Politicians from all three camps have signalled deals on immigration and climate policy will be tough to reach as the German chancellor attempts to unite her divided conservative alliance, which suffered bruising losses in a national election last month.
There are fears it could take months to form a coalition, leaving Germany politically weakened as the European Union (EU) looks to its wealthiest country for leadership on governance reform within the bloc.
In the first two rounds of talks, the CDU/CSU conservatives, the pro-business Free Democrats (FDP) and the Greens defied expectations by finding common ground on fiscal policy.
But cracks started to appear when the parties arrived for further talks on the so-called ‘Jamaican coalition’ on Thursday.
Greens’ Juergen Trittin told Bild newspaper: “We only set out fiscal goals.”
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Arriving for the negotiations, Alexander Dobrindt – negotiator for the Christian Social Union (CSU) – said he was far from sure that they would be as successful on Thursday’s “heavyweight agenda”.
He said: ”Without limits on immigration, Jamaica will remain an island in the Caribbean but will certainly not be a coalition in Berlin.
“What happened in 2015 must never be repeated.”
Immigration is a particularly divisive topic after many blamed the conservatives’ election setback on the open-door refugee policy that Mrs Merkel implemented through 2015 and into 2016.
Angela Merkel opened Germany’s borders to more than a million migrants fleeing war in the Middle East and Africa, on a scale not seen since World War Two,
While some hailed the decision as a humanitarian act, many in Mrs Merkel’s camp blamed her for the subsequent surge in the anti-immigration Alternative for Germany (AfD) party, which took seats from her bloc.
While Mrs Merkel’s Christian Democrats (CDU) and the CSU have agreed to limit migration, many experts say an absolute cap on refugee numbers would violate the German constitution.
The Greens want to maintain a more generous immigration policy, are advocates of closer European integration – opposed by the FDP – and are adamant that Germany stick to all climate targets.
Greens co-chief Cem Ozdemir said: “I understand it hurts if parties can’t implement promises they made in the election campaign.
“We have to explain to people that some of those promises were dreams and now it’s reality.”
Wolfgang Kubicki of the FDP, a potential candidate for finance minister, added: “There is a lack of basic trust between the negotiating parties.”