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Monday, February 03, 2003

Seismic Shockwave in German Politics Continues

I post below just a few of the comments to surface today. This is clearly important, and talk of all this being good for a reform process are wide of the mark (no pun intended), as is interpreting this in terms of a traditional protest vote and pendulum swing politics. Remember even a change of government would not give Germany the interest rates and monetary conditions it needs, and even if the more radical reform packages could work medium term (which I clearly doubt they can without addressing the key problem of attitudes to immigration) things would get a lot worse before they got any better, which means the impact on EU politics will be the same either way. If the German economy continues its wander downwards this year as I think it's going to, problems are surely brewing. One of the key parameters that every economist knows deep down in their bones is important to any society is confidence. Schroeder's nerve is clearly rattled, the Iraq card is evidently useless to him, and has probably only served to damage his credibility even more. The problem now is if this loss of nerve spreads to the German populace at large. I'm worried (not in the big sense of really WORRIED), but genuinely concerned that this is going to end badly, and that it's consequences will be felt across the Euro zone.

Leading German dailies from across the political spectrum are unanimous in their view that the showing by Chancellor Gerhard Schroeder's Social Democrats in Sunday's state elections in Lower Saxony and Hesse constitutes a landmark defeat. There is consensus that voters delivered an unequivocal message on the need for economic and political reform, with warnings that Mr Schroeder may be forced to abandon social commitments long held dear by his party.

Uwe Vorkoetter, writing in the Berliner Zeitung, counsels that the SPD will need to review their whole political and social philosophy, including the role of the trade unions. "The state took on too much," he says. "It can no longer guarantee citizens what it had formerly promised. Gerhard Schroeder will have to join the side of the reformers in the SPD. He can no longer afford to grant the trade unions a de facto veto right against government policy." Mr Vorkoetter argues the party will need to review the generous social provisions, including pensions and health care, that many Germans take for granted. "He will need to compel his own party to take a political course which Social Democratic traditionalists consider unsocial, unbalanced and neo-liberal." He warns that if the SPD wants to stop its decline, "it must learn the country's problems cannot be solved in a Social Democratic way".

The right-leaning Die Welt agrees that the trade union issue is vital, calling the SPD defeat "devastating". Describing Mr Schroeder as "this humbled chancellor", the daily says: "Gerhard Schroeder has now been forced to give the country a general overhaul - even if that means doing it against resistance from the unions." "Whether in health reform, labour-market reform or immigration, the government can no longer work without the opposition. The only escape is to move forwards: radical reforms. Attack, not defence." Munich's centrist Sueddeutsche Zeitung sees the result as a protest vote against the governing coalition, pointing out that although such votes are nothing new, their vehemence is. "The situation of the Schroeder government is terrible. But reports of its imminent demise are exaggerated, " it concludes.
Source: BBC News

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