Germany's 'Tories' prepare for power

The women wear Burberry scarves, UGG boots and a lot of make-up; the men favour brass-buttoned blazers and loud blue and yellow striped ties. The political rallies hosted by Germany's pro-business, liberal Free Democratic Party (FDP) are like early Sloane Ranger parties – and this event was no exception. Crowds waited in front of the 500-year-old town hall in the prosperous west German town of Osnabrück for the man who is expected to put the Free Democrats back into power in next week's general election, ending a period of exile from national government that has lasted 11 years.

Guido Westerwelle tries hard to be German liberalism (which translates into the British equivalent of the Tories rather than Nick Clegg and co) personified. The openly gay party leader, 47, is permanently suntanned, nearly always in a suit and clearly obsessed with bringing the FDP back into government. His almost single-handed campaign is peppered with dire warnings about the "Red Menace" facing Germany, and outrageously high taxes he blames for crippling small- and medium-sized businesses.

In Osnabrück, Guido (as he is known to followers) lost no time in attacking the threat posed by an eventual coalition of the Social Democrats and more communist Left party that could rule Germany. "They claim to be democratic socialists," he said of the Left party. "But there is no such thing as democratic socialism; it's like talking about a vegetarian abattoir," he added, to laughter.

Voters appear to be impressed with his party's commitment to cutting taxes and ridding Germany of the restrictions and bureaucracy that not so long ago earned it the title of "sick man of Europe". One of the Burberry-clad ladies at Mr Westerwelle's rally said she would vote for him because the conservative Chancellor, Angela Merkel, had "gone socialist".

Latest opinion polls suggest the Free Democrats are within a hair's breadth of realising their long-held ambition to form a coalition government with Mrs Merkel's conservatives after the election on 27 September. Mrs Merkel is certain to take the lion's share of the vote but the race to be her coalition partner is too close to call. Some polls suggest the liberals will get in with a margin of 1 or 2 per cent; others forecast that Mrs Merkel will be obliged to continue her present unwieldy grand coalition with the Social Democrats.

Mr Westerwelle is fighting tooth and nail for a place in government. He has flatly ruled out joining a coalition with any of Germany's other parties, dismissing the idea as "completely unworkable". Mrs Merkel has also committed herself to forming an alliance with the liberals, even if it is obtainable with only a single seat.

Pundits predict that if the FDP gains power, it will usher in a new era of pro-business, market-oriented government. The currently left-of-centre conservative Mrs Merkel, they argue, could transform herself into a Teutonic, albeit toned-down, MargaretThatcher overnight.

Gerd Langguth, a political scientist who has written a biography of the Chancellor, says many conservative voters are frustrated by the Merkel government's handling of the recession and its readiness to prop up failed banks and ailing car manufacturers, such as Opel. "The Free Democrats are benefiting from the support of disappointed conservative voters who are fed up with what they see as the state-capitalism practised by Mrs Merkel's party," he said. "The liberals stand out because of their clear pro-business policies."

Mrs Merkel's Christian Democratic Union fought the last general election in 2005 promising radical economic reform. But the conservatives secured such a wafer-thin majority as result that they were forced to form a coalition with the Social Democrats. Since then, Mrs Merkel has not dared to mention serious changes on the economic front, fearing the subject was a sure vote-killer.

So the legally-trained Guido Westerwelle has been plugging the gap. He promises a radically simplified tax system that will put more money in the pockets of those who go to work. He attacks the conservatives for rushing to the aid of Germany's major concerns as soon as they face economic problems, while ignoring the plight of the vast Mittelstand, the medium-sized manufacturing firms that provide 70 per cent of German jobs. "When a big car company is in trouble, the government bails it out," he says. "But when a small firm has problems, the owner ends up mortgaging his house." Tax cuts, he says, are the only way to help these smaller firms stay in business and keep jobs.

His serious campaign message appears to have transformed the German liberals' prospects. Early in his career as party leader, Mr Westerwelle liked to portray himself as Germany's "fun politician". He followed the mayors of Berlin and Hamburg in announcing that he was gay. Then he started turning up at rallies in a bright yellow bus called the Guidomobile and wearing shoes with the figure 18 emblazoned on the soles in the liberal colour yellow to stress the percentage of the vote his party wanted to bag. He even put in an appearance on the German version of Big Brother.

While nobody in Germany bats an eyelid about Mr Westerwelle's homosexuality, many blame his "fun" antics for the party's poor showing in the 2002 and 2005 elections. If his party forms part of Germany's next government, Mr Westerwelle will be expected to take the job of foreign minister like the heads of most junior coalition parties before him. Unlike the other parties in opposition in Germany, the Free Democrats are not clamouring for a speedy withdrawal of the 4,500 German army troops in northern Afghanistan, but neither are they prepared to send their forces to the more dangerous south.

Mr Westerwelle insists it is Germany's job to confront the Taliban. But his party has decided to break with one of Germany's near sacrosanct post-war codes by demanding an end to conscription. The liberals say a professional army would be much better suited to Germany's military needs.

The Free Democrats also want to hang on to Germany's nuclear power stations beyond the scheduled shutdown date of 2020 so Germany can sufficiently develop its alternative energy sources and avoid its dependence on Russian gas. "If we don't want to be blackmailed we have to diversify," Mr Westerwelle says.

Yet whether he will accept the foreign minister's job that was held by his famous liberal predecessor, Hans-Dietrich Genscher, for decades, is no foregone conclusion. If he is asked, he always fights shy. "I wish it was the agriculture minister's job I was up for; at least that's a subject I really know something about," he said in an interview. He did not appear to be joking.

Partnership politics: Germany votes

Q. Who's going to win the German general election on 27 September?

Right now, it looks as if Chancellor Angela Merkel's conservative Christian Democrats will secure the biggest share of the vote. In the run-up, they have been polling 36 per cent, mainly because Mrs Merkel is one of Germany's most popular leaders since the war.

Q. But that means she'll have to find a coalition partner won't she?

Yes, and this is where the outcome is almost impossible to predict. Mrs Merkel wants to end her present grand coalition with the left-wing Social Democrats and form a new government with the pro-business Free Democrats. Some polls predict that the liberals and conservatives will squeak enough votes to form such an alliance; others that they will just fail.

Q. What would a conservative coalition mean for Germany?

It would result in key policy changes including lower taxes and a long-term delay in Germany's plan to phase out all nuclear power stations by 2020. It would also enable Mrs Merkel to introduce a programme of structural and economic reform she abandoned when she was obliged to join with the Social Democrats after the 2005 poll.

Q. What will happen if Mrs Merkel hasn't the votes for a new alliance?

In that case, she will be forced to continue her existing arrangement with the Social Democrats. That's likely to mean a continuation of compromise politics with both parties agreeing on the lowest common policy denominator to govern.