Germany’s reforms: A mutinous rumble in the ranks

Date: 19/04/03

Germany's chancellor is finding it hard to win his party's support

FIRST it simmered. Then it bubbled. Eventually, this week, the dissatisfaction with Chancellor Gerhard Schröder's plans for economic reform overflowed, claiming its first prominent victim and catching the chancellor himself unawares. The upshot is that trade unionists and left-wingers in Mr Schröder's Social Democratic Party who had promised to block his plan for welfare cuts and a looser labour market have managed to make the party's leaders submit the chancellor's entire bundle of reforms, known as Agenda 2010, to a special party conference on June 1st.

The party's general secretary, Olaf Scholz, has tried to put a good face on things. “The 2010 reform agenda will be a success only if it's broadly supported in the party,” he says. True enough. Mr Schröder's own first instinct had been to get it approved in just this way. But he had been assured, by Mr Scholz among others, that the tactic would be unnecessary - and dangerous. A defeat at the special conference would leave the chancellor without the authority to see through the legislative centrepiece of his second term. It could even wreck his chancellorship.

What brought about this week's change of mind was stark evidence from the northern state of Schleswig-Holstein that mutinous feelings among party members were being stirred, not quelled, by the refusal to let them have their say. At a local party conference, the Schleswig-Holstein chairman, Franz Thonnes, a close Schröder ally, who backs Agenda 2010 and has opposed the idea of a special conference, was voted out of office by local delegates, who replaced him with Claus Moller, a critic of the reforms. Schleswig-Holstein is the third state where the Social Democrats have voted for a public debate about them.”All hell has broken loose among the rank-and-file,” declares one MP.

The misgivings are not surprising. Germans have grown used to a high degree of social security and many resent a plan that threatens it. But Germany's economy is not improving. Last year it grew by just 0.2%, the slowest rate in the euro zone. The chancellor's strength lies in the lack of any realistic alternative remedy.

His opponents want huge public investment to revive growth. But it would be difficult to square that with Germany's commitment to keep within the limit on budget deficits imposed by membership of the euro club - especially since the opposition-controlled upper house last month threw out a bunch of tax increases.

Mr Scholz predicts a “clear majority” for Agenda 2010 when the Social Democrats vote on it in June. Perhaps. What this week's events show is not that Mr Schröder's policies are necessarily doomed but that he still faces a big test of political skill to make his followers swallow them.

Germany's Chancellor is finding it hard to win the support of his SDP party for his proposed plan for welfare cuts and a looser labour market.

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