By Barnaby Mason BBC diplomatic correspondent

The narrowly re-elected German government of Gerhard Schroeder will have the task of mending relations with the United States over Iraq, as well as dealing with all the old intractable problems of economic and social reform.

The Germany that emerges from these elections seems to be in two minds on many things, rather than a giant on the world stage

The Social Democrats' smaller partner, the Green Party, is also expected to have greater influence after its best-ever showing in a German general election.

Mr Schroeder's open break with President George W Bush certainly won him some votes.

He said Germany would not take part in military action against Iraq even if it were backed by the UN Security Council.

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That was a step further than France, normally Washington's most dissident ally.

'Military adventures'

The popularity of Mr Schroeder's stance reflects a general European hostility to the Bush administration, and also an enduring German reluctance to get involved in "military adventures" - that was the Chancellor's word.

The Greens, led by Joschka Fischer, have increased their influence

Mr Schroeder may now tone down his language but he can hardly reverse a policy so sharply stated.

He has already written to Mr Bush regretting remarks attributed to his justice minister Herta Daeuble-Gmelin.

She is accused of comparing Mr Bush's political methods to those of Adolf Hitler.

She says she was misquoted but senior American officials say the episode has poisoned relations with Germany.

Mr Schroeder's stance on Iraq was strongly backed by his Foreign Minister, Joschka Fischer.

He leads the Green Party, which will have more influence in the government after its strong showing.

If anything, that will widen the gap with Washington, especially on the environment: many Germans responded to the Greens' argument that this summer's disastrous floods should be blamed on global warming.

Reform and economy

But more generally, Germany's partners will fear that a government with a tiny majority will be less capable of pushing through radical reform to stimulate the economy and restructure health and social security.

The European Union needs decisive action from Germany - both to deal with its own budget deficit and to reach a settlement with its partners on the financing of agriculture, essential for EU enlargement to go ahead.

The Germany that emerges from these elections seems to be in two minds on many things, rather than a giant on the world stage.