By Joseph Nasr and Paul Carrel

BERLIN (Reuters) – Germans vote in a national election on Sunday that looks too close to call, with the centre-left Social Democrats (SPD) mounting a strong challenge to retiring Chancellor Angela Merkel’s conservatives.

Merkel has been in power since 2005 but plans to step down after the election, making the vote an era-changing event https://reut.rs/3hfDamG to set the future course of Europe’s largest economy.

A fractured electorate means that after the election, leading parties will sound each other out before embarking on more formal coalition negotiations https://reut.rs/2ZeqYw3 that could take months, leaving Merkel, 67, in charge in a caretaker role.

Campaigning in his home constituency of Aachen alongside Merkel, conservative candidate Armin https://www.reuters.com/world/europe/conservative-laschet-struggles-momentum-german-leadership-race-2021-09-21Laschet said on Saturday that a leftist alliance led by the SPD with the Greens and the hard-left Linke party would destabilise Europe.

Laschet is 60 years old. He said, “They want us to pull out NATO. They don’t want this alliance. They want another republic.” “I don’t want the Linke in the next government.”

Running against Laschet is Olaf Scholz https://www.reuters.com/world/europe/german-leadership-race-boring-olaf-bets-craving-stability-2021-09-21 of the SPD, the finance minister in Merkel’s right-left coalition who won all three televised debates between the leading candidates.

Scholz (63) hasn’t ruled out a leftist coalition with The Left, but stated that NATO membership was a priority for the SPD.

Berlin’s European and other allies may need to wait months to see if the new German government will be open to foreign engagements after a focused election campaign.

A three-way coalition seems likely due to the fragmented political environment. Final opinion polls https://tmsnrt.rs/3BiQwWF gave the Social Democrats a narrow lead, but the conservatives have reduced the gap in recent days and many voters were still undecided.

The most likely coalition scenarios see either the SPD or the conservative CDU/CSU bloc – whoever comes first – forming an alliance with the Greens https://www.reuters.com/article/uk-germany-election-candidates-baerbock-idUKKBN2GH188 and the liberal Free Democrats (FDP).

Scholz stated to his supporters that the SPD and Greens could secure enough votes alone in Potsdam, near Berlin.

Scholz explained that “the stronger the SPD the more it will make it easier to form coalitions.” I don’t know what it will look like, but perhaps an SPD-Greens partnership is possible. This is what I believe possible. We’ll find out.

Both the conservatives and the FDP reject a European “debt union” https://reut.rs/2T1UKS3 and want to ensure that joint European Union borrowing to finance the bloc’s coronavirus recovery package remains a one-off. SPD spoke out in favor of a fiscal union.

Greens favor a European common fiscal policy for supporting investment in education, research and infrastructure.