"She would have sent soldiers" says an SPD  campaign poster about Angela Merkel.

When German chancellor Gerhard Schröder called for a snap election in late May after his Social Democratic Party (SPD) lost a key state election in Germany's most populous state, Nordrhein-Westfalen, political analysts and news commentators thought he was about to commit political suicide. With infighting in his own party over Schröder's reform program and growing public discontent after implementation of the program's early stages, polls showed the SPD trailing the main opposition party CDU/CSU by nearly 20 percentage points. Schröder's opponent for chancellor, CDU party chairperson Angela Merkel, a colorless former East German university teacher, seemed to be a sure bet to be the first woman to occupy Germany's highest political office. "Newsweek" magazine even asked whether Merkel was the German Maggie Thatcher. However, everyone underestimated Gerhard Schröder's feisty spirit and staying power.

When the ballots were counted after the polls closed on September 18, Gerhard Schröder emerged as a winner who had lost. In the final weeks before election day the SPD gained over 10 percentage points in the opinion polls and came to within one percent of equaling the number of votes garnered by the CDU/CSU parties. Appearing before SPD supporters at party headquarters after the initial results began coming in, Schröder appeared defiant, telling the crowd that they had proven the opinion polls and media gurus wrong. However, with 222 seats in the Bundestag, Schröder's party won three seats less than the CDU/CSU. Traditionally the largest party in the Bundestag makes the first attempt at forming a new government, ensuring that its candidate becomes chancellor. Although Schröder's SPD and its environmentalist coalition partner, the Green Party, failed to maintain their majority in the Bundestag, Schröder still emphasized his claim to remain Germany's chancellor.

By contrast, Angela Merkel was technically a winner by a slim margin who lost big. Political analysts are already asking how the CDU/CSU managed to blow its seemingly insurmountable lead. Party leaders voiced support for Merkel on election night, but most commentators believe it is only a matter of time before she loses the support of party leaders. She, too, staked her claim to be Germany's chancellor. To achieve her goal she has two options. One would be to form a grand coalition with the SPD, which is all but impossible since Gerhard Schröder will refuse any position except that of chancellor. Her other option is the "Jamaica coalition" (based on the colors of the Jamaican flag) of black (CDU/CSU), yellow (Free Democratic Party) and green (Green party).

The neo-liberal Free Democratic Party (FDP) was another election night winner. With 9.8 percent of all votes cast, the FDP achieved its second best result ever and became the third largest party represented in the Bundestag. Analysts attributed the FDP gains to a clear-cut party program and a definite pre-election commitment to form a coalition only with the CDU/CSU. However, the CDU/CSU and FDP failed to achieve their goal of winning a majority in the Bundestag, so the FDP and its young chairman Guido Westerwelle are really losers. On election night Westerwelle again made clear pronouncements to party supporters and to the press that his party would only be available for a coalition with the CDU/CSU and would not be part of any coalition with the environmentalist Green Party.

Another election night winner was former SPD member Oskar LaFontaine, who reentered national politics by becoming the magnet in western Germany for disgruntled former SPD members. They formed an alliance called "The Left" with the "Party of Democratic Socialism" (PDS) in eastern Germany, made up largely of East Germany's former ruling party, the Socialist Unity Party (SED). LaFointaine's help ensured that the new alliance would clear Germany's special five percent vote requirement that a party can only be represented in parliament with so-called "2nd ballot" seats that are won indirectly if the party gains five percent of the vote nationally. In 2002 the PDS failed to meet the five percent requirement, but did win 2 seats directly by having the most votes cast in 2 districts. By meeting the five percent requirement this time, "The Left" jumped its seat total to 54, making them the fourth largest party in the Bundestag. However, since none of the other parties considers them to be truly democratic, they will not be invited to be part of any coalition. LaFontaine's contribution helped ensure that his old rival SPD Gerhard Schröder lost a number of seats to "The Left", possibly costing Schröder his chancellor's seat.

With no clear cut winner, the only real options are a grand coalition between the CDU/CSU and the SPD, or the "Jamaica coalition" of CDU/CSU, FDP and the Green Party. However, both larger parties appear unwilling to form a coalition, and the FDP had ruled out any coalition involving the Green Party. There are first reports, though, that the FDP may be willing to join a coalition with the CDU/CSU and the Green Party. Since the progressive FDP has a completely different business perspective than the the Green Party and the CDU/CSU wants to improve relations with the United States while Green Party foreign minister Joschka Fischer is partially responsible for the current state of German-U.S. relations, a "Jamaica coalition" will not produce a government based on a wide range of common goals. Instead, the common ground will be narrow and limited.

If no majority coalition can be formed, Germany's constitution does permit a minority government to be tolerated by the other parties represented in the Bundestag. However, a minority government or a majority coalition will not last a full four-year term. Germans do not like instability, and with the country's chronic unemployment and low economic growth, a weak democratic government is the last thing Germany needs right now. Look for new elections within two years at the most. If instability continues, look for more attention to be directed to those on the far right and left who claim to have a solution for the malaise.

• Paul Kieffer, September 19, 2005