Photo-finish for Merkel and the Comeback Kid

BERLIN - Cast as a shoo-in for Germany's first female Chancellor - and a protestant from the east to boot - Angela Merkel is now discovering her expected role will not come easily.

In the months before Germany's parliamentary elections this Sunday, her Christian Democrat bloc basked in its double digit lead over Social Democrat incumbent, Gerhard Schroeder.

But fumbling on her part and a surge by the charismatic Schroeder has meant that all bets are off.

The election could be a narrow victory for a conservative-liberal alliance, a similarly paper-thin majority for the Social Democrats and the small left-wing parties, or even a grand Social-Christian Democrat coalition.

Many commentators say the election will go down to the wire.

At stake are 598 seats in the Bundestag, the powerful lower house of the German parliament. Its future composition will determine the course of Germany and will also have a strong influence on the European Union, of which Berlin is the paymaster.

With only a few days to go, polls show Merkel's conservative CDU/CSU bloc and its allies the Free Democrats (FDP) at between 47.5 per cent and 49 per cent, only a few points ahead of Schroeder's SPD-Greens alliance.

About 20 per cent of voters are still undecided and the feverish campaigning will go down to the wire.

Merkel said "every vote" will count, while Schroeder was more dashing, telling Bild am Sonntag that he was encountering support "wherever I go ... the tide is turning".

Merkel's problems are a reflection of Germany's divisions, between east and west, between traditionalist Catholics and Protestants.

She is distrusted in the east for chummying up to the "Wessis" - the westerners who in effect took over the east after unification in 1990.

Yet she is also distrusted in the west because she comes from the east, and among conservative Catholics because she is a divorced Protestant who eschewed having children.

Then there is her challenger. Schroeder, named the Comeback Kid for his return from the political brink in the 2002 general elections, who has ruled with the Greens since 1998.

Schroeder's weakest ground is the economy. Germany's unemployment rate is 11 per cent and his efforts to free up the labour market and trim back the welfare state have been bitterly opposed by many of his supporters.

But in two TV debates, Schroeder has turned the tables on Merkel, accusing her of plotting to dismantle the welfare state and claiming her plans to introduce a flat tax rate would have millionaires paying the same amount of tax as blue-collar workers.

Schroeder has urged voters to stay the course, vowing his economic reforms will see unemployment shrink and the economy grow.

If elected, Merkel will slash bureaucracy, liberalise labour laws, close tax loopholes and increase sales tax.

Schroeder has shrewdly exploited anti-US feeling in Germany by opposing the Iraq war. Merkel, meanwhile, has called for closer ties with the US.

One of Schroeder's most effective weapons has been his foreign ministry, Joschka Fischer, a Green, who has quietly built up German involvement in foreign missions as a peacekeeper rather than as a combat force.

Of all the permutations that could arise on Sunday, the "grand coalition" is the one least liked by analysts who fear it is a recipe for squabbling and incoherence and could push voters to the political extremes.

"If a grand coalition is forced into existence because no other majority is there then I would be pessimistic and see the danger of the lowest common (reform) denominator," warned political scientist Juergen Falter of the University of Mainz.