Gerhard Schröder has exacted a high price for handing the chancellorship to Angela Merkel, seizing eight of the most powerful ministries, says Roger Boyes, Berlin Correspondent of The Times

"The Social Democrats realised that the arithmetic was against them. On September 18 they were three seats behind, but after the election in Dresden eight days ago, which gave the Christian Democrats another seat, the penny finally dropped. They realised that they were not the expression of the popular mood.

"It was then that their second election strategy kicked in: how expensively could they 'sell' the top job. At the beginning, Herr Schröder swaggered around arrogantly saying that he was not going to go. As time went on he became little more than a bargaining chip.

"Now, after a series of talks and with time running out, the Social Democrats have bartered their way into obtaining a very good price for the surrender of Chancellor Schröder.

"One Christian Democrat even compared it to being a slave in a slave market, with his party colleagues auctioning him off for the best deal.

"This has been personally humiliating for Herr Schröder, and by last night even he had finally had enough of the game. He was putting pressure on his party to find a quick solution.

"In return for giving up the chancellorship, the Social Democrats have taken eight of the 16 ministries. This includes foreign affairs, reform, employment, health, transport and finance. They will come into the government in a very powerful position.

"Angela Merkel's Christian Democrats, in contrast, have the department of the interior, which will be important during the World Cup next summer. They also have defence, economics and a clutch of others.

"Although the Christian Democrats also take eight ministries, Frau Merkel will have to give at least two or three away to the Christian Social Union, her sister party in Bavaria. This leaves her only five or six posts to share out to reward people within her party.

"That will cause resentment immediately, and means that she will have opposition from disaffected elements, who will scratch away at her power base. Frau Merkel will begin from a weak position, and will be shorn of any real power to introduce half of the things she promised.

"Germany's financial position is very poor indeed and unemployment - already at around 11 per cent - is expected to stay very high. Forecasts show that although we are supposed to be at the dawn of a new era of economic revival, growth is actually staying relatively unchanged.

"Both parties realise that the economy is the priority and both are interested in reform, but there will be a lot of horse-trading between the two and we will probably see a number of the Christian Democrats' flagship policies disappear - most notably giving up their fight against a universal minimum wage.

"Frau Merkel will not be able to produce any crowd-pleasing quick fixes to bolster her support and show that everything is back on track.

"She has won the chancellorship at last, but it's a poisoned chalice. Far from being Germany's equivalent to Margaret Thatcher many people believe she is going to be a short-term leader.

"As for Herr Schröder, it's not clear what he's going to do next - whether he will take the foreign ministry or retire back to his ambitious wife and start to write his memoirs."

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