Coming on court after Anke Huber had won the first rubber of the tie against the Netherlands, by beating Nicole Jagerman 7-5, 3-6, 6-1, Graf cruised through the first set against Schultz in 31 minutes.
But the 21-year-old Dutch woman, who won the Edgbaston tournament last month, used her powerful serve and varied her game well in the second set, causing the German problems before finally succumbing 8-6 in the tie-break.
Spain, the No 2 seeds, had an even tighter battle, clinching their tie against Canada in the doubles after the singles were shared.
They started badly when Conchita Martinez was beaten 7-6, 6-2 by Helen Kelesi, but Arantxa Sanchez Vicario evened things up with a 6-4 6-2 victory over Patricia Hy in the second singles.
Sanchez Vicario then teamed up with Martinez to beat Hy and Jill Hetherington 6-4, 6-0 in the doubles, securing the match 2-1.
In the first play-off round, Jo Durie led Great Britain to a 3-0 victory over Chile. Britain now need to beat the winners of the China- Finland tie to avoid having to qualify for next year's event.
Durie beat 19-year-old Paula Cabezas 6-7, 6-0, 6-1, and with Sara Gomer's earlier 6-2, 6-0 win over Barbara Castro, Britain had an unbeatable lead. They completed a
3-0 win when Gomer and Clare Wood beat Macarena Miranda and Paulina Sepulveda 6-3 6-1.
Bjorn Borg's comeback continued in Washington yesterday with another first-round defeat - his fourth on the main ATP Tour this year. The 36-year-old five-times Wimbledon champion, now ranked 1,015th in the world, was defeated 6-4, 7-6 by his fellow Swede, Thomas Hogstedt, the world No 157. Borg, who said he still hopes to play at Wimbledon, held a 4-1 lead in the second set and was
5-3 up in the tie-break before slipping to defeat.
FEDERATION CUP Quarter-final line-up: Germany v Poland; France v United States; Australia v Czechoslovakia; Argentina v Spain.Reuse content