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Why Schroeder clings to powerBy CNN Berlin Correspondent Chris Burns RELATED
SPECIAL REPORTYOUR E-MAIL ALERTSBERLIN, Germany (CNN) -- It may seem like megalomania in its highest form. A chancellor who is a sore loser, refusing to call a spade a spade and admit defeat. Choosing instead to engage in a prolonged celebrity death match with conservative challenger Angela Merkel. But there is more to it than ego-driven hardball tactics. The very survival of his party could be at stake. Yes, the flamboyant and charismatic Gerhard Schroeder contends it is thanks to him that Germany is on the path of kinder and gentler market-oriented reform. Critics say the chancellor's measures after seven years in power are half baked and are not reducing 11 percent-plus unemployment fast enough. Yes, Schroeder's leftist Social Democrats are the largest single party in the Bundestag after the September 18 election, if one considers the two conservative parties -- the Christian Democrats and Bavarian sister party, the Christian Social Union -- separately. But of course the CDU/CSU will have none of it, insisting that together they lead the SPD by a four-seat plurality in the Bundestag. Thus the drawn-out talks between the two blocs, neither of which is able to form a government with their traditional allies and so are likely to be forced together on the dance floor in a so-called ''grand coalition.'' That is where Schroeder and his SPD are playing hard to get -- holding out for the best deal possible, indicating Schroeder is expendable if they can beat out a more favorable compromise, both on a future government's policy and on Cabinet members. The charisma-challenged Merkel went into the talks severely weakened, after she and her conservatives squandered a 23-point lead in the campaign and won by a rice-paper-thin 1 percentage point -- thanks to their own missteps, and thanks in no small part to Schroeder's relentless attacks on Merkel's proposals for deeper cuts in taxes and spending, and to loosen labor market rules to encourage businesses to hire. For one, he characterized a conservative proposal for a 25 percent flat tax as a sop to the rich. Even in defeat, Schroeder played the ''Comeback Kid'' again, as he did in 2002 when he came from behind and narrowly defeated the conservatives to clinch re-election. This time, the tactic may not save his job, but it may save his party from oblivion. Schroeder's limited reforms -- trimming taxes and welfare costs, forcing the hard-core unemployed to look harder for work -- cost him the left flank of his party, who have split away to form the Linke, or Left Party, with former communists. That party played the spoiler in the September election and prevented the SPD from winning. Political pundits and observers say that if the SPD caves too quickly to the conservatives' demands and are in effect co-opted in a grand coalition that takes them hostage, they could further lose their rank and file to the Linke, the Greens or other smaller parties. That could spell the end of the party's position as a major player, and even its demise. So if you thought it is just a politician's head trip, think again. 
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