The International Call for a Quick Coalition

Whether they prefer a Merkel-led or Schröder-led government, the international observers of Germany's recent election agreed that the worst thing would be for Germany to dawdle, as this would only lead to uncertainty and a poor investment climate.

Foreign investors were especially disappointed by the unclear situation in Berlin. The Chairman of the German-American chamber of commerce, Dierk Müller, said, "US investors had hoped that the voters would make a clear decision." He added that for Americans familiar with a two-party political system, the forming of a ruling coalition was a complex and bewildering process.

The London headquarters of Deutsche Bank was also discouraged by the German election outcome. "German voters don't want any reforms," said Chief Economist for Europe Thomas Mayer. "The mandate says: do nothing."

Uncertainty is bad for business

A drawn-out and fractious coalition-building process could hurt Germany's image in the long-run. Economist Elga Bartsch of Morgan Stanley said, "The great uncertainty is bad for Germany's reputation as a good place to do business. The mood in the business community could take a turn for the worse. Psychology plays a major role."

Germany's great impact on the overall economic health of Europe was reason enough for the British Institute of Directors group of business leaders to call for a speedy government for speedy reforms.

"There is much more at stake in Germany than the simple question of which politicians get a slice of power in the new coalition team. The real question is whether Germany's leaders can assemble a government with the decision-making capacity to tackle the urgent task of economic reform," said Miles Templeman, Director General of the IoD in a press release.

Europeans hopeful for speedy solution

Political leaders, too, were hopeful for an expedient solution to the awkward state of affairs. José Manuel Barroso, the President of the European Commission, told the European Parliament in Brussles, "I have a duty on behalf of the European institutions to urge German political leaders to find a solution as soon as possible that is stable for Europe."

"Without a dynamic Germany, Europe cannot recover," he added refering to the leading role Germany often plays in EU discussions.

A major impact on European affairs

The final decision on who will lead the German government is of great concern to those with an interest in the stalled EU budget talks, the debate over the Turkish and Croatian accession to the EU, and the fate of the European Constitution, said EU spokeswoman Francoise Le Bail.

"Germany is a very important member state and there are a lot of important political dossiers which are on the table," Le Bail told reporters Monday. "As soon as there is a German government it will be possible for Europe to go ahead ... and a solution for these problems found."

The new European budget will not be able to advance without a German partner. As the largest economy in the European economic area, Germany has a lot to say on this sensitive issue.

Germany also has a divided stance on extending EU membership to Turkey, which is scheduled to open talks with the Commission on Oct. 3. Under Chancellor Schröder, Germany would almost certainly endorse proceeding with the negotiations; under Merkel as chancellor, however, Germany is more likely to block an offer of full membership.