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AUGUST 27, 2002

How the German election could affect Formula 1

The Germans are preparing to go to the polls to elect a new Chancellor with the two candidates: incumbent Gerhard Schroeder and challenger Edmund Stoiber running close in the opinion polls. The pair this week took part in a televised debate which has stimulated political discussion in the country. It is the first time that the Germans have employed such a mechanism and it seems to have played into the hands of Schroeder who is a polished performer while Stoiber is less at ease with the cameras. In recent weeks Schroeder's challenge has strengthened, thanks in part to the government's handling of the recent flood crisis. Stoiber however did well in the debate and so the contest remains tight in the run-up to the September 22 election.

One issue which has not been raised to date is that of Stoiber's involvement in the purchase of the Formula One group by Kirch. Leo Kirch is a longtime friend and ally of Stoiber and borrowed money from the Bavarian state bank to fund the purchase of Bernie Ecclestone's company. The Bavarian bank comes under the control of and is the responsibility of the state government, which Stoiber heads. When Kirch ran into difficulties there were several questions about the loan but these were brushed aside by Stoiber. The collapse of Kirch has left the Bavarian bankers with a big hole in the budget but in effective control of the Formula One group of companies. As they do not seem willing to do deals with anyone at the moment the sorting out of the political problems in the sport has effectively been blocked for several months.

Stoiber is exposed as his pitch to the electors is his record of success building up the Bavarian economy. Beyond that the two candidates have very similar policies. As the pressure rises on Schroeder it is possible that he will turn to the Kirch business as an example that Stoiber's economic policies are not always successful.

This could be good news for the F1 world as the current lack of action has left everyone frustrated - particularly as the long-term uncertainty is already beginning to affect sponsorship negotiations.