The German chancellor is, under normal circumstances, the country's most powerful politician and de facto leader, but the German president is the actual head of state. Although largely symbolic, the office of the presidency carries the responsibility of ensuring that German democracy functions. That makes President Frank-Walter Steinmeier crucial to solving the impasse that is blocking the formation of the next German government.

The German system operates on the principle that politicians have a responsibility to put the will of the voters, expressed in elections, into practice. That's why Steinmeier pointedly reminded the political parties on Monday that they had a duty to compromise and form governing alliances rather than just call for a new election. Talks to create a so-called "Jamaica" coalition between Angela Merkel's conservatives, the center-right, pro-business Free Democratic Party (FDP) and the Greens acrimoniously broke down on Sunday.

Read more: The FDP's Christian Lindner: the coalition killer

Steinmeier's first move is to summon the heads of those parties, plus the Social Democrats (SPD), to discuss their issues and try to broker a compromise. The president spoke with the Greens and the FDP on Tuesday and has an appointment with SPD leader and defeated chancellor candidate Martin Schulz on Wednesday.

Breakthroughs are not expected. The FDP were reportedly the ones most responsible for scuppering the talks on Sunday, and the SPD has repeatedly and categorically ruled out extending the grand coalition Merkel led in the last legislative period.

But the discussions should be interesting, particularly between Steinmeier and Schulz, since they were members of the same party until earlier this year, when SPD grandee Steinmeier took up his new job and its demands of political neutrality.

A former SPD man at odds with the party

The 61-year-old Steinmeier is a former vice-chancellor, two-time German foreign minister and SPD chancellor candidate, who is known above all for his pragmatism. He has served with and run against Merkel – and now will be one of the main people trying to save her bacon.

In a further irony, that task puts him on a collision course with Schulz. Schulz has been heavily critical of Merkel since losing to her in the September 24 national election and has said he favors new elections. Steinmeier, himself a veteran of two Merkel-led grand coalitions, has said that Germans should not be asked to return to the polls and has called upon the SPD to give up their hardline stance.

Thus, Schulz and Social Democrats cannot expect to be treated with kid gloves. Steinmeier suspended his party membership upon becoming president, and as the head of the Chancellor's Office under ex-Chancellor Gerhard Schröder, he knows how to throw his weight around to get results. The major mainstream German parties may not like what Steinmeier has to say, but they have no choice but to at least act as though they are seriously considering his suggestions.

Still it is very unlikely in the political landscape right now that Steinmeier will be able to arrange either a Jamaica or a grand coalition. In that case, he will have some hard choices to make — ones that could have a huge impact on Germany's future.

Merkel's 'boss'

Even if no coalition deal emerges, Steinmeier is still required to nominate someone soon for the office of chancellor. That will almost certainly be Merkel. The candidate will be put forward for confirmation by the Bundestag and, ultimately, he or she only needs a simple plurality, which Merkel possesses, for election.

But if the chancellor is confirmed with a plurality, that doesn't open a clear path to the formation of a new government. In that case, Steinmeier has seven days in which to decide whether the new chancellor should form a minority government or whether the situation is so unstable that parliament must be dissolved and a new election held.

Interestingly, what the chancellor wants in all of this is of only secondary importance. For instance, even if Merkel says she wants a fresh election, as she did Monday in a TV interview, Steinmeier could overrule her wishes. In effect, the president can order the chancellor to form a government which she or he doesn't want to lead. In this respect, Steinmeier is Merkel's boss.

The chancellor's only real option in case the president puts her or him in what she or he considers an untenable position is to resign. In which case, the president proposes another candidate for chancellor to the Bundestag, and the whole rigmarole starts over again from the beginning.

Normally, none of these hypotheticals come into play because the chancellor in situ has secured a working parliamentary majority. 2017, however, is no ordinary political year. Frank-Walter Steinmeier may have thought he was taking over a largely symbolic office when he swapped the Foreign Ministry for the president's residence this March. But he'll be in the headlines and potentially making decisions that are anything but symbolic as Germany struggles to solve its current political impasse.