EU in business after German poll

The EU looks to Germany to take centre stage

By Chris Morris BBC Europe Correspondent

The morning after the German election, and the clock starts ticking for the European Union.

From now until the end of the year, the EU faces a series of intense negotiations and a script full of potential drama.

The European Commission will be hoping that Gerhard Schroeder's acquired habit of bashing EU institutions at every turn proves to be a passing phase

It will be looking to Germany to take centre stage.

Germany is the biggest country in the EU. It has the largest population and the biggest economy. It also pays more into the EU's budget than anyone else.

Nothing significant can happen in the EU without sustained German involvement.

For the last few months, though, Gerhard Schroeder has taken his eye off the ball, consumed with his campaign for re-election.

But if the EU's next big project - its historic enlargement into central and eastern Europe - is to go ahead as planned, the union needs Germany to be fully focused on its European role.

Trouble ahead

It certainly will not be plain sailing. There are tensions and uncertainties on a whole variety of issues.

Mr Schroeder has split the EU with his forthright opposition to any military action against Iraq. British officials in particular have been dismayed by his rhetoric.

Schroeder and Jacques Chirac do not get on

Tony Blair may be pleased that another centre left leader has won re-election, but Iraq will strain his personal relations with Mr Schroeder.

It will hardly make the EU's dealings with Washington any easier either.

That may be nothing, though, compared to the difficulties in what has traditionally been the most important relationship in the EU.

Mr Schroeder and the French President Jacques Chirac do not get on. To put it mildly, the Franco-German motor has stalled.

And that will make it hard to resolve the most contentious issue in the enlargement process - how to pay for plans to invite up to 10 new countries to join the union.

Most importantly, France and Germany disagree bitterly on reform of the EU's hugely expensive Common Agricultural Policy.

Germany wants radical change and big cuts in subsidies before the newcomers join. France insists that its farmers must be protected.

As for the European Commission in Brussels, it will be hoping that Gerhard Schroeder's acquired habit of bashing EU institutions at every turn proves to be a passing phase - a convenient election gambit.

Big-ticket items

There is concern though that the chancellor has never taken the EU as seriously as he might.

Even Mr Schroeder's domestic policies will be closely monitored across Europe.

The big question is, how will he try to succeed where he has failed in his first term - to revitalise the struggling German economy.

With 12 EU member states locked together in the euro zone, Germany's slow growth, high unemployment and failure to reform its labour market have sent ripples of concern across the continent.

Crucial decisions need to be made on the future of the EU's Stability Pact and the budget rules the EU has tried to enforce across the euro zone - so a crowded agenda of big-ticket items.

Expect public statements of unity and determination, but ferocious negotiations behind the scenes as the EU heads into one of the most important periods in its history.