Hugh Lawson)