THE RE-ELECTION of Gerhard Schröder as German leader on Sunday was bad news for George Bush and the warmongers. Schröder staged a remarkable recovery to narrowly clinch the election for one central reason - his stated opposition to a US war on Iraq, even if it gets the blessing of the United Nations.
Schröder's SPD party (equivalent to the Labour Party in Britain) began the campaign 9 percent behind the Tories led by hard right winger Edmund Stoiber. But on Sunday the SPD won 251 seats in parliament to the Tories' 248, despite getting slightly fewer votes than them. Schröder is able to form a government because his coalition partners, the Greens, got their best ever parliamentary vote, 8.6 percent. The SPD lost votes compared with 1998, when Schröder ended 16 years of Tory rule.
It found deep disillusionment among working class voters, stunned that unemployment has risen over the last 12 months to return to the four million figure Schröder inherited. Every serious commentator in Germany says it was Schröder's shift to an anti-war position halfway through the election that encouraged embittered SPD and Green supporters to vote to keep the Tories out.
It enabled the SPD to take votes in eastern Germany from the former Communist PDS. It got two MPs but failed to win enough votes under Germany's election system to get extra MPs reflecting its 4 percent share of the vote. The Bush gang knew full well that the war was a central issue in the election. Two days before the poll US national security adviser Condoleezza Rice accused Schröder's government of 'poisoning relations' with the US.
The SPD-Green victory also runs counter to Tony Blair's New Labour ideology. There has been a string of defeats for left of centre parties in Europe over the last two years - crucially in France, Italy, Austria and the Netherlands.
That has led Blairite thinkers to argue that the only way to win is to repeat right wing or far right wing scaremongering over immigration and crime. Edmund Stoiber in Germany played the race card in the last ten days of the election. Schröder won.
He has introduced measures against asylum seekers, but he steered away from Tory immigrant-bashing during the election. Schröder, however, returns to government weaker than before and facing deepening political and economic instability. There is widespread scepticism, and rightly so, among those who voted for him that his anti-war stance could buckle.
Schröder backed the US-led war in the Balkans and the previous attack on Iraq. His opposition to this war is not based on principle. It is partly a reflection of the fact that German big business does not believe its interests will be advanced by a US victory in the Middle East. Schröder is a strong supporter of a European 'rapid reaction force', which if developed would give European states the capacity to intervene across the globe like the US, but in a less ambitious way.
His anti-war stance has not translated into refusing the US permission to use bases in Germany to prepare for an attack on Iraq. And he has indicated that he wants to repair relations with Bush. That can all generate opposition to Schröder from left wing forces that are clearly opposed to militarism. He faces even deeper problems over the economy.
Over the summer he appointed Peter Hartz, personnel director of Volkswagen, to chair a commission on unemployment.
Its central proposals were to reduce access to unemployment benefit and move to a New Labour style 'Welfare to Work' regime. Schröder accepted the proposals, but steered clear of implementing them in full before the election for fear of confronting the trade unions. Now, however, he is under pressure from big business to press ahead with deregulation.
'Top of the list are a clear reduction of non-wage labour costs, and reform of the overstretched social security system and flexibility in the labour market,' says the chief executive of Germany's largest retailer. Schröder may have stepped away from the Blairite ideology he embraced four years ago, but he still wants to appease big business.
And he wants to cut public spending. The Financial Times reported on Monday, 'He is likely next year to introduce new austerity measures in order to meet European Union stability pact commitments.' This puts him on a collision course with trade unionists and SPD voters. There was rejoicing when Schröder entered government four years ago. This time there is relief that a right wing Tory was stopped.
Resistance to mass unemployment and austerity measures broke out at the start of the election campaign, symbolised by a militant strike of construction workers. The pressure for deeper resistance remains after the election. That matters. Germany is the biggest economy in Europe and the third biggest in the world. Political polarisation there will find an echo across the continent.