In two regional elections on Sunday, voters dealt a bitter blow to Angela Merkel's conservative party in the city-state of Berlin and the eastern state of Mecklenburg-Western Pomerania, which also happens to be where the German chancellor's constituency is based.

Merkel's Christian Democrats (CDU) scored their worst results in the German capital since the founding of the Federal Republic in 1949, trailing behind the Social Democrats (SPD) by nine percentage points. Polls indicate that the CDU's popularity has eroded nationwide over plans to hike taxes and reform Germany's health care system.

Meanwhile the two clear victors in the elections were Berlin's charismatic mayor Klaus Wowereit, who led the SPD to first place with over 30 percent of the vote, and in Mecklenburg-Western Pomerania the neo-Nazi National Democratic Party which won 7.3 percent of the vote, far more than the five-percent threshold required for parliamentary representation.

Neo-Nazis enter fourth state parliament

This now makes the economically depressed state the fourth regional legislature where an extreme right party is represented:; The NPD also sits in Saxony's parliament while the German People's Union (DVU) is represented in the state legislatures of Brandenburg and Bremen. Mecklenburg-Western Pomerania, which is on the Baltic coast bordering Poland, is one of Germany's poorest regions with an unemployment rate of 18.2 percent, nearly double the national average.

The former communist states have never caught up to the West economically since German reunification in 1990, strengthening the appeal of the NPD party, which has been able to capitalize on the disaffection among jobless youth with its crude anti-immigrant, racist platform.

Harald Ringstorff, 66, the incumbent Social Democrat state premier, whose party won by a margin, said he would "handle things with the NPD in a democratic way and get rid of the party in the next elections."

On the other hand, the NPD have not been able to make inroads in Berlin. Mayor Klaus Wowereit, who wrested power from the conservatives in 2001, remains enormously popular, despite high unemployment and the city's enormous debt of 58 billion euros ($73 billion).

Once asked about the disastrous state of Berlin's finances, Wowi, as he is affectionately called by his supporters, memorably declared: 'Berlin may be poor. But it's sexy.'

Yesterday, Wowereit told cheering supporters, "I am happy that the people of Berlin have voted in favor of democracy and did not elect the NPD into the state's parliament."

Coalition possibilities still open

His party's strong showing will now allow the Berlin mayor to form a ruling coalition of his choice, which could include either the Greens or the Left Party. Both the Greens and the Left Party, a mish-mash of former communists and leftist SPD defectors, won 13 percent of the vote each.

On Monday morning, Wowereit ruled out the possibility of a three-way, red-red-green coalition of the Social Democrats, the Left Party and the Greens. "One should avoid such a constellation if possible. It would be too complicated," said Wowereit in an interview with the German news agency, DPA.

The Berlin mayor declined to say if he would continue governing with the Left Party in a red-red coalition or seek a new partnership with the Greens. "We have common ground with both parties," he said.

The Greens, which made gains of four percent from the last state elections in 2001, have said they have earned the mandate to govern with the Social Democrats, whereas voter support for the Left Party dropped dramatically from 22.6 percent to 13.4 percent.

In Mecklenburg-Western Pomerania, state premier Ringstorff left open the possibility of renewing his coalition with the Left Party or forming an alliance with the Christian Democrats, which would mirror the grand coalition of the SPD-CDU on a national level.