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STEVE INSKEEP, host:

We're moving next to Germany where Germans are facing weeks of political maneuvering after yesterday's inconclusive parliamentary election. Neither the Christian Democrats, led by Angela Merkel, nor the Social Democrats, headed by Chancellor Gerhard Schroeder, scored a clear victory. As NPR's Rachel Martin reports, it's unclear now what sort of government will emerge.

RACHEL MARTIN reporting:

The champagne was flowing early at Christian Democrat Party headquarters in Berlin, but when initial exit polls were released, the thousand or so CDU supporters gathered there, put down their glasses aghast with disbelief.

Unidentified Woman: Oh.

Unidentified Man: Oh.

MARTIN: They had banked on a clear-cut victory for Angela Merkel and the CDU, but that didn't happen. The Christian Democrats won roughly 35 percent of the vote, well below the majority they'd hoped to claim to form a government with their allies, the Free Democrats, but that didn't stop Angela Merkel from claiming a mandate when she spoke to her supporters.

Ms. ANGELA MERKEL (Chancellor Candidate, Christian Democrats): (German spoken)

MARTIN: `The CDU is the strongest power,' she said. `We have a clear mandate of forming a government under difficult circumstances. It's not enough for the coalition we wanted, but I will still pursue this mandate with everything I have to give.'

(Soundbite of applause)

MARTIN: But across town at the Social Democratic SPD headquarters, there was no talk of concession. Gerhard Schroeder took the stage and congratulated his party for beating the odds and taking roughly 34 percent of the vote. Even though it's the worst performance by the SPD since World War II, it was enough for Schroeder to claim his own version of victory.

Chancellor GERHARD SCHROEDER (Social Democrats): (German spoken)

MARTIN: `I feel I've been affirmed by our country,' he said, `to ensure that for the next four years there will be a stable government under my leadership.'

(Soundbite of cheers)

MARTIN: The election results shocked many German voters and left them trying to make sense of it all. Hundreds of people gathered at a popular bar in central Berlin to watch the election returns on television. Carston Martell(ph) is a salesman from the Rhineland who voted for the CDU because of their plans to loosen up the labor market. He said he's surprised and disappointed with the murky outcome.

Mr. CARSTON MARTELL (Salesman, Rhineland): The biggest disaster that could happen, that they are both at the same level and there's no clear decision and we just have to form a ...(unintelligible) coalition now.

MARTIN: Matias Kunaker(ph) voted for Schroeder and the SPD. He says the Christian Democrats would have done better with a different candidate.

Mr. MATIAS KUNAKER (Voter): I'm not surprised because I know that the conservatives put the wrong horse in the elections. Angela Merkel was the wrong horse.

MARTIN: The CDU lost some key constituencies, and by all counts, the results were a big blow to Angela Merkel. She was the first chancellor candidate from former East Germany, so the CDU had hoped to do well there. They didn't, getting only a quarter of the vote. Merkel also performed worse than expected in her home state as well as the CDU's traditional strongholds in south Germany. Kristoff Shult(ph) is a political editor with the Germany weekly Der Spiegel.

Mr. KRISTOFF SHULT (Political Editor, Der Spiegel): Such a loss and such a bad result always has something to do with the candidate, and everybody thought that as a first woman candidate she would reach the hearts of the Germans much easier, but she didn't.

MARTIN: It's unclear at this point what Angela Merkel's future will be and what kind of coalition she could form if any. The CDU doesn't have enough votes to ally with its traditional partners, the Free Democrats, but neither does the SPD have enough votes to form a coalition with its partner for the last seven years, the Greens. This could mean some peculiar alliances, including the possibility of a so-called grand coalition which would make unlikely bedfellows out of the Social Democrats and Christian Democrats. Malta Lemming(ph), op-ed editor for the German paper Tagesspiegel says a grand coalition could mean a hamstrung German parliament.

Mr. MALTA LEMMING (Tagesspiegel): But this SPD cannot move very far in terms of economic reforms and a weak Angela Merkel, who just had a terrible loss in the election, would not be a good chancellor. So, yes, we can have a new government. It will be unstable and weak.

MARTIN: The political horse trading has already begun with major party leaders meeting last night to lobby for their respective coalition preferences. Even if the CDU does form the governing coalition, Angela Merkel will have difficulty getting many of her reforms through. And then there's the current chancellor. Many thought Gerhard Schroeder was on his way out, but his party is just 1 percentage point under the CDU, and in the coming coalition negotiations, anything could happen.

Rachel Martin, NPR News.

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