Germany and its chancellor. Gerhard Schröder’s last chance / Which way for the Chancellor?

Date: 08/02/03

If he drastically changes his ways, Germany's battered chancellor can still rescue his country

IT WAS a brutal but well-deserved rebuff for the pusillanimous and opportunistic populist who has been running Germany's federal government for the past four-and-a-half years. The scale of defeat for his Social Democrats in two of the country's chunkier states was greater than even the gloomiest of the chancellor's friends had expected. If a general election were held in Germany today, Gerhard Schröder's lot would plainly be thrashed. But he and his Social Democrats, in tandem with their Green allies, are unlikely to bow out any time soon, despite their slim majority in the Bundestag, Germany's lower house of parliament. Amid the debris of last weekend's defeat, the chancellor has a fleeting chance to make amends.

How come? The conservatives have consolidated their previously tenuous hold on the Bundesrat, parliament's upper house, where Germany's 16 states are represented and which can block more than half the legislation passed in the Bundestag, including all bills to do with finance and tax. So a de facto “grand coalition” may hopefully emerge, with both Mr Schröder and his conservative rivals already promising to co-operate for the good of the country. In the vital area of labour-market reform, where the chancellor has characteristically shilly-shallied since a raft of useful proposals was presented and at first endorsed by him last summer, he seems bent on pressing ahead again - with the conservatives giving him the necessary leeway.

But even on this score there are snags. Well over half the Bundestag's Social Democrats are trade-union members or officials. Many are loth to back painfully radical reforms of the labour market, though its sclerosis is a big cause of the country's soaring unemployment, now, at 4.6m, amounting to 11% of the workforce. Whatever his recently professed good intentions, Mr Schröder has a woeful habit of tacking to and fro to keep his party faithful happy. There is still no guarantee that he will risk the wrath of the left.

In any event, the gap between even reform-minded Social Democrats and their conservative and liberal rivals in other fields of reform - pensions, health care, taxation and the welfare state in general - needs bridging. The Christian Democrats must, as they have promised, do their utmost to seek compromise. But they will rightly refuse to endorse new legislation that they deem to make no serious improvement. With his usual prevarication and denials, Mr Schröder, egged on by his left, has sought to plug his country's widening deficit by raising taxes or putting off tax reforms, a policy the opposition conservatives and liberals are bound to block.

Nor does it help that the German people themselves still sound ambiguous about reform - especially where it threatens to squeeze them personally. Despite the bleak figures for unemployment and economic growth (a pathetic 0.2% last year, with scant improvement expected this year), those in work remain reluctant to accept an erosion of their cosy job-protection laws and extravagantly comfy welfare state, which help sustain Germany's sky-high and increasingly uncompetitive labour costs. In this respect, Mr Schröder must discover his hitherto hidden backbone - unless he is to go down in history as Germany's worst chancellor since the second world war.

In foreign affairs, he may already be irredeemably doomed to bear that epithet. Not that his broad stance against war in Iraq has been inherently foolish or dishonourable; after all, most of his compatriots and perhaps most fellow Europeans still doubt whether the Americans have made their case for it, especially if they seem bent on attacking Iraq even without UN approval. But it is Mr Schröder's crass insistence that Germany will oppose a war even if the rest of the UN's Security Council endorses it that threatens to leave his country utterly isolated and ridiculed in Europe, so ruining its effort since reunification to earn more influence on the global stage.

Go for the home run, at least

But it is at home that Mr Schröder now faces his biggest challenge. He is an able tactician and remarkably durable. He has proved before that he can clamber back out of a hole. He has shown guts on occasions. Some of his tax reforms in his first term in office were laudable. So was his courage in persuading the Bundestag to let German combat troops be sent to the Balkans and Afghanistan.

And yet, again and again, the chancellor has spoilt his reputation for the sake of cheap popularity, either at the polls or by pandering to his party's powerful, backward-looking, trade-union-connected rank-and-file. What this weekend's election setbacks show is that his fabled charm has finally worn off. Now he will be judged only by results. He still has three years to redeem himself. Even though his past record gives, at best, patchy cause for hope, he has a last chance of doing so.

Editorial argues that if he drastically changes his ways, Germany's battered Chancellor can still rescue his country.

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