- The Washington Times - Wednesday, August 29, 2001

German Chancellor Gerhard Schroeder walked onto voters' TV screens three years ago promising a decrease in unemployment and a media-friendly relief from the face of Helmut Kohl, whose 16 years in office had seen the unification of his country. But that was before the United States went into a recession of its own, contributing to a slump in Germany's economy, which is largely export-driven. As the German Federal Labor Office reported recently, unemployment rose again for the seventh month in a row.
Gone are the blues of the the opposition Christian Democratic Union (CDU), which suffered last year from the revelation of a party finance scandal that included illegal dealings by Mr. Kohl. If they have the fortitude to create a unified economic platform, they will be able to provide a formidable challenge in the federal election in the fall of 2002.
It is clear that the CDU will have their hands full. There have been mass layoffs at Germany's largest companies, such as the chemicals producer BASF AG, electronics giant Siemens AG and truckmaker MAN AG. Estimates for the growth of GDP for 2001 have been cut in half to approximately 1 percent, according to Germany's five largest economic research institutes.
Mr. Schroeder has little power to make any drastic changes in those figures, despite the pressure to fulfill his campaign promise to bring unemployment down to 3.5 million. While CDU leader Angela Merkel has proposed accelerated tax cuts to speed economic recovery, the International Monetary Fund advised against implementing tax reform too quickly. Mr. Schroeder took heed.
Where Mr. Schroeder could make a difference is in remodeling Germany's welfare policy. However, he has criticized the policies of the CDU governor of the state of Hesse, Roland Koch, who has looked to the United States for answers to his country's employment problems. Mr. Koch wants to decrease welfare rolls based on the methods used by the "Wisconsin Works" program, which required all welfare recipients to work in exchange for their benefits. As a result, 60 percent of welfare recipients got jobs within five months after leaving welfare rolls. Mr. Schroeder said such a program could not be transferable to Germany.
The CDU, by contrast, has proposed cutting benefits for any job-seeker who refuses a job offer. But it doesn't need to look as far as the United States for economic leadership. Bavaria's leader Edmund Stoiber of the CDU's Bavarian sister party, the Christian Social Union is ahead of Mrs. Merkel in election polls, and in his state unemployment is at only 5 percent. He's known for his strong leadership and ferocity in cutting red tape.
It is not yet clear who will run against Mr. Schroeder in next fall's elections. Both Mr. Koch and Mr. Stoiber can be expected to challenge Mrs. Merkel for the spot. Until then, however, a focus on welfare reform is in order.


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