Germany, third largest economy in the world, is getting ready for Sunday election with 62 million eligible voters.

The close election is fought on a platform of economy and jobs and has left more than quarter of its electorate undecided till the last day of election. German economy has struggled in the last three years with slower growth in exports, competition from Asia, and job migration to Eastern Europe.

Five major parties, SPD, CDU, Greens, and Free Democrats are fighting the election with two alliances led by SPD and CDU. Gerhard Schroeder’s party SPD and its allies, at least until yesterday, were lagging in the polls. However, intense campaigning by Chancellor Schroeder in the last few days has put the fate of election in hanging.

Angela Merkel, leader of alliance led by her party CDU, the current favorite to win the election, is campaigning on economic reforms and job creation but there are few details of her plan. Media in Europe has given intense publicity to her campaign but little details and analysis is available of her economic plan.

British and American media and privately governments of both nations have favored Ms. Merkel, but one wonders whether they are thinking of greater good of Germany and Europe or they feel that weaker leader in Germany will only advance their political goals.

After more than fifteen years of unification of East and West Germany, the economic gap between the two Germanys persists. High cost of reunification has strained federal treasury and German people are increasingly worried that the government may not have enough money to pay for its pension obligation without taking on significant debt.

In 1998, Mr. Schroeder fought and won election with the promise of lowering the unemployment rate, instead in 2005, Germany has the highest unemployment rate of 11.6% since world war two. Campaign skills of Chancellor sometimes fail to transfer in managing fractious coalition.

Regardless who wins this Sunday’s election, the cost of the reunification will drive the policies of the new government. The competitive German industry can generate corporate profits and better paying jobs, but if Germany’s political leaders squander its wealth in costly government social programs with no real progress then no level of private sector reforms can save the nation.

Five Million Germans are unemployed and roughly two million are looking for jobs longer than a year. Germany has to make economic choice. National wealth of today is not guaranteed unless it is earned everyday. The five-year near zero percent growth, public deficit of four percent of GDP and growing, and high unemployment, and if this economic record continued for ten or more years, no one can save Germany from sinking to the bottom of economic ladder.

Causes of lack of economic progress are known to the establishment and its roots in the costly reunification are widely understood, but the Germany’s need to share the burden of this costly economic reunification is not explained by its leaders to its population.

German people have not been told that the cost of reunification has to be shared over a generation and one or two decades will not be enough to absorb this cost. Cost of currency reunification and dealing with aggressive Asian economies is not counted.

Germany has spent in the first twelve years of reunification more than one trillion dollars to rebuild East Germany. Private estimates suggest that more than one third of this investment was wasted in construction that neither kept skilled population in the region nor built self-sustaining industry. Today unemployment in the East is at 18% level and in some regions as high as 25%.

German leaders have American problem. No German leader has courage to tell truth to its people and total truth of it faltering finances. Every leader wants to expand its nation and its territory but there is a cost to it. The people of West Germany were led to believe that cost to reunify Germany is small and manageable. As if this was not enough the cost of unified currency was also underestimated.

There is widespread resentment with the rise in consumer prices which most people link to the introduction of Euro. General feeling across Germany is that the Euro has done more harm than good to the nation.

A week ago people of Japan handed a clear election victory to the LDP party led by the Prime Minister Junichiro Koizumi. It is widely perceived that the clear majority won by the Prime Minister will speed up the economic reform starting with Japan Post. At least that is what Prime Minister is telling us for now.

Why do politicians from Japan, Germany, and the USA sound too optimistic. As if they all went to same high school.

However people who believe in this argument of speedy reform in Japan only need to think of the plight of the U.S. President Bush. Republican majority in Senate and Congress and Republican President in the White House, total majority at all levels of government, has still not led to the implementation of economic reform after more than nine months of governing.

German voters appear in no mood to hand a clear victory to either party SPD or CDU and there lies the problem for the third largest economy.

The Anglo-Saxon economic model is widely promoted as a remedy to German economic problem. One only need to look at the mess of public finances of the U.S. and failure of its leaders to reign on runway public spending on wars, unlimited promises of rebuilding of Gulf of Mexico states and permanent tax-cuts for wealthy and lofty promises of balanced budgets.

To note the familiar tone across politicians of all nations, Americans like Germans have not been told the truth. Americans were told that the cost of Iraq war will be less than $5 billion, easily paid by the sale of Iraq oil. Current estimates three years later point to higher than $200 billion.