Schroeder stands firm as Merkel inches ahead

CONSERVATIVE challenger Angela Merkel claimed a mandate to form Germany’s next government - but an exuberant chancellor Gerhard Schroeder refused to concede defeat after his party did better than expected in yesterday’s election and insisted that he should lead the next administration.

Ms Merkel failed to get the convincing majority she needed to govern with her preferred coalition partners, the small, pro-business Free Democrats. Her Christian Democrats held a narrow lead over Schroeder’s Social Democrats late last night, with votes counted from 80% of districts.

If she is to become Germany’s first female chancellor, she would now need to find a parliamentary majority in a coalition that would force her to water down plans to shake up the sluggish economy.

One leading possibility was a link-up between the Christian Democrats and the Social Democrats -although such a coalition is viewed by some as a recipe for paralysis in a country where leaders must tackle problems such as an 11.4% unemployment rate.

The inconclusive election result sparked a scramble to see which party could come up with a majority.

Projections showed the Christian Democrats barely leading the Social Democrats, and supporters at Ms Merkel’s party’s headquarters were subdued.

Mr Schroeder’s supporters chanted “Gerhard! Gerhard!” as he raised his hands like a prize fighter, celebrating a comeback from as much as 20 points down in polls during the campaign.

Ms Merkel smiled but twisted her fingers in apparent agitation as she argued that she had a mandate to be the next chancellor - while a grinning Mr Schroeder said the apparent outcome was “disastrous” for Ms Merkel.

Both Ms Merkel and Mr Schroeder said they would talk to all parties except the new Left Party, a combination of ex-communists and renegade Social Democrats.

Mr Schroeder’s performance was reminiscent of the 2002 election, when narrowly won re-election after his vociferous opposition to the war in Iraq won the approval of voters.

A turning point this time was Mr Schroeder’s performance in their single head-to-head debate on September 4. He hammered her tax adviser, Paul Kirchhof, for having proposed a 25% flat tax, even though that is not part of Ms Merkel’s programme.

She also was hurt by a campaign gaffe by Edmund Stoiber, leader of the Bavaria-only sister party, the Christian Social Union. Stoiber disparaged voters in the economically struggling former East Germany, saying he didn’t want the “frustrated” east to decide the result. Now, Ms Merkel’s plans to make it easier for small companies to sack people, cut payroll taxes and let companies opt out of regional wage bargaining agreements seem much farther away.

Juergen Thumann, head of the Federation of Germany Industry, said the result was “bitterly disappointing.”

Mr Schroeder defiantly taunted Ms Merkel in a joint television appearance last night, saying she would not receive the post of chancellor in any deal with the Social Democrats.

“If Mrs Merkel manages to form a coalition with the Free Democrats and Greens, I can say nothing against it,” said Mr Schroeder. “But she will not win a coalition under her leadership with my Social Democratic Party.”

If the new parliament cannot elect a chancellor in three attempts, President Horst Koehler could appoint a minority government led by the candidate with a simple majority.

Other possibilities were an all-left government of Social Democrats, Greens and the Left Party, but a Left Party leader, Oskar Lafontaine, ruled out joining such a coalition. Another possibility would be Ms Merkel’s Christian Democrats, the Greens and the Free Democrats.

The Free Democrats leader Guido Westerwelle said his party would not work with the current government pair, the Social Democrats and Greens.