Schröder Confirms Exit; Slams Bush

"I will not be part of the next federal government. Definitely not," the two-term chancellor told a trade union congress in his home town of Hanover. "I genuinely want to support it with all the strength I have. And that is not meant as a threat."

The 61-year-old, now in his last few weeks as chancellor, also warned the new administration, which will be led by his conservative archrival Angela Merkel, not to harm Germany's cherished welfare state.

Schröder this week conceded the chancellery to Merkel following a bitter post-election power struggle.

"I want to help with this transition. And I will say one last time, I would ideally have liked to do so in another term in office, but it was not to be," he said.

Instead, he would now help steer his Social Democratic Party (SPD) through tough negotiations with Merkel's Christian Democrat alliance to form Germany's first left-right coalition government since the 1960s.

"Whether it will be a success, I do not know. But I want to help ensure it works," Schröder said of the potentially fraught union.

He is already credited with having helped secure eight ministries for the SPD, including the key foreign and finance posts in the upcoming coalition -- two more than the conservatives will hold -- in a trade-off for leaving.

The parties agreed to the broad outline of a so-called grand coalition just over three weeks after finishing neck-and-neck in September 18 elections, but must now draw up a formal program of government in the negotiations starting next Monday.

SPD to fight for social policies

Schröder said his party would battle to preserve social policies, while supporting reforms to revive Germany's moribund economy which he began.

"Eighty percent of voters spoke out in favor of reforms because they know it is inevitable," he said, adding that Social Democrats would resist changes threatening the welfare state. "People do not want the state in their faces, but they want it by their side," he said.

Leading party colleagues had urged Schröder to remain in the cabinet, but he said he would not serve under Merkel after seven years in the top job.

Klaus Uwe Benneter, the general secretary of the Social Democrats, said he regretted the decision.

"We must unfortunately live with it, but many of us had hoped it would be different," he told ZDF television.

Takes aim at US president

The outgoing chancellor on Wednesday also aimed a broadside at US President George W. Bush, saying Hurricane Katrina showed what happened when a state neglected its duty.

"I can think of a recent disaster that shows what happens when a country neglects its duties of state towards its people," said Schröder.

"My post as chancellor, which I still hold, does not allow me to name that country but you all know that I am talking about America," he said to laughter and applause.

Schröder fell out with Bush over the war in Iraq when he refused to commit German troops to the war and relations between the two leaders have remained chilly.

In another jab at the US president on Wednesday, Schröder spoke of British Prime Minister Tony Blair as "my British friend, who also has other friends," in a reference to the Anglo-American on Iraq.