Germany's Greens warn against blind adherence to balanced budget

BERLIN (Reuters) - Germany's Greens party, in talks to join Chancellor Angela Merkel's conservatives in government, warned its potential partners on Tuesday against holding onto the ideal of a balanced budget at any cost.

Merkel's conservatives will meet the Greens and the pro-business Free Democrats (FDP) later Tuesday for talks about taxes, finances and Europe as they try to forge a three-way coalition that is untested at the national level.

The Greens and FDP had inched closer together on Monday on the issue of taxes, as the Greens welcomed an FDP proposal to make it harder for global technology companies to cut their tax bills by basing themselves in low-tax countries.

But significant differences remain among them, one of which is the Greens' insistence on higher spending. That faces opposition from the FDP and fiscal hawks in the conservative camp.

Juergen Trittin, a key negotiator for the Greens in the talks, told the RND newspaper chain his party would insist on better health care and more affordable housing.

"A `black zero' serves no one when we're facing unaffordable housing costs and problems in healthcare," he said. "We need to provide relief for families with children and people with small and medium incomes."

"Black zero" was the label applied to the rigorous balanced-budget policy of Merkel's finance minister, Wolfgang Schaeuble.

FDP leader Christian Lindner told the RND a balanced budget was non-negotiable, since it provided an important "signal of stability for Europe."

Merkel, whose party suffering punishing losses in the Sept. 24 election, opened talks on Friday to bring the conservatives, Greens and FDP into a stable government, sometimes called a "Jamaica coalition," because their colors -- black, yellow and green -- match those of the Jamaican flag.

Her financial experts say some 30 billion euros ($35.27 billion) is available for new projects in coming years, but the parties' demands already amount to over 100 billion euros in extra spending.

Lindner told reporters he viewed the chances for reaching a deal on what he called a "clover-leaf coalition" as 50-50.

"You very seldom see four-leaf clovers in nature, so the probability of us coming together is around 50-50. Nothing has changed. We'll know more in the coming week," he said.

The parties still faced "a difficult path" to an agreement, said Acting Transport Minister Alexander Dobrindt, a member of the Christian Social Union, Bavaria's conservatives.

"I don't think we should create the wrong impression just because the mood is positive," he told Reuters. "If the content isn't right, a good atmosphere in negotiations is no use whatsoever."

Merkel is hoping to complete exploratory talks - an initial stage during which parties decide whether to go ahead with full-blown coalition negotiations - by Nov. 17 or 18.

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