Angela Merkel and her vision of Europe survive to fight another round

Open source

Open source

However, sources within the CDU's Bavarian sister party, the CSU, suggested that Seehofer had offered to resign both as leader of the CSU and as interior minister.

Bavaria's Interior Minister Joachim Herrmann, who has been tipped as a potential successor to Mr. Seehofer, said in a radio interview his party wanted an agreement with the CDU but gave no indication about what a compromise could look like.

The coalition parties, comprising Merkel's Christian Democrats (CDU), the CSU and Social Democrats (SPD), are holding a series of meetings on Monday to decide what action to take.

Germany's constitution prevents federal ministers from outright quitting their positions, and must request to be dismissed by the German President.

CSU leaders are divided over how to face down a challenge from the anti-immigration Alternative for Germany (AfD) in October's regional election.

This would have deprived Merkel of her narrow parliamentary majority and forced her to either seek a new coalition partner or call a second election within a year, after scoring poor results in last September's vote.

"If Berlin introduced national measures, which would have a chain reaction, it could mean that Austria would have to react", Kurz added in solo remarks to press.

Ms Merkel would have hoped she had put the crisis that threatened to bring down her government behind her when she hammered out the last-minute compromise with Horst Seehofer, her rebellious interior minister, on Monday night.

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The compromise deal between Merkel and Seehofer suggests refugees arriving at the Austrian-Bavarian border who were first registered in European Union states that now refuse to take them back, such as Hungary, should be sent back to Austria.

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

Public anger and fear about the newcomers has given rise to the far-right, anti-Islam Alternative for Germany (AfD) party, which entered parliament previous year and threatens Seehofer's CSU in Bavarian state polls in October.

The Social Democrats, who rejected a similar plan three years ago, withheld their immediate consent and European Union states must also agree to take migrants back. Seehofer wants to unilaterally turn back refugees already registered in other European Union (EU) member states, while Merkel opposes it and has been calling for a European solution.

German Chancellor Angela Merkel has been criticized for adopting a much too relaxed policy on immigration.

"We will do the same thing and we'll come out ahead because there are more people arriving here".

A sharply weaker euro was an indication that the market was not very hopeful that an exit by Seehofer could be avoided‚ placing Merkel's three-month old - and carefully constructed - coalition in jeopardy. By suspending the European Union's Dublin regulations, which govern where immigrants are allowed to apply for asylum, Merkel took Hungary's burden and made it Germany's.

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