German chancellor quickly loses favor; Leadership: One year after his election, Gerhard Schroeder's unpopular budget-cutting plan spawns attacks from the right and the left.


BERLIN -- This is the thanks German Chancellor Gerhard Schroeder gets for presiding over the government's move to Berlin, shepherding the country through a war, and championing budget cuts.

The voters have turned against his party in recent local elections, and a one-time political ally is now a critic with a best-selling book.

And that's just for starters.

In office one year, Schroeder clings to what he calls the "new middle," a pragmatic place on the political spectrum that has yet to gain full favor among Germany's electorate or elite. He is discovering the hard way that governing from the middle is no easy task, with critics lining up to his left and right.

As the first anniversary of Schroeder's September 1998 election triumph approached, Wolfgang Schaeuble of the opposition Christian Democratic Union said of the new chancellor,"All the trust is gone."

"Your own supporters are horrified. There's no consistent line, only zigzagging and hot air," Schaeuble said in the German parliament, the Bundestag.

During the campaign, Schroeder presented himself as an agent of change against Helmut Kohl's longtime rule, which was running out of gas in increasingly hard economic times. But once it came time to govern, Schroeder was forced to unveil specific policies. And there was a sense, in the first few months, that the government lacked direction.

Lack of direction

"He has said he would make a lot of new reforms and everything would be better," Kause says. "In the field of tax reform, there is no clear direction. Pension reform is totally exhausted. There are ministers in [the] Cabinet who give different statements. Some suggest [the] pension limit be taken to 60 years, others say, this is impossible. There is no leadership in it. No clear road shown. This makes people annoyed."

No one is predicting Schroeder's ouster, but his approval rating has dropped 10 points to 31 percent in the last year. If those figures don't turn around and his Social Democratic Party (SPD) continues to sustain local election losses, Schroeder could be in deep political trouble by next spring.

"They are facing lots of problems," says Richard Hilmer, managing director of the polling company, Infratest dimap, ticking off voter dissatisfaction, policy changes and a split between his party's two wings.

"They weren't really prepared for government," Hilmer says.

Few could have predicted the bumpy course and U-turns charted by Schroeder, a confident, charismatic politician who defeated the seemingly entrenched Kohl.

Schroeder appeared poised to be the embodiment of a new, confident Germany. Smoking Cuban cigars, wearing Italian designer suits, he fosters an image as a shrewd leader adept at dealing with blue-collar workers and millionaire businessmen.

He even appeared to have the fortune of good timing, as Germany's government was moving from the sleepy post-war capital of Bonn to fast-paced, rebuilt Berlin, the cosmopolitan city steeped in Germany's turbulent history.

A political realist with an ambitious social agenda to cut unemployment, slash taxes and shore up the country's generous social safety net, Schroeder has been forced to make difficult, unpopular decisions. He took on two reforms, slimming down government and refashioning his leftist party.

Added to the mix was Schroeder's role as an international leader with heavy global responsibilities. NATO's war in Yugoslavia may yet be a defining moment for a more assertive Germany. Yet with a Nazi past still haunting the country, Germans were understandably uneasy during the war in Kosovo -- the largest German military presence in Europe since World War II. But Schroeder backed NATO airstrikes, held together a fractious ruling coalition with the pacifist, pro-environment Green party, and then deployed troops into the Serbian province of Kosovo.

Problem is money

But money is Schroeder's problem, not war jitters.

Facing a budget deficit so large that he said one in every four marks in tax revenues was used to repay interest on debt, Schroeder introduced a belt-tightening plan. The key features were proposals for $16 billion in budget cuts and linking pension increases to the inflation rate as opposed to the higher rate of increase in the net national wage. At a time when Germany's unemployment remains persistently high -- a shade under 4 million -- any cuts represent bitter economic medicine and will be difficult to push through parliament.

"Despite all the criticism we have received, the government will stick to its policy of austerity," Schroeder said in a recent television interview.

It's little surprise then that Schroeder's Social Democratic Party has been battered, sustaining six straight state election defeats. The country's public service unions are also restless and understandably nervous about the budget-slashing plans.

Last week, two unions staged a huge demonstration that brought Berlin's center to a halt and threw up a challenge to the government summed up in a placard carried by demonstrating policemen: "Schroeder go home."

But Schroeder shows no signs of backing down. He has said government spending cuts are "a bitter necessity, but a necessity for Germany to be fit" for the next century.

'He's not very lucky'

"Schroeder has a predominantly domestic agenda, and he's not very lucky with his subjects," says political analyst Joachim Kause. "There is no clear road shown."

In international affairs, Schroeder has provided vision and a clear policy, according to Kause, deputy director of the Research Institute of the German Society for Foreign Affairs. He has brought Germany forward as a legitimate influence in Europe.

Schroeder's dealings with France were recently criticized by Kohl, who spent years fostering solid relations with Germany's close neighbor, former enemy and now indispensable political partner. Kohl said those close ties were being neglected by Schroeder, who has courted an ideological soul mate, British Prime Minister Tony Blair, and spoken of a German-French-British triangle.

Kohl also said German foreign policy required not just self-confidence, but tact. "Everyone already knows that we are the strongest country in the European Union," Kohl said in a Focus magazine interview. "We don't have to say it every day."

But the criticism that cut Schroeder deepest was supplied by Oskar Lafontaine, one-time SPD leader, former finance chief and committed leftist who quit politics last March.

Lafontaine got his revenge against Schroeder with the publication of the book, "The Heart Beats on the Left," writing that Schroeder betrayed the voters by ushering in a "neoconservative" era.

"I could have ignored the lack of loyalty and sincerity [of the chancellor] towards me, but I cannot remain silent when the faith of voters is mocked by an about-face in policies," Lafontaine wrote.

Schroeder ignored the personal barbs and vowed to fight for his policies.

But just what he is fighting for is difficult to detect, according to some commentators.

Is Schroeder a crusading left-winger or a budget-cutting right-winger, or a bit of both?

"His appeal to address public spending has been good," says Konrad Adam, essayist for the Frankfurter Allgemeine Zeitung newspaper and author of a book on problems creating a new political center in Germany.

"Some of my colleagues in Berlin say he makes the right politics but is the wrong man," Adam says. "It is a point of credibility. That is his real problem. The credibility."

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