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Germany: Election Battle Goes Into Final Phase

Gerhard Schroeder (file photo) The electoral battle in Germany, Europe's biggest economy, is going into its final days, with the center-left Social Democrats of Chancellor Gerhart Schroeder desparately trying to close the gap with the conservative Christian Democrats of Angela Merkel ahead of the 18 September election. The two leaders appeared in a televised debate yesterday, in an attempt to sway voters to their side.

Prague, 5 September 2005 (RFE/RL) -- "Well, Mr. Schroeder is walking through the country and saying that the seven years of the red-green [the ruling coalition] were seven good years for Germany, and I have to say honestly that to the ears of many, many people this is really utter nonsense."

That was Angela Merkel, challenging Chancellor Gerhart Schroeder during their evening debate yesterday. She demanded he defend his leadership record when unemployment has risen to postwar highs.

But Schroeder had his defense ready. He said that his government has already launched difficult reforms that have brought a recent decline in joblessness.

"I'm not saying that this is something that I find satisfactory. How would I come to that idea? But it is evident that the reforms which we have launched, which no-one had the courage to do until now, are starting to take effect and that is exactly why this policy [has to be continued,]" Schroeder said.

The two also clashed over whether Turkey should be allowed into the EU.

Merkel said, “It would be very irresponsible to give Turkey the promise of full membership and then at a later date not be in a position to fulfill that promise.”

Schroeder called that view short-sighted. “You’re making a big mistake,” he said. “You don’t undestand the political importance of bringing Turkey into the EU.”

Postdebate polling showed that most of viewers felt Schroeder won the televised debate. But not by enough of a margin to catch up with Merkel before the election. Polls show Merkel’s Christian Democracts (CDU) with an 11-point lead over Schroeder’s Social Democrats (SPD) in the run-up to the vote.

But during the debate, Merkel still did not spell out her party's policy on key issues. As economic analyst Adrian Ottnad of the Institute for Politics and Economics in Bonn, said before the debate that Merkel has not yet told people what she plans to do.

As another analyst, Ingo Peters of the Free University in Berlin, sees it, that's because neither Schroeder nor Merkel have a convincing plan for reviving what was once Europe's most dynamic economy.

"If one takes a closer look into the programs they offer to solve Germany's problems, they are more or less similar, or they don't have real answers to the problems," Peters said.

Both leaders have emphasised the necessity for continued reform, in the expensive welfare state and in promoting labor flexibility to meet the challenges of globalisation.

The irony of the situation is that much of Schroeder's unpopularity is because he pushed through a start to reforms by making painful changes to health, welfare, and pension systems. And the electorate knows full well that Merkel plans even deeper cuts, if her CDU can rule alone or more likely in coalition with the small Free Democrats (FDP).

"The public can only expect stronger reforms and deeper cuts into the social security system, from a CDU-FDP government, of course everybody is aware that something has to be done, I think everybody is ready to face new challenges and perhaps even some cutbacks, but there have to be limits, otherwise this [process] might lead to some form of turmoil," Peters said.

There is already consternation among German voters about the impact of globalisation. Its impact is illustrated by the Volkswagen car company's announcement last week that it is considering building its new compact sports utility vehicle in Portugal, and not at its main German factory at Wolfsburg.

VW said that by doing that, it can save 1,000 euros per unit. It offered to stay in Germany if the labor unions agreed that the vehicle should be built under a scheme which seeks to put the long-term unemployed back to work. The point is, those workers earn only about 60 percent to 80 percent of the wages of regular VW employees. Such inroads into incomes is not a prospect which workers relish.

Germany has 4.8 million unemployed -- 11 percent of the workforce. As a result of the economic uncertainty, the German public has resorted to its traditional preoccupation of saving money, rather than spending it. This has led to widespread malaise in the consumer sector, which is not likely to change any time soon, unless the next government can instill a sense of increased economic security.

By contrast, the corporate sector is picking up, with export orders running strongly despite the continued strength of the common currency the euro. One thing that a win for Merkel would do is to improve the psychological climate for business even further.

"There could and should be a psychological impact, first of all, I think it is possible to create more confidence in the economy by bringing things onto a clear line," Ottnad said.

This growing business confidence has been evident since Schroeder announced an early election in May, raising the prospect of a more pro-business government coming to power. Since that time, the Xetra Dax share index has risen 10 percent.