Sworn rivals face uneasy political union

BERLIN - Just three months ago, he was an object of ridicule, written off as a tired politician whose last trick for clutching onto office was to call a general election. Today, Gerhard Schroeder looks a different man.

As the weeks tick by to Germany's polling day on September 18, the Social Democrat leader, Chancellor since 1998, has a winner's gleam in his eye. His conservative rival, Angela Merkel, meanwhile, is floundering.

The stage is set for either a remarkable comeback or a realignment of Germany's political parties - and the impact will reverberate across Europe.

Schroeder, 61, called the election on May 22 even though he still had more than a year left in office. At the time it seemed like political suicide.

The Social Democrats were hammered by 12 per cent unemployment, a huge budget deficit and widespread loathing of Schroeder's reforms of labour law, welfare and pensions.

His party trailed the conservatives by 20 per cent in the polls and many predicted Merkel would become Germany's first female Chancellor.

But by refusing the allotted role of lame duck and by demanding a national consultation in the name of integrity, Schroeder has given the electoral battle a dramatic twist.

Former Chancellor Helmut Kohl, the architect of Germany's reunification in 1990, saw East Berliner Merkel as the key to winning over East Germans and women to his conservative Christian Democratic Union.

Kohl affectionately called her "das Maedchen" ("the girl") and brought her up through the ministerial ranks. In April 2000, Merkel stepped out of his shadow to become leader. She declared it a "generational breakthrough", and the media likened her to Margaret Thatcher (a comparison she denies).

Image engineers rushed to give Merkel a makeover. Her frumpy pageboy haircut was replaced and she was captured in baggy trousers and deck shoes in a holiday photo-shoot.

But the spin can only go so far. The Iron Maedchen has lacked charisma at election meetings, becomes bogged down in details and looks stiff and nervous on television.

Schroeder, in contrast, has earned his tag of the "Media Chancellor". He has looked relaxed and confident on television, digging at the US policy towards Iraq and Iran in a sure-fire election strategy.

Adding to Merkel's woes is internal friction. The Protestant childless divorcee has always seemed out of place in a CDU dominated by Catholic family men from western Germany.

Her biggest problem is the Christian Social Union, a deeply conservative Bavarian party and the CDU's electoral sister. CSU leader Edmund Stoiber ignited a storm by saying that people in the former East Germany were less intelligent than Bavarians.

As a consequence of all this, the CDU-CSU lead is slowly melting away. The 20-point margin of May has shrunk to 13 or 14.

The big beneficiary has been the new Party of the Left, formed by Social Democrat maverick Oskar Lafontaine and Gregor Gysi, of the former East German Communist Party, now renamed the Party of Democratic Socialism.

Pushing a programme of higher tax for big earners and loudly protesting at economic liberalism and globalisation, they are credited with about 10 to 12 per cent of the nationwide vote, ranging to a staggering 35 per cent in the former East.

Unchanged on about 7 per cent each are Social Democrat coalition partners the Greens, and the Free Democratic Party, a pro-business group that traditionally sides with the conservative bloc.

If current polling holds true, Merkel may fail to get enough seats - alone or with her partners - to forge a coalition under Germany's proportional representation system.

As voters seem to want to keep Schroeder but not his Government, a "grand coalition" may be forged between the Social Democrats and the CDU, quite possibly headed by Schroeder if his party continues to gain support. The last coalition between the bitter rivals was more than 36 years ago.

Many predict this would be a setback both for Germany and Europe.

Infighting could destroy Schroeder's economic programme just when it is starting to bear fruit.

Abroad, it could make Germany's voice in Europe chaotic and discordant, adding to the crisis over the European Union's constitution. Schroeder, for instance, wants Turkey in the EU. Merkel does not.

Germany is the EU's biggest economy, and its roles as EU paymaster and partnership with France give it enormous clout.

Whoever wins this election will help to shape Europe's course for years to come.

Most likely coalitions

CDU/CSU & FDP: The favourite of the financial markets, a "Black-Yellow" coalition is seen as a pro-growth alliance that would push deregulation.

CDU/CSU & SPD: A "Black-Red" "grand coalition" that most CDU/CSU and Social Democrat leaders claim they don't want is nevertheless the most likely alliance after a "Black-Yellow" coalition. Angela Merkel would take the Chancellor's office, while Gerhard Schroeder would most certainly retire.

- REUTERS