Germany election outcome remains unclear

The outcome of Germany's election is still not known as Chancellor Gerhard Schroeder and his conservative challenger Edmund Stoiber ran neck-and-neck tonight in one of the country's closest post-war elections.

Projections by three polling agencies combining exit polls and early returns showed a slight lead for two Christian Democratic parties led by Stoiber, with about 39% to about 38% for Schroeder’s Social Democrats.

With nearly 97% of the vote counted, official results showed the Christian Democrats won 38.8% to the Social Democrats 38.8%. The Greens were in third, with 8.6%, followed by the Free Democrats at 7.4%.

The Greens, in coalition with the Social Democrats for the last four years, was polling at about 9% - which could be decisive in helping Schroeder stay in power.

Early returns showed the liberal Free Democrats, Stoiber’s likely coalition partner, polling at 7%.

According to ZDF public television, the Social Democrats and Greens would win 300 seats to 297 for the Christian Democrats with their likely coalition partner, the liberal Free Democrats.

Similarly, n-tv private television, using projections from the Forsa polling agency, gave 301 seats to a Social Democratic-Green coalition and 297 seats to the challengers.

However, another public TV station, ARD, projected the seat distribution at 302 for Stoiber’s likely coalition and 296 for Schroeder’s.

“One thing is already clear: We have won the election,” said a jubilant Stoiber at his campaign headquarters.

“The CDU, the great party of the centre, is back. It is the biggest party in parliament. We will make what we can of this great result.”

Cheers burst from the CDU crowd as exit polls were announced, followed by groans that the FDP was behind the Greens.

The Greens were elated by the strongest showing in their 22-year history. Leader Rezzo Schlauch said his party got momentum from the Iraq debate and the popularity of foreign minister Joschka Fischer.

“We are so happy ... There was the issue of war and peace, and we have a highly competent foreign minister. It was a combination of the issues and the people in charge.”

At the Social Democratic party headquarters, general-secretary Franz Muentefering said his party would pursue a coalition with the Greens even under the narrowest of majorities.

“A majority is a majority,” Muentefering said. “Coalitions are always difficult but we want to stay in power.”

The final days of the hotly contested race were overshadowed by tensions with the United States over Iraq, in particular by Justice Minister Herta Daeubler-Gmelin’s reported statement comparing Bush to Hitler for threatening war to distract from domestic problems.

While Schroeder has resisted calls to force her resignation, a government official said Schroeder would not include the minister in his Cabinet if he wins re-election.

In a campaign already remarkable for straining relations with the United States because of Schroeder’s emphatic opposition to American military action to oust Saddam Hussein, Washington responded with anger to the remarks attributed to the justice minister.

Despite sharp reaction from the White House and attacks by conservative challenger Stoiber for undermining US-German relations, Schroeder’s anti-war stance resonated with Germans who overwhelmingly oppose a new Mideast conflict.

Schroeder’s unusually harsh rhetoric - along with his handling of Germany’s catastrophic floods and strong performance in a televised debate - helped him close the gap with the Bavarian governor, who led the polls for months with attacks on Schroeder’s economic record.

Voter turnout was running slightly behind 1998, with official figures showing 42.8% of the more than 61 million voters casting ballots by 2pm, compared to 47% at the same hour four years ago.

Though the ruckus over the justice minister ruined the final hours of his campaign, Schroeder appeared confident and smiling as he voted in his home city of Hanover. He declined to answer questions about the minister’s fate, but admitted: “One is always a little nervous.”

His conservative challenger has used the affair as ammunition, accusing the chancellor of whipping up emotions against the United States, Germany’s staunchest ally, for electoral gain. Stoiber has pledged to repair the damage with Washington if elected.

On Iraq, Schroeder has insisted he would not commit troops for a war even if the United Nations backs military action.

Like the chancellor, Stoiber opposes unilateral US action, but he insists Germany must be ready to support any UN-backed action against Saddam - though not with frontline troops.

Stoiber also wants faster tax cuts than Schroeder especially for small and midsize businesses.

He pledges to overturn a Schroeder law that widened the powers of unions in workplace decisions and to curb rising energy taxes. And he intends to scrap an immigration law passed under Schroeder that he says is too liberal.

With two big and three smaller parties competing today, the Free Democrats could resume the kingmaker’s role they played in most post-war governments.

The major party best able to form a stable coalition - not necessarily the one with the most votes - will lead the next government and downsized 598-seat parliament.

Schroeder, 58, has governed with the Greens since unseating Helmut Kohl in 1998 and ending 16 years of conservative rule. He says he wants another four years with the party.

Stoiber, 60, has embraced the Free Democrats as he ran for national office after governing Bavaria for nine years. But the pro-business party FDP refused to rule out a coalition with either party in hopes of replacing the Greens as third-strongest force.

Germans cast two votes, one directly for a local candidate and one for a party. The party vote is critical because it determines the percentage of seats each party wins in the Bundestag, or parliament.

To enter parliament, parties must either win 5% of the vote or at least three seats directly.

In the current 669-seat legislature, Schroeder’s Social Democrats hold 298 seats, the Christian Democrats/CSU 245, the Greens 47, the Free Democrats 43 and the ex-communists 36.