Caroline Wyatt: The two men were once bitter rivals

When Chancellor-to-be Gerhard Schröder and Finance Minister-elect Oskar Lafontaine stood in turn before a Social Democratic Party gathering at the weekend to deny reports of rivalry, they were rewarded with long applause from the party faithful.

But the ovation which greeted the talk of solidarity barely concealed fears that the relationship between Chancellor Schröder and Minister Lafontaine - who as party chairman took the podium before Mr Schröder - could prove an unworkable one.

Away from the rallying rhetoric of a party meeting, others take a more caustic view of the Schröder-Lafontaine relationship. Thomas Hanker, of the influential German newspaper Die Zeit, fears an ongoing power struggle between the chancellor and the party leader.

"Schröder wants to be the man who defines the policy. And during the first three weeks it was very difficult for him to take the initiative from Lafontaine," Mr Hanker said.

Certainly, there were moments before and after the election when the two men appeared literally to be shouldering each other aside, and many in Germany see Mr Lafontaine as the power behind the German throne.

Eyed the chancellorship

A gesture of solidarity for the party

Before the election he is known to have had his eye on Germany's highest office.

He lost the SPD candidature to Mr Schröder whose new left credentials were felt to make him better able to capture centrist voters who were beyond the reach of the more traditionally socialist Mr Lafontaine - dubbed "Red Oskar" by his detractors on the right.

After all, Mr Lafontaine had already had one crack at the chancellorship - in 1990 - and lost it to the apparently unstoppable Helmut Kohl.

Until Mr Lafontaine stepped aside as candidate this time round, he and Mr Schröder were reputed to be bitter rivals. As a reward for his recent loyalty, Mr Lafontaine won a powerful Cabinet position, as head of an expanded Finance Ministry.

Financial choices

But it could be precisely the presence of "Red Oskar" in the Finance Ministry that exacerbates the tensions between himself and the more economically conservative chancellor, especially since Germany faces key decisions on financial policy as the European Central Bank and the Euro establish themselves.

For Mr Schröder as well as Mr Lafontaine, the recent election was above all about reducing unemployment. Analysts such as Hans-Pieter Frolich, at the Cologne Economic Institute, believe that in the case of the new Finance Minister, this might translate into political pressure on the new European Central Bank for lower interest rates, to help create new jobs at home.

"This would be rather unfortunate, in a situation where this new currency is just coming into existence," Mr Frolich said.

Green Party MP Antje Heminau, who was witness to the discussions that took place around the shaping of Germany's new coalition government, believes the differences between Schröder and Lafontaine are a reality.

"The coalition discussions showed that there is a big gap between the financial ideas of Oskar Lafontaine and the economic ideas of Gerhard Schröder," she told the BBC. "And I'm very interested in what that conflict will turn out to be like."

She went on to suggest that only some sharp politicking within the SPD had succeeded in forging a workable relationship: "Things are more stable than anybody expected. The SPD really was very fussy about who had to become what and which minister and things like that."

'Division of labour'

Even within the SPD, commentators seem keen to spin the relationship as one of creative tension rather than deny the differences between the two men at the top.

SPD Minister for Europe, Günter Verheugen, describes the current relationship between the two as a "division of labour" rather than a split.