Schröder's Social Democrats Suffer Fresh Losses

Voters in Brandenburg and Saxony handed a sharp rebuke to mainstream parties Sunday, giving radical right parties up to 9 percent of the vote and a boost to the former communists, exit polls showed.

Schröder's SPD lost about six percentage points on its 1999 result in Brandenburg, the vast state surrounding Berlin in the former East Germany, according to exit polls compiled by the ZDF and ARD public television channels. However, despite the losses, the SPD has managed to retain power in the state. Under Social Democrat Premier Mathias Platzeck, the party has about 32.6 percent of the vote, according to exit polls.

Its coalition partner, the opposition conservative Christian Democratic Union (CDU) also posted losses and took 19.6 percent. The CDU however lost its position as the second-largest party in the state to the PDS, the successors to the former East German communists, which clinched 28.3 percent support. That's the best electoral result the PDS has acheived in state elections. Dagmar Enkelmann, the ex-communist candidate for governor, immediately staked her party's claim to taking over the state government.

The right-wing German People's Union (DVU), which has campaigned on an anti-foreigner and anti-immigrant platform, will remain in the state parliament with support topping the five percent hurdle needed to get into parliament.

Conservatives to lose absolute majority in Saxony

In Saxony, SPD support dropped slightly to about 10 percent of the vote. But the biggest electoral shock was the rise of the neo-fascist National Democratic Party (NPD) (photo), which surged to nine percent from just 1.4 percent five years ago.

Though the SPD losses follow a string of electoral setbacks in regional, local and European polls ever since they launched their "Agenda 2010" social and labor market reform package, the bigger losers this time were the Christian Democrats. If exit polls are confirmed, the CDU could lose its absolute majority in Saxony and have to look for a coalition partner.

Eastern voters frustrated with SPD

Nationwide demonstrations taking place every Monday against the government's program of economic reforms and welfare cuts have been particularly strong in the formerly communist eastern half of the country.

That's because the latest slew of social welfare reforms, that will soon go into effect will have a proportionally bigger effect on the people in the economically depressed east, where unemployment is more than twice as high as in the west. Several East Germans also feel betrayed by the government because 15 years after the fall of the Berlin Wall, wages and pensions in the region are still lower than in western Germany.

Schröder has been calling on Germans to accept that their generous welfare system will not function if it is not trimmed and that painful labor market and social reforms are the only way to revive a stagnant economy and lower nagging high unemployment.

But so far, voters have responded by punishing the SPD at the polls. In elections in the western state of Saarland two weeks ago, support for Schröder's party plummeted by about a third to 30.8 percent, the lowest there since 1960.

Rise of extremism could deter investors

Ahead of the polls on Sunday, fears that the backlash against Schröder's economic reform agenda might bolster far right and left-wing parties in the two states prompted several business leaders to urge voters to stay mainstream. They warned that a surge in the extremist vote could scare off investors.

"For Brandenburg and Saxony the growing strength of the right radical parties and the PDS is almost catastrophic," Anton Börner, president of the Federation of German Wholesale and Foreign Trade told the Berliner Zeitung.

"Whoever votes for the extremists is teaching nobody a lesson," Georg Braun, head of another trade group told the paper. "He harms the image, and through that the economic growth of his home region for years."