FOR THE SECOND time in four years, Germany's August has been enlivened by a hotly contested election campaign, and once again Chancellor Gerhard Schroeder has sought to help himself with anti-American demagoguery. "Let's take the military option off the table. We have seen it doesn't work," he bellowed at one rally, referring to President Bush's refusal to rule out force in the case of Iran. Never mind that Mr. Schroeder declared just a few weeks ago, during a visit to the White House, that he "couldn't agree more" with Mr. Bush's message that the development of an Iranian nuclear weapon is "unacceptable," or that his rhetoric undermined an urgent attempt by the European Union to pressure Iran into accepting limits on its nuclear program. The chancellor hoped to repeat his feat of 2002, when his attacks on Mr. Bush's move toward war with Iraq helped him win a new mandate, at the expense of a poisoned relationship with Washington.
Luckily for German-American relations, and for Germany, Mr. Schroeder's gambit appears unlikely to work this time. With a little more than two weeks left before the Sept. 18 election, polls show him a dozen points behind the candidate of the Christian Democratic Union, Angela Merkel. Barring a dramatic reversal, the 51-year-old former physics professor stands to become the first female chancellor in German history, and also the first citizen of the former communist East Germany to lead the reunited state.
That's one of several reasons the German election stands to be one of the most important in the country's post-World War II history. In addition to the possible end of Mr. Schroeder's seven-year tenure, Germans also face a dramatic choice about the direction of their social welfare state, which has offered relative security but also high unemployment and years of stagnation. Mr. Schroeder is being punished in part for Germany's 12 percent unemployment rate, the highest since World War II. But he also lost some of his left-wing base by taking the first painful steps toward reform, including a restructuring of unemployment benefits. There are signs that Germany's economy is already responding to the medicine, but Mr. Schroeder, who long ago wrecked his credibility at home as well as abroad, is getting little credit.
Ms. Merkel supports much more aggressive reforms, including a revamping of stifling labor regulations and income taxes. One of her chief advisers is a proponent of a flat tax, a breathtakingly radical idea for Germany. But the German debate is wide-open: In addition to Mr. Schroeder's Social Democrats and the Green party, Ms. Merkel's coalition is challenged by a new left-wing populist party that crusades against globalization, calls for an immediate German withdrawal from Afghanistan -- and so far is attracting enough support to become a factor in the next Parliament.
How much change occurs in Germany will depend not only on whether Ms. Merkel can hold her lead, but also on whether she is able to form a government without resorting to an unwieldy "grand coalition" with Mr. Schroeder's party. The result matters not only for transatlantic relations, though the ouster of Mr. Schroeder would certainly remove a major irritant. Whether Europe can emerge from its long economic slump, and help to right the dangerous imbalances in the global economy, will depend in large part on whether its largest economy can recapture its once-enviable dynamism. For Washington, and the rest of the industrialized world, Germany's vote will be worthy of close attention.