Well behind in polls with six weeks to go to election day, he is trying to distract from dismal economic data and court left-wing voters by exploiting fears of war with Iraq and attacking business for fat-cat salaries and layoffs.

But analysts say the strategy could well backfire, failing to convince left-wingers and pacifists alike.

Schroeder's strident anti-war tone could damage Germany's foreign policy reputation and, by highlighting divisions in the west, undermine diplomatic efforts to pressure Baghdad to readmit weapons inspectors, Reuters reported.

"It is catastrophic that Iraq is playing a role in the election campaign," said Frank Umbach from the German Council on Goreign Relations (DGAP). "Schroeder is weakening the position of the U.S. and UN attempts to find a political solution."

Playing to mounting public concern about Iraq, Schroeder has repeatedly warned against a war in recent days. On Wednesday, he told the mass-circulation ***Bild*** daily that a strike on Iraq could destroy international support for the U.S.-led war on terror. "The Middle East needs new peace, not new war," Schroeder told the paper. "Anything else would worsen the global economic crisis and also only bring us economic difficulties."

Washington accuses Iraq of developing weapons of mass destruction and has a stated policy of wanting to topple Iraqi President Saddam Hussein. Other European leaders agree Saddam must let UN weapons inspectors back into Iraq unconditionally, but are also wary of an attack without a fresh UN mandate.

--- Economy Casts Shadow --- Schroeder's comments in ***Bild*** came as data released on Wednesday showed that headline unemployment vaulted the politically-sensitive four million level in July and that June manufacturing orders fell by a worse-than-expected 3.2 percent.

"Now that we have four million unemployed, the chancellor launches an Iraq discussion," noted Wolfgang Gerhardt, parliamentary leader of the opposition free democrats, who urged Schroeder to seek a common European Union position on Iraq.

Gerhardt could become Germany's foreign minister should the Conservatives win power with the Free Democrats backing.

As a tentative economic recovery has stalled in recent months, the Conservative opposition has cemented a lead in polls they opened up in January. In a survey by the Forsa Institute published in ***Stern*** magazine on Wednesday, the Conservative CDU/CSU alliance stood firm on 42 percent, while Schroeder's Social Democratic Party (SPD) was stuck on 35 percent.

The poll also showed that support for Schroeder, who has been hoping to translate strong personal popularity into votes for his SPD, sagged four points to 38 percent this week. His challenger Edmund Stoiber gained two points to 31 percent.

While Schroeder hopes to exhibit reformist zeal when he presents new job creation ideas next week, he has distanced himself from the industry bosses he courted in his early days in power in favor of the SPD's traditional trade union allies.

At a party rally on Monday, he called business the "fifth column" of the right-wing opposition and he told ***Bild*** that he had no intention of introducing "American-style hire and fire" practices into the notoriously inflexible German labor market.

Commentators said Schroeder's attacks on business and warnings about Iraq were a clear attempt to mobilize left-wing SPD supporters and steal pacifist votes from the Greens and the anti-American ex-communist party of Democratic socialism.

"As election day draws near, the SPD is rummaging through its old luggage, which it shamefully hid away four years ago," wrote the Conservative ***Die Welt*** newspaper in an editorial. _