Angela Merkel

Party Leader -- Christian Democratic Union -- Germany

Only months ago, Germany's center-right Christian Democratic Union party was wallowing in a campaign finance scandal surrounding ex-Chancellor Helmut Kohl. It seemed the party, which has ruled Germany for most of the last 50 years, was doomed to suffer the fate of Britain's Conservatives after the departure of Margaret Thatcher: drifting for years in the vacuum left by their domineering leader.

Then came Angela Merkel, the CDU's secretary general. In December, she shocked party comrades by writing an article for the Frankfurter Allgemeine newspaper calling for an investigation of the campaign financing scandal. That was a clear attack on Kohl and his refusal to name contributors to a CDU slush fund. It was a risky and controversial move, but it marked Merkel in the public mind as an independent thinker willing to challenge Kohl's legacy.

Merkel's popularity soared. That alarmed members of the party Old Guard like Chairman Wolfgang Schauble and former Defense Minister Volker Ruhe, who tried to block her advance. They even held a late-night, stop-Merkel strategy session in a Leipzig beer cellar. But the days when a clique controlled the CDU were over. At a party convention in April, Merkel was swept into the top office on a wave of grass-roots enthusiasm.

The Merkel surge has been hard on CDU leaders like Schauble who thought they might be Chancellor someday. Tough luck, guys. Merkel, 45, has sparked a CDU revival no one thought possible a few months ago. Already, she has proved a formidable rival to Chancellor Gerhard Schroder in the struggle for the soul of Germany's vast middle class. If she's clever, she could restore the CDU's image as the party best able to manage the economy.

WELCOME ANTIDOTE. Merkel, with her page-boy haircut and drab suits, is an unlikely media star. But to German voters she's a desperately needed antidote to the stagnation and pomp of Kohl's final years in office. Kohl tolerated no dissent, but Merkel is encouraging many views. She's used to that in her own family. Her mother supports Schroder's Social Democratic Party, and her brother backs the Greens. But after 16 years of Kohl, the CDU isn't used to much democracy, leading commentators to warn of destructive infighting. "Oh, we'll handle it," Merkel says, dismissing such predictions. "In a world where not all the questions are answered, we need to be able to have lively discussion."

That kind of freshness has already made Merkel more popular than Schroder. Indeed, she's a kind of politician Germany has never seen before. A pastor's daughter who grew up in the former East German city of Templin, she seems nonplussed by the attention showered on her. She still places her own phones calls, saying: "Hello, this is Merkel." In her spare time she reads, walks, and gardens.

But her popularity is partly a honeymoon effect. The hard work lies ahead. Business leaders have embraced Schroder and his pro-business reforms such as tax cuts. Merkel has to convince business that the CDU instead best represents their interests. As parliament prepares to vote on Schroder's reforms, she also has to find a way for the CDU to put its mark on the package and take some of the credit. At the same time, she can't risk offending the aging, sometimes fearful middle-class voters who are the party's backbone.

NO MIRACLE. It's a challenging job. Merkel has shown some tactical savvy, demanding that Schroder cut top income-tax rates more than planned. But she doesn't yet seem quite comfortable with the world of global finance. She's not sure, for example, if people should be able to invest retirement savings in stocks. "We should allow as many different types of investment as possible," she says. "At the same time, we have to make sure that private pension plans have a solid basis." That kind of old-fashioned caution may be excusable for someone who spent much of her life in a communist state. But she'll have to get up to speed if she wants to challenge Schroder.

And Merkel is no miracle worker. In May elections in North Rhine-Westphalia, Germany's largest state, the CDU barely gained ground on the Social Democrats even though Merkel campaigned energetically. She has only neutralized the effect of the Kohl scandal. Still, it's a safe bet that everyone has underestimated Merkel so far. If her remarkable political instincts don't fail her, the woman Kohl once dismissed as "that girl" could be Germany's next Chancellor.

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