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Germany: Parliament Considers Austerity Program

Germany's governing Social Democrats are bracing themselves for another bad day in the provincial elections in Saxony on Sunday. But Chancellor Gerhard Schroeder can console himself that the parliamentary opposition is now offering some support for his proposed economic reforms. RFE/RL correspondent Roland Eggleston reports.

Munich, 16 September 1999 (RFE/RL) -- The German parliament yesterday debated a particularly unpopular package of economic reform: what Chancellor Gerhard Schroeder calls the austerity program.

Senior officials of the opposition Christian Democrats offered yesterday to negotiate a package of tax reforms acceptable to both parties. The opposition said it would not necessarily block passage of the other reforms, although it still insists that many of them should be modified.

Schroeder's government said it is willing to consider amendments. But it insists that reforms are necessary to cut the huge national debt, restore economic stability and provide social justice for the younger generation. Schroeder's Social Democrats blame the debt on the previous government of Christian Democrats, led by Helmut Kohl. The Christian Democrats governed Germany for 16 years until their defeat a year ago. Kohl's supporters say the debt was unavoidable because of the cost of reunifying Germany.

The unpopular austerity package is one of the main reasons for the Social Democrats' poor performance in this year's provincial elections. The reforms hit almost every element in German life, including health care, social services, pensions and unemployment benefits. The immediate goal is to cut federal spending by $16 billion next year, but the plan presented to parliament envisages continuing cuts in federal spending until 2003.

Schroeder's government says the reforms are essential to prevent a dangerous debt load from crippling Europe's strongest economic power. Finance Minister Hans Eichel told parliament yesterday: "Our expenditures in the next few years must climb more slowly than our income. It is the only way out of the debt trap."

The austerity package will be the major issue in Sunday's provincial elections in Saxony. The Christian Democrats there enjoy an overall majority under the leadership of the popular Kurt Biedenkopf. Opinion polls indicate the party will retain its majority without difficulty. Many polls suggest the majority will even improve -- at the cost of Schroeder's Social Democrats.

The question for Schroeder's party is whether it can finish in second position behind the Christian Democrats, or whether it will again suffer the humiliation of falling into third place, behind the PDS, the successors to the East German communist party.

The PDS finished in second place, behind the Christian Democrats but ahead of the Social Democrats, in last weekend's regional elections in Thuringen. Saxony, like Thuringen, is a province in the former East Germany, and the PDS has also done well in other east German provincial elections.

In the post-mortems which followed the election in Thuringen, many in the Social Democratic Party have warned that the votes for the former communists could be a sign the party must not ignore. They suggest it could mean that left-wingers have grown tired of the Social Democrats' frequent internal fighting and are turning to the PSD to represent them.

The warnings have already had some effect, with both the right wing and the left wing of the party pledging to stop fighting in public. At least in public, Social Democrats are now expected to fall in place behind Schroeder's policies, particularly the economic reforms. Schroeder has also strengthened his management team to toughen party discipline.

However, some of the party's left wing this week again publicly criticized Schroeder. This followed an article he wrote in a monthly review, saying that Germany is a "great power" in Europe and therefore it should not hesitate to pursue its national interests. Past German governments have played down the nation's self-interests, to avoid international fear of a resurgence of German nationalism. They have always portrayed German interests as being synonymous with other European countries and with NATO. In the article, Schroeder said that generally this remained true -- but Germany also had its own self-interests which it would pursue more aggressively. He declared that a new Germany was emerging without complexes about its recent past.