The Social Democrats started counting ballots Saturday night that its members cast on a proposed coalition government deal with Merkel's conservatives.
Party workers were to work through the night at the party's Berlin headquarters using high-speed letter opening machines. The result is expected to be announced Sunday at around 9 a.m. (0800 GMT).
A majority "yes" vote means Merkel would remain chancellor of Europe's largest economy for a fourth term, after 12 years in office as one of the continent's dominant politicians.
A "no" vote would bring a new wave of uncertainty. Germany's parties have struggled to form a governing coalition, leaving Merkel in charge of a caretaker government since a September election.
If the coalition is rejected by the Social Democrats, the result could be a new election — or a minority government, which is unprecedented in postwar Germany.
Some 464,000 members of the Social Democratic Party were eligible to vote. Party leaders say they expect a "yes" vote to the coalition deal they hammered out with Merkel and her allies.
But some Social Democrats are unhappy at repeating the so-called "Grand Coalition" government between right and left parties that has been in place since the 2013 election. The dissenters have campaigned against renewing that coalition, saying the Social Democrats lost public support while in partnership with Merkel's Christian Democratic Union and the Bavaria-only sister party, the Christian Social Union.
Party chair designate Andrea Nahles told journalists Saturday in Berlin that "we hope that there will be no negative result. That's why I will not speculate about this, especially on such a sunny day. We are only prepared for good news."
Under a "yes" vote, Merkel would likely be re-elected chancellor by the Bundestag, or lower house of parliament, on March 14.
A "no" vote would put things in the hands of President Frank-Walter Steinmeier. He could nominate Merkel as chancellor. If no one gets a majority on two initial votes, a third vote is held in which the candidate with the most votes wins.
Steinmeier then would face a choice: appoint that person as a minority chancellor or dissolve parliament and hold a new national election.
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