By Tod Robberson,The Dallas Morning News

LONDON – The leadership of Germany, Europe’s most populous and financially powerful country, goes up for grabs Sunday in an election showdown over conservative and liberal plans to fix the nation’s troubled economy.

The outcome could significantly alter Germany’s relationship with the United States, its leadership role in Europe and the country’s efforts to shake off a double-digit unemployment rate, German political observers said. Or it could lead to no change at all, regardless of who wins.

“The strangest election campaign ever is coming to an end,” said an editorial in the German newspaper Der Tagesspiegel. As for the nation’s political future, it added, “No one knows what will happen.”

Germans “want change, but they’re afraid of change,” said Constanze Stelzenmueller, director of the Berlin office of the German Marshall Fund. Painful economic adjustments are looming, and voters are worried about what both of the dominant parties are preparing to inflict on them, she said.

Pundits say no clear winner is evident in Sunday’s election, meaning that a coalition government is likely to emerge, with months of paralysis and political haggling to follow over ministerial positions.

That projection comes in spite of the formidable challenge posed by a conservative parliament member, Angela Merkel, to Chancellor Gerhard Schroeder’s center-left governing alliance. Merkel has favored strengthening German cooperation with the United States, whereas relations between Washington and Schroeder have been frosty for much of his seven years in office.

At one point during the summer, Merkel, 51, appeared to be a shoo-in to become Germany’s first woman chancellor. Her conservative Christian Democratic alliance carried a 20 percentage point lead in opinion polls over Schroeder’s Social Democrats and appeared strong enough to win the 50 percent of votes required to govern without a coalition.

In recent weeks, however, Merkel’s lead has slipped, and political analysts say a power-sharing arrangement between her party and Schroeder’s is a strong possibility.

Her popularity dropped after Schroeder unleashed an effective fear campaign focusing on her plans to strengthen ties with the United States, slash spending, reduce government subsidies and possibly introduce a controversial “flat tax” system.

The populist approach was reminiscent of the 2002-03 campaign, when Schroeder, facing almost certain defeat, began openly criticizing the planned U.S.-led invasion of Iraq. His party narrowly won the election but angered the Bush administration, and relations remain cool.

In the current campaign, Schroeder’s supporters have raised doubts about Merkel by invoking Britain’s former conservative prime minister, Margaret Thatcher, who earned her “iron lady” nickname by fighting labor unions and sharply curtailing the British welfare system.

During a televised debate last week between the two main candidates, Schroeder repeatedly promoted himself as a family man while portraying Merkel as cold and indifferent. His wife, Doris, later noted the fact that Merkel has no children and suggested the candidate might not understand the values of most German women.

Opinion polls heavily favored Schroeder as the winner of the debate. “Weirdly, a lot of people I know, particularly a lot of women, said, “But she did much better than he did,”‘ Stelzenmueller said.

“He looked rattled a lot of the time. She was very good on the details. She was tough. She rebutted him in every single case and didn’t make mistakes,” Stelzenmueller added. “But, clearly, my view is not borne out by the majority of those polled.”

Schroeder has capitalized on the contrast between his and Merkel’s personalities, said Emil Kirchner, a professor of German studies at the University of Essex in Britain.

“She just doesn’t really come across forcefully or, for that matter, in a way which persuades people. She looks haggard,” Kirchner said. “Schroeder, on the other hand, looks … like he’s in charge. And I think people are beginning to worry: Has she got the leadership qualities?”

Merkel has fought back by blaming Schroeder for most of the ills plaguing Germany: high immigration, 11.4 percent unemployment, and economic stagnation with the gross domestic product forecast to grow at only 0.9 percent this year.

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In one recent speech, she lashed out at the chancellor’s campaign style, saying: “He has set out to create fear in people by not telling the truth. … He has lied. What he has done is unworthy.”

But Merkel has alienated voters with her economic solutions, political analysts said. Although she has criticized rising fuel prices and heavy taxes on gasoline, she startled voters by proposing an increase on general sales taxes to 18 percent from their already high rate of 16 percent.

The man she has tapped as finance minister, Paul Kirchhof, has advocated a highly unpopular flat income tax and elimination of the graduated rate that increases with the level of income. He also favors cuts in the social welfare system, which many Germans regard as sacrosanct.

Whenever there’s even a hint of “an erosion of their social entitlements, whether it is pensions or social security or any related thing, it touches a raw nerve,” Kirchner said.

Some of her supporters want her to fire Kirchhof, but newspaper editorials have warned that such a move would make her appear weak. With the election so near, the Financial Times Deutschland counseled, “The only thing left to her is what she happens to do well: damage limitation.”

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(c) 2005, The Dallas Morning News.

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