German Chancellor Angela Merkel sent a clear “I told you so!” to the United States and Britain at the weekend, criticising them in unusually frank terms for resisting measures that might have contained the current financial crisis. The conservative leader of Europe’s largest economy reminded her partners that she had pushed for steps to boost the transparency of hedge funds during Germany’s presidency of the Group of Eight last year. ”We got things moving, but we didn’t get enough support, especially in the United States and Britain,” she told the Muenchner Merkur newspaper. Merkel expanded on her point in a speech in Austria, suggesting that both Washington and London were only now coming around to her view.

“It was said for a long time ‘Let the markets take care of themselves’ and that there is ‘no need for more transparency’…Today we are a step further because even America and Britain are saying ‘Yes, we need more transparency, we need better standards for the ratings agencies’.

Germany had made greater transparency a key theme of its rotating presidency of the G8, which includes the United States, Japan, Germany, Britain, France, Italy, Canada and Russia. Berlin had expressed fears that hedge funds could threaten the stability of the financial system through their heavy reliance on borrowing to finance risky trading strategies. But it ran into resistance from the United States and Britain, achieving little.

Whether Merkel’s G8 initiative could have averted or limited the current financial market crisis if it had been successful is certainly debatable. But reminding voters that she had sought to address the problem as early as last year could help Merkel score points on the domestic front ahead of a general election next year. Merkel’s Christian Democrats (CDU) rule in an uneasy grand coalition with the Social Democrats (SPD), and both sides have been trying to play up their own role as crisis manager in the current financial market turmoil.

Both Merkel and her SPD finance minister, Peer Steinbrueck, have tried to take credit for Germany’s efforts last year to agree better transparency rules for financial markets. SPD budget expert Carsten Schneider praised Steinbrueck’s efforts during Germany’s G8 presidency in a newspaper interview on Monday, adding: “At the time, the United States and Britain demonised every effort to agree more transparency and rules.”

As Germany’s election approaches, the “I told you so!” Berlin seemed to send to Washington and London on the weekend could turn into an “I told you so first!”-competition between Merkel’s CDU and her SPD rivals.

It hasn’t garnered as much attention or generated quite the same excitement as the nomination battle between U.S. Democrats Barack Obama and Hillary Clinton did, but Germany’s Social Democrats are tying themselves in equally torturous knots over who will lead their party into the next election.

Like their U.S. counterparts, the centre-left SPD has two main candidates vying for the right to challenge for the country’s top job. But the similarities between the American and German contests end there.

While Obama and Clinton wore their political ambitions on their respective sleaves, the SPD contenders — party chairman Kurt Beck and Foreign Minister Frank-Walter Steinmeier – are doing their best to play down their desire to go up against popular conservative Chancellor Angela Merkel in 2009.
 Ask either one of them if they want to take on the popular “Angie” and they invariably dodge the question — not exactly the burning sense of purpose that we saw in Barack and Hillary.

Their hesitancy and the party’s reluctance to commit to a candidate before the end of this year has opened the door to almost daily speculation in the German media about which of the two will step up.

That uncertainty has prompted just about every politician in the SPD to voice his or her own opinion on the matter, pulling those aforementioned knots even tighter.

Andrea Nahles, a leading SPD leftist, said this weekend that Beck’s her man. Other deputies in parliament are pushing for Steinmeier, concerned about their own fates if the unpopular Beck leads the party into the election battle.

Former Chancellor Gerhard Schroeder is reportedly pressing behind the scenes to get his protege, Steinmeier, chosen in the hopes of avenging his agonisingly narrow 2005 loss to Merkel.

Sigmar Gabriel, the environment minister, warned in Berlin daily Tagesspiegel on Monday that any SPD candidate would be doomed unless the party sorts out its own messy policy divisions first.

If some German media are to be believed, the “Kanzlerkandidat” decision was sealed back in late April when Beck and Steinmeier held a “clandestine” meeting in the back garden of a coffee shop in west Berlin.

A photographer, who just happened to be present, caught the two looking cheerful and united – far more cheerful and united in fact than Obama and Clinton ever looked.

The sole picture of the meeting (Steinmeier has a cafe latte and pack of Marlboro reds in front of him and Beck an espresso and important-looking red dossier) has been analysed closely for clues about which way the decision could go.

Right now, Steinmeier is the odds-on favourite. He is more popular with voters than Beck and has done a competent job as Germany’s top diplomat. But the bespectacled, white-haired foreign minister is more technocrat than politician. He’s never won an election at any level and it’s rather hard to imagine him stirring up the party faithful at campaign rallies like his mentor Schroeder could.

Beck, by contrast, is a political veteran with a common touch who has scored a series of impressive victories over the years in his rural home state of Rhineland-Palatinate. If only his credibility both inside and outside the party weren’t crumbling because of his spotty leadership and flip-flops on cooperation with a new far-left party.

Ultimately, while the U.S. Democrats were spoiled for choice when deciding who to send up against Republican John McCain, the SPD looks paralysed by the fear that neither of its candidates can lead the party to victory against Merkel’s conservatives.

Perhaps one way to solve that would be for the SPD to inject a little more American-style  competitive fire into the race and rely a little less on traditional German-style consensus.