With the fallout from Germany's bitterly inconclusive general election beginning to resemble the fracas that followed America's fateful "hanging chad" presidential poll in 2000, Ms Merkel's opposition Christian Democrats (CDU) launched an attempt to end the chaos.
Volker Kauder, the CDU's general secretary, declared that negotiations aimed at forming a grand coalition between his party and the ruling Social Democrats would not even start unless Mr Schröder renounced his claim to remain German leader.
"We will make this a precondition for any coalition talks with the Social Democrats," he said.
The two sides will meet on Wednesday and the Christian Democrats, who are becoming increasingly vexed by Mr Schröder's refusal to stand down as chancellor, are expected to confirm their position at a party leadership meeting today.
The chancellor's job has become the main stumbling block to an early solution to Germany's political crisis. Ms Merkel, whose conservatives beat Mr Schröder's SPD by 419,000 votes, claims that chancellor's office is rightfully hers, even though he party was not able to win a majority, or even enough seats to form a coalition government with its preferred partner, the liberal Free Democrats.
Mr Schröder has argued that because the election produced a new de facto leftist parliamentary majority, comprised of his own party, the Greens and the radical Left Party, the voters' wishes would more accurately reflected if he remained chancellor. However, Mr Schröder has ruled out forming a coalition government with the Left Party.
The Chancellor's unbending stance has prompted growing criticism in the German media. He has been compared to a latter-day Roman emperor. Some newspapers have even jokingly alleged that he may have taken megalomania-inducing drugs.
Comparing the Chancellor to his friend President Vladimir Putin, theFrankfurter Allgemeine newspaper said both were men who "show little overwhelming respect for democratic values and institutions".
Kurt Beck, the deputy Social Democrat party leader is the latest in a series of leading SPD members to back off from their line that Mr Schröder remain in office. Asked whether a grand coalition was conceivable without Mr Schröder at its head, Mr Beck said: "In a democracy, one should never say never."
Whether or not the combination of press criticism and waning party support was beginning to get to him, Mr Schröder has indicated for the first time that he might be prepared to reach a compromise or even back down. "I am in favour of the two main parties forming a coalition," he told German television last night. "I will do everything in my power to ensure that this happens." He said he was sure the question of the chancellorship could be resolved.
Unconfirmed reports suggested that he was considering sharing the post on a two-year rotating basis with Ms Merkel.
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