Merkel 'nears refugee deal' with Bavarian allies

Two weeks after winning elections with a reduced majority, German Chancellor Angela Merkel neared a deal Sunday to unite her conservative camp on the flashpoint issue of refugee policy as she seeks to build a new coalition government, a party source said.
Merkel's team huddled for closed-door talks with her Bavarian CSU allies led by Horst Seehofer, who blames her decision to allow in 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 -- had revived his calls to cap the national refugee intake at 200,000 a year, a demand Merkel has so far rejected as unconstitutional.
However, after hours of talks, "a fundamental compromise has been reached" on the issue, a conservative alliance source told AFP, who added that details were still being hammered out in talks dragging into the night.
Conservative lawmakers have stressed that both parties agree Germany must not face another mass influx of refugees, with steps that include fighting traffickers, better protecting EU borders and quickly repatriating those who are denied refugee status and political asylum.
In an opening salvo Sunday, the CSU had published a 10-point list of demands, including a refugee "upper limit", but also a push for a broad return to the conservative roots of the centre-right alliance, and a committment to a "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 also suggested that "conservatism is sexy again".
Martin Schulz, head of the Social Democrats who have vowed to go into opposition after heavy election losses, was gleefully watching the family squabbles in Merkel's conservative camp and charged that the "madhouse" CDU-CSU dispute showed that "in reality, they are enemy parties".
Merkel's CDU needs to reach a deal with the estranged CSU before both can jointly enter into talks with two smaller parties to form a coalition government -- a process some observers expect to last until Christmas if not the new year.
- 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 all players will fight for ministerial posts and issues from EU relations to climate policy. All must give a little -- 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, rejecting any steps that would send 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 and favour steps to help Syrians bring over 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".