The resignation of Franz Muentefering, leader of outgoing German Chancellor Gerhard Schroeder's Social Democratic Party (SPD), would possibly delay the formation of the next German grand coalition government, political observers said Monday.

His surprising resignation came Monday after he lost a key power struggle as his hand-picked SPD election campaign strategist Kajo Wasserhoevel failed to be elected as secretary-general.

The party's executive committee defied Muentefering and elected a leading party leftist, Andrea Nahles, who got 23 votes compared with Wasserhoevel's 14.

"Under these conditions I cannot remain party chairman," said Muentefering told an urgent news briefing.

Nahles, who had refused to withdraw her candidacy for party secretary-general, was reported to be a charismatic left-winger.

Muentefering was reportedly worried that left-wing positions of Nahles would make it difficult for him to work out compromises for coalition between the SPD and chancellor-designate Angela Merkel's CDU alliance.

Muentefering said he would continue to head the SPD delegation at grand coalition talks with chancellor-designate Angela Merkel's Christian Democratic Union, but would not seek reelection at a party congress in November.

Speculation over a possible successor for him focused on Mattias Platzeck, premier of eastern Brandenburg state, but a decision would be made till Wednesday.

Muentefering has been designated to be vice chancellor and labor minister in the new government expected to be in place in November, but he said that he was not sure whether he will do so.

"I left my decision open as to whether I would belong to the cabinet after the next party congress" on November 14-16, Muentefering said.

In a relevant development, Germany's Bavarian Prime Minister Edmund Stoiber may not join the planned German cabinet as economics minister in response to Muentefering's resignation, Die Welt newspaper said.

Arch-conservative Stoiber was likely to be concerned that without centrist Muentefering leading the SPD, the party will shift to the left, said the newspaper.

The report was not confirmed by Stoiber's CSU, Bavarian sister party of the CDU, but media here quoted officials as saying that Muentefering's resignation could mean the basis for Stoiber's participation in the cabinet shifted.

As the SPD is leaderless at a critical time in the talks on forming a grand coalition government, observers here said the developments have cast shadows over the coalition, though it wouldnot be likely to trigger a new general election in Germany.

The move could upset the timetable for the new government to take office, originally planned for late November. On Nov. 22, Merkel is expected to be voted in as Germany's first female chancellor by the lower house of parliament.

The SPD inner struggle came in the middle of coalition talks aimed to create a financial plan for the new government that includes spending cuts and possible tax increases to contain budget.

(Xinhua News Agency November 1, 2005)