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By GEIR MOULSON and MELISSA EDDY (AP) – 23 minutes ago

BERLIN — German Chancellor Angela Merkel on Sunday won the center-right majority that eluded her four years ago — nudging Europe's biggest economic power to the right as it claws its way out of a deep recession.

Voters sent the nation's main left-wing party, the Social Democrats of Foreign Minister Frank-Walter Steinmeier, into opposition after 11 years as part of the government. It was the party's worst parliamentary election result since World War II.

"There is no talking around it: this is a bitter defeat," a subdued Steinmeier said, vowing to lead a strong opposition.

The conservative Merkel managed to end her four-year "grand coalition" with the Social Democrats thanks to a very strong showing by her new coalition partner, the pro-business Free Democrats. Her own Christian Democrats produced an underwhelming showing.

"Tonight we can really celebrate," said a beaming Merkel, greeted by chants of "Angie! Angie!" from supporters. "(But) there are many problems in our country to be solved."

Projections by the nation's public broadcasters, based on partial vote counts, put support for Merkel's Christian Democrats at up to 33.8 percent of the vote and for the Social Democrats at about 23 percent. The Free Democrats captured nearly 15 percent, the Left Party had 12 percent or more and the Greens above 10 percent.

Both ARD and ZDF television channels said that would produce a stable center-right majority in parliament. It was a major shift from the 2005 election, in which Merkel's conservatives just squeaked by the Social Democrats.

Merkel's second four-year term will be markedly different from her first, in which she presided over a middle-of-the-road government that was fractious but enjoyed a huge parliamentary majority.

Heather Conley, director of the Washington-based Center for Strategic and International Studies' Europe Program, said the new government "is going to place much more burden on Chancellor Merkel to forge an agenda and implement it."

Merkel's popularity has been fueled by her consensual approach. She will now lead a narrower coalition with a stronger opposition and a self-confident new partner, but suggested that she will stick to her own style.

"My understanding was, and my understanding is, that I want to be the chancellor of all Germans," she told supporters, adding that protecting and creating jobs "will be my highest aim."

Guido Westerwelle, the leader of the Free Democrats, is expected to be the next foreign minister. His party is returning to government after an 11-year absence.

"We are pleased with this exceptional result but we know that above all else, this means responsibility," he said.

Merkel vowed "swift and decisive" coalition talks, likely to be shorter than the two months of haggling that produced the "grand coalition" in 2005.

Merkel and Westerwelle will now have to figure out how to deliver on pledges of tax relief — promises that Steinmeier had said were unrealistic as the government is running up huge debts to tackle the country's economic crisis.

Both argued that tax cuts would boost the economy, ultimately leading to higher tax revenue.

Yet Merkel has called for modest middle-income tax relief, while Westerwelle — who successfully portrayed his party as a champion of the middle class and small business — has called for far deeper tax cuts, with significant reductions in both the top and bottom rates.

"That will be the Achilles' heel of the Free Democrats and the (new) coalition as a whole, because it will not be possible to cut taxes," predicted Heinrich Oberreuter, a political science professor at the University of Passau.

One change should be easy: Both the conservatives and the Free Democrats want to halt a plan to shut down Germany's 17 nuclear power plants by 2021, and extend the lives of some until more renewable energy is available.

A key challenge for the new government will be to work toward a strategy for the eventual withdrawal of the more than 4,200 German troops in Afghanistan, a mission that has become increasingly unpopular.

Conley said there would not be a "run toward the exits."

"What I would suspect is that the new government will take an opportunity to do its own strategic review of where the forces are and how it will continue," she said.

Al-Qaida and Taliban militants have threatened Germany over its involvement in Afghanistan, prompting increased security ahead of the election. Authorities on Saturday banned all flights over Munich's Oktoberfest beer festival, which draws 6 million visitors, until it ends Oct. 4.

Germany's mainstream parties all agree on the need to better train Afghan police and soldiers so that NATO soldiers eventually can be pulled out, but have set no withdrawal date.

Westerwelle has praised the outgoing government's carrot-and-stick approach to Iran over its nuclear program.

The changeover may eventually mean a tougher approach to Turkey's European Union membership bid, which Merkel's party opposes while the Free Democrats appear noncommittal.

The outcome Sunday was particularly painful for the Social Democrats, but Merkel's party also performed poorly. The conservatives' result wasn't much better than their worst postwar performance — 31 percent, in 1949.

Germany's three opposition parties gained support in the past four years, with all heading for their best results ever. In 2005, all three parties scored less than 10 percent of the vote each.

"The attractiveness of the big parties is crumbling and that of the small parties is increasing significantly," Oberreuter said.

Associated Press Writer Matt Moore contributed to this report.

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Key issues in Germany's election

By The Associated Press (AP)

A glance at key issues in Germany's parliamentary election Sunday:

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FOREIGN POLICY:

_ All except the Left Party broadly support Germany's military mission in Afghanistan, but want to see enough progress in training Afghan police and soldiers in the next few years that an exit strategy becomes possible. Steinmeier has advocated laying the foundations by 2013 for a withdrawal, but has not said when he thinks a pullout might begin; Merkel's stance is similar, and she says it makes sense to exert pressure for progress on Kabul. The Left Party advocates an immediate withdrawal.

_ Merkel's conservatives say Turkey should have a vaguely defined "privileged partnership" with the European Union rather than full membership — a longstanding position that has played no role in this campaign. The Free Democrats say there is no prospect of a final decision on Turkey's membership in the next few years, and that it depends on Ankara implementing reforms and on the EU's capacity to absorb new members. The Social Democrats and Greens are clearly supportive of Turkish membership.

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LABOR:

_ The conservatives and Free Democrats oppose introducing an overall national minimum wage, which they maintain would destroy jobs.

_ The Social Democrats and Greens advocate a national minimum wage of euro7.50 per hour. The Left Party wants a euro10 minimum wage.

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TAXES:

_ Chancellor Angela Merkel's Christian Democrats want middle-income tax relief in an effort to spur economic growth. They propose cutting the lowest income tax rate gradually to 12 from 14 percent. They also want to raise the threshold at which the highest rate — 45 percent — kicks in to euro60,000 ($88,000) per year from euro52,552.

They have set no date for the proposed cuts but their Bavaria-only sister, the Christian Social Union, wants to see them implemented in 2011 and 2012.

_ The conservatives' preferred coalition partners, the Free Democrats, want a more radical overhaul of the tax system, under which the bottom income tax would drop to 10 percent and the top rate to 35 percent.

_ Challenger Frank-Walter Steinmeier's Social Democrats say that, because the economic crisis has pushed up government debt, there is no room for broad tax relief. They want to cut the lowest income tax rate to 10 percent but increase the top rate to 47 percent.

_ The opposition Greens want to help cover the costs of overcoming the crisis by imposing a special, though unspecified, one-time tax on Germany's richest people. The Left Party wants to raise the top income tax rate to 53 percent and impose a "millionaires' tax" on the very rich.

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ENERGY:

_ Merkel's conservatives want to halt a plan to shut down Germany's 17 nuclear power plants by 2021 and extend the lives of some plants until more energy from renewable sources is available. However, they do not want to build new nuclear plants. The Free Democrats share this position.

_ The Social Democrats are fiercely defending the existing nuclear shutdown schedule — as are the Greens, who were their partners in the center-left government that drew up the plan. The Left Party goes further, advocating an immediate shutdown. The Social Democrats advocate new coal-fired power plants, which the Greens and Left Party reject.

Copyright © 2009 The Associated Press. All rights reserved.