Merkel coalition's fate depends on elusive migrant deal

German Chancellor Angela Merkel's ruling coalition risked breaking apart on Monday, as her hardline conservative Bavarian allies pushed a showdown over migrant policy after she was unmoved by her interior minister's threat to resign.

Horst Seehofer insisted on his plan to turn away asylum seekers at the border with Austria registered in other European countries, as he rejected EU deals reached last week by Merkel as inadequate.

Seehofer said after talks with his party stretching into the small hours that he would step down as minister and CSU party head rather than acquiesce in the increasingly bitter standoff.

But after a night of high drama, Seehofer later said he would hold last-ditch talks with Merkel's CDU "in hopes of reaching an understanding". The meeting is set to begin at 1500 GMT.

The future of Merkel's governing coalition between the CDU-CSU alliance and the centre-left Social Democratic Party (SPD) appeared to hang by a thread, as media slammed what they called a reckless game of chicken.

"It is fair to ask: has the CSU lost its mind?" Der Spiegel reporter Rene Pfister said.

"In the end, the government could fall and an old, proud party could descend into ridiculousness -- and all of that to solve a problem that in reality hardly is one," given the dramatically lower numbers of asylum seekers arriving in Germany this year.

Foreign Minister Heiko Maas of the SPD said the crisis had already damaged the country's standing as a bulwark of European stability.

"I think the way this debate is being conducted is hurting Germany's image and above all that of the German government," he said.

If Merkel holds firm and Seehofer does quit, the CSU could offer a replacement interior minister if it aims to remain tied to her party.

Alternatively, it could break up the two parties' 70-year partnership, depriving Merkel of her majority in parliament and pitching Germany into uncharted political waters.

To survive politically, Merkel could attempt a minority government, seek a new coalition partner in the ecologist Greens or pro-business Free Democrats, or orchestrate a no-confidence vote in parliament that could trigger new elections.

As he entered a CDU crisis meeting on Monday, deputy leader Armin Laschet insisted that the sister parties "want to hold onto" their alliance.

"It is a precious thing for our party system and that is why I'm confident we will succeed," he said.

CDU general secretary Annegret Kramp-Karrenbauer said earlier that party leaders were "united" behind Merkel and "effective, humane solutions together with our European partners".

Meanwhile, Bavarian state premier Markus Soeder appeared to indicate a willingness to cut Seehofer loose for the sake of the coalition.

"We are ready for compromises -- you have to be in politics," he told reporters.

"None of us want to call the government into question."

Merkel, who has been in office since 2005, warned last week the battle over migration could decide the EU's future.

European leaders agreed new measures on Friday to reduce immigration and so-called "secondary migration" of asylum-seekers between countries.

Merkel has proposed that migrants arriving in Germany who first registered in another EU country should be placed in special "admission centres" under restrictive conditions.

A document she sent to the CSU and SPD also outlined deals with 16 other countries to return already-registered migrants if they reached Germany.

However, Seehofer rejected Merkel's assessment that the EU-wide measures would "have the same effect" as his demand to turn away migrants registered elsewhere in the bloc.

The "Union" of CDU and CSU have blended the southern state's beer-and-lederhosen-infused conservatism with more moderate politics, forming a centre-right force that dominated Germany for decades.

The CSU's conflict with Merkel comes as it faces an October election in Bavaria in which it fears losing its cherished absolute majority.

Merkel's 2015 decision to keep borders open to migrants and refugees arriving from the Middle East via the Balkans, Hungary and Austria scrambled the traditional alliances of German politics.

Since then, more than one million people have arrived, while Merkel's governments have repeatedly tightened immigration and asylum laws.

Nevertheless, the anti-refugee, anti-Islam Alternative for Germany (AfD) entered parliament for the first time last year, leading to months of paralysis while Merkel struggled to put together a workable coalition.

Opinion polls point to the AfD making a similar entrance to Bavaria's regional legislature in October -- giving it seats in all of Germany's 16 states.

Weeks of "Merkel-bashing", however, have failed to help the CSU.

A Forsa poll Monday showed that Seehofer had even failed to rally a majority of CSU voters behind him, with 49% backing the chancellor in the dispute against 48% for the interior minister and party leader.