She is not an especially charismatic woman, this former physicist who grew up in communist East Germany. She doesn't come across as a natural leader who grabs hold of life with gusto. In fact, when asked once in an interview how she would spend three days if she could do anything she wanted, she replied she would tidy up her apartment and get her book collection in order.

But Angela Merkel has been underestimated time and time again, and in her political career, she has always emerged on top, often leaving much more experienced, usually male politicians in the dust. She has skyrocketed to the top of her party in near record time -- she only entered politics after the fall of the Berlin Wall -- as a childless, Protestant woman from the east in a party dominated by Catholic family men from western Germany.

She didn't flinch in the difficult weeks after her party's poor showing in the Sept. 18 election, during which there were calls for her to step aside.

Now, Germany is preparing to watch as she is voted by the German parliament, the Bundestag, as the country's first female leader, and its first leader from the east.

Although she is stepping into the history books tomorrow when she gets the keys to the chancellery, any honeymoon period, if there is one, is not likely to last long. She has a raft of difficult decisions to make as she takes over from seven years of outgoing Chancellor Gerhard Schröder's Social Democratic-Green government. Many of those decisions are not going to please the public.

Red-Green legacy

Even as Schröder cleans out his desk, judgments are being passed on the legacy of seven years of his "red-green" government, so named because of the colors associated with the coalition's two parties.

It is a mixed report card, with many on the left upset at social welfare reforms that hurt the poor, those on the right and business interests giving him poor marks for his unwillingness to put through far-reaching changes they say are necessary.

Over the weekend, in what was Schröder's last public speech as German leader, he said he hoped his time in office would be remembered for his government's strong foreign policy stance (he refused to support the US-led war in Iraq, severely bruising transatlantic relations), and the domestic reforms, which he said struck a balance between oiling the economy and protecting the weakest in society.

But Merkel is inheriting a Germany suffering from high-unemployment, currently at 11.6 percent, a ballooning budget deficit and anemic economic growth, less than 1 percent this year and forecast to be just slightly higher in 2006. While Germany was once the economic locomotive of Europe, today it's more akin to the caboose.

Government program

In the coalition agreement, the two partners have pledged to enact a multi-billion-euro investment program, to loosen some job protection rules to encourage companies to hire and to increase the VAT tax by three percentage points in 2007 to cut down the deficit.

On this last point, she has already come under criticism by economists, who question the wisdom of increasing a consumption tax at a time when consumer spending is the Achilles' heel of the German economy.

She has to hope that the German populace will be forgiving as she works to enact deeper, and more painful reforms than her predecessor (although not as deep as she would like to, since she has to govern with the SPD). She appears to think they will be understanding if they see that the reforms are cutting the jobless rate and helping them in the long run.

"Will we ensure that by 2009 people say 'Yes, for me personally it's a bit better than in 2005'?" Merkel said before signing the coalition agreement. She said the agreement offered Germany the chance of achieving that goal.

No "Iron Lady"

Much has been made, especially abroad, of the fact that Merkel is a woman and there have been the inevitable comparisons to the UK's Margaret Thatcher, who is credited with aggressively remaking the British economy, although many questioned her methods.

Due to constraints placed on her by her coalition partners, it is very unlikely that she will become a sort of "Eiserne Frau" after the model of the "Iron Lady," as Thatcher was nicknamed.

However, there is at least one factor that could help her get her way. Her coalition enjoys an overwhelming majority in the parliament, 448 of the 614 seats in the lower house. The two parties also dominate the upper house of parliament, the Bundesrat, which means that the new government will be able to enact reforms in the federal system, pensions and taxes without fear of a veto.

The fact that the upper house was in conservative hands during the Schröder era proved to be a major hindrance to that government.

Convincing the public

One of her greatest challenges will be bringing the public around to the idea that change is needed to Germany to retain the high standard of living it has enjoyed for decades. For a German public highly resistant to change, this has been a bitter pill to swallow.

Still, she and the new head of the Social Democrats, Matthias Platzeck, have presented a united face to the public regarding reforms. The fact that both of them hail from in the east -- Platzeck is from Potsdam -- gives them something of an outsider's perspective on things, and could prove beneficial since they did not grow up with many of the material benefits of West Germany or with a sense of entitlement. They are both former scientists, analytical and pragmatic and have proven in the past they are not afraid to tell it like it is, even if the news is unpleasant.

Platzeck won the support of the population of the state of Brandenburg with his straight talk about the dire economic situation there. The population found it refreshing. Merkel and Platzeck can only hope that will apply on a national level as well.

Still, they have a lot of persuading to do. Polls show that a majority of the public does not expect the grand coalition to last for four years.