Preparing for Battle

Merkel pledged continued cooperation with the Social Democrats (SPD) in her grand coalition government after the SPD named Foreign Minister Frank-Walter Steinmeier to challenge her in German elections next year.

However, the working relationship between Merkel and her deputy is likely to deteriorate slowly as the elections in 2009 get closer.

Christian Democrat (CDU) Merkel criticized the weekend maneuvering in her junior coalition partner that saw the popular Steinmeier named as the SPD candidate for the chancellorship and Kurt Beck ousted as party chairman.

Cracks in the coalition?

The machinations within the SPD were "unworthy" of a major German party and indicated "deep division," Merkel said, following the unexpected shake-up in the SPD hierarchy on Sunday.

Government spokesman Thomas Steg said Merkel and Steinmeier, who also holds the office of deputy chancellor, aimed to focus on the business in hand "until far into next year."

But political commentators said cooperation within the unwieldy coalition would become increasingly difficult in the months leading up to the elections, provisionally set for Sept. 27, 2009.

And the chairman of the minority opposition liberal FDP, Guido Westerwelle, called for early elections. "Germany cannot afford a full year of electioneering between the chancellor and the deputy chancellor," he said.

Meanwhile, a key Merkel ally urged Steinmeier to resist party pressure to campaign on foreign policy issues ahead of the election.

Lawmaker urges united foreign-policy front

Ruprecht Polenz, head of the German parliament's foreign policy committee, said Steinmeier's nomination came with risks at a time of major international crises such as the Georgia conflict.

"(The Georgia) crisis is not yet over. And on other issues, such as Iran or the Middle East, Germany will have to play an important role inside the EU and has to present a united front," Polenz told Reuters news service.

"If other countries receive contradictory messages from Germany, Germany's weight in the international community would be reduced. That's not in Germany's interests. Germany must present a united front," Polenz told Reuters.

Steinmeier has frequently clashed with the chancellor on issues such as the human rights situation in China and Russia, where he has taken a less overtly critical approach than Merkel.

Ronald Pofalla, general secretary of Merkel's CDU, called on Steinmeier to make clear the SPD's position on pro-market reforms and on its relations with the socialist Left Party, which has eaten into the SPD support base in recent months.

Steinmeier was named the SPD's top candidate in next year's elections at a closed meeting of around 50 top SPD leaders near Berlin on Sunday.

The announcement had been widely anticipated, but Beck's decision to resign as party chairman in favor of veteran SPD campaigner Franz Muentefering shook the German political landscape.

German business hails SPD changes

German business welcomed the changes at the top of the SPD as marking the return of leaders pledged to maintaining the pro-market reforms initiated by the last SPD chancellor, Gerhard Schroeder.

The head of the employers' organization BDA, Dieter Hundt, noted that Steinmeier and Muentefering were both close associates of Schroeder and worked together on his Agenda 2010 program that slashed social benefits and promoted job creation.

Their appointment offered the chance that the Agenda 2010 program, widely credited with cutting unemployment by 2 million over the past three years and putting the federal budget on course for balance by 2011, would be continued, Hundt said.

German Chambers of Commerce (DIHK) President Georg Ludwig Braun also welcomed the changes as bringing clarity to the party.

The DIHK had long worked effectively with the new duo at the top of the SPD, despite clear differences of opinion, he said.

Muentefering told reporters Merkel's party might dominate the government, "but it does not represent the majority political view." He admitted the SPD trailed far behind, but said it could catch up to the CDU by next year.