European Diary: Chancellor Gerhard Schröder's decision to seek an early federal election later this year has not only wrong-footed Germany's conservative opposition but added fresh uncertainty to a volatile European political scene.
In Brussels yesterday EU officials and diplomats suggested that Germany's election campaign would prolong the paralysis that has settled on the European Commission since the French referendum campaign began.
Most senior commission figures hope that Mr Schröder will lose the election to a centre-right coalition that will embrace the Lisbon economic reform agenda that José Manuel Barroso has made the centrepiece of his five-year term as commission president.
A Christian Democrat victory in Germany could create its own problems for the EU, however, not least because of the party's opposition to opening membership talks with Turkey.
The past few months have been a frustrating time in the Berlaymont, as important initiatives such as the services directive and new rules on state aid to industry have been put on ice for fear of alarming French voters. In the coming months, the commission, the Council of Ministers and the European Parliament will struggle to get much work done as they tiptoe around the sensitivities of German voters.
Mr Schröder's dash to the polls has probably snuffed out any remaining hope that EU leaders will agree a deal next month on the EU's next seven-year budget plan. Britain, which takes over the EU presidency on July 1st, is badly placed to secure a budget deal in view of its own isolation over the rebate secured by Margaret Thatcher in 1984.
Mr Schröder made it clear on Sunday that he wants to fight the election on the issue of economic reform - offering voters a choice between his government's reform programme and a centre-right alternative.
The Social Democrat-led government has made painful changes to Germany's social welfare and health systems, cutting unemployment benefit and putting greater pressure on recipients to seek work.
Health service reforms have already produced big savings, but the social welfare changes have yet to show an impact on Germany's dole queues.
The election campaign comes amid a debate on the market economy launched last month by the Social Democrat chairman Franz Müntefering, who compared hedge funds to "a swarm of locusts" that descended on German companies, stripped them bare and moved on.
Foreign commentators denounced Mr Müntefering, with some newspapers accusing him of anti-Semitism because he broke a post-war German taboo against comparing people with insects or vermin.
An overwhelming majority of Germans told opinion polls that they shared Mr Müntefering's sentiments, calling for business to be driven by social responsibility as well as shareholder value. Mr Schröder will join the debate next month with a major speech in Berlin on the social market.
The German debate echoes some of the discussions surrounding the EU constitution in France, where left-wing No campaigners have claimed that the EU is embracing the Anglo-Saxon economic model.
As Britain's Tony Blair assumes the EU presidency with a call for more deregulation, more liberalisation and more flexible labour markets, this debate is likely to become a pan-European one.
Economic liberals would be unwise to place too much hope in Christian Democrat Dr Angela Merkel, who has failed to persuade her party and its Bavarian allies in the Christian Social Union to adopt a radical economic reform plan.
A centre-right victory would, however, see the two houses of the German parliament in the same political hands, ending the policy gridlock that has hampered Mr Schröder's government.
Germany's Christian Democrats are no longer the enthusiastically Europhile party of Helmut Kohl, and leading European integrationists such as Wolfgang Schäuble and Karl Lamers are now sidelined. The party's opposition to EU accession talks with Turkey could create an immediate crisis if it wins power, as EU leaders are to decide on opening talks before the end of this year.
A new German government would have an opportunity within its first 18 months in office to introduce sweeping changes, even if they are unpopular with voters. Unfortunately for the EU, Germany's political window of opportunity coincides with the run-up to the next presidential election in France in 2007, making progress on the European political agenda now look like a difficult prospect.
