May 22, 2005 - 1:35 AM

Germany poised for national election battle

By Noah Barkin

BERLIN (Reuters) - Germany on Monday looked set for early elections after Chancellor Gerhard Schroeder called for a national vote in the autumn following a crushing regional poll defeat.

Schroeder announced his gamble two hours after voters in the large regional state of North Rhine-Westphalia (NRW) kicked his Social Democrats (SPD) out of government after 39 years.

"SPD calls to final battle," said top-selling newspaper Bild on Monday. "The chancellor is taking a big risk. But this taking the bull by the horns will probably spare the nation 18 months of political paralysis."

In a survey conducted by ARD television on Sunday night, 46 percent of respondents said they would vote for the conservative Christian Democrates (CDU) and 29 percent for the SPD.

The election call carries enormous risks for Schroeder, who has seen his personal ratings plunge as unemployment has surged to post-war highs.

Voters appeared to be punishing him for the fact that his painful welfare cutbacks have produced little or no visible gain.

Two years ago, Schroeder unveiled a package of labour market reforms known as "Agenda 2010" that sparked protests across the country. They include cuts in jobless benefits and stricter rules on means-testing for the long-term unemployed.

Schroeder hopes to convince Germans that the plans of the conservatives, who have largely supported his reforms, will be even more painful. He may also have headed off a left-wing revolt within his own party.

"It is a coup that is designed to mobilise the last reserves, discipline the party and distract from electoral loss. It is attack, poker for power, speculation on turbulence that could break out in the conservatives," said Sueddeutsche Zeitung. "Everything is placed on one card."

BID FOR EARLY ELECTION

Federal elections are held every four years for Germany's lower house, the Bundestag, with the next one due at the end of 2006. Early elections are possible only in exceptional circumstances and the final decision rests with the president, currently the conservative Horst Koehler.

Schroeder could seek a vote of confidence in the Bundestag as early as next month. Should he lose that vote -- which the government can try to lose deliberately -- Koehler would have 21 days to decide whether to dissolve parliament.

There is a precedent for an early election. The Bundestag was dissolved early at the behest of Christian Democrat Chancellor Helmut Kohl, who wanted new elections in March 1983 to expand his parliamentary majority.

Schroeder's shock announcement came after voters in NRW dealt the SPD its worst defeat since his re-election in 2002.

Preliminary results put the conservative Christian Democrats at 44.8 percent, against 37.1 percent for the SPD -- enough to win control of a region Schroeder's party has ruled since 1966.

The CDU's likely coalition partners, the liberal Free Democrats, stood at 6.2 percent, giving the two parties an absolute majority.

Once an SPD stronghold dominated by the coal and steel industry, NRW has fallen on hard times.

Unemployment in the state, which borders on the Netherlands and Belgium and is home to a fifth of the population, recently pushed above the one million mark to a post-war high. Voters have blamed Schroeder's reforms for their woes.

The result strengthens the hand of CDU leader Angela Merkel, who stands a good chance of running against Schroeder in a bid to become Germany's first woman chancellor.

The prospect of early elections was expected to boost German stocks on Monday. Brokers said foreign investors would be drawn by the hope that a victory for the CDU could mean more far-reaching economic reforms.

Schroeder faces an uphill battle in the coming months as he tries to convince disaffected voters to return to the SPD camp.

The SPD has now seen its support decline in nine consecutive state elections. NRW was the last state ruled by a coalition of the SPD and the leftist-environmentalist Greens, leaving the federal coalition in Berlin as the last "Red-Green" alliance.