- The Washington Times - Thursday, December 19, 2002

HANOVER, Germany Gerhard Bach was one of the thousands of German businessmen who had high hopes when Chancellor Gerhard Schroeder's coalition of Social Democrats and Greens was swept to power for the first time four years ago on a promise of economic reform.
The director of the Wilhelm Faber construction company near Frankfurt was convinced that Mr. Schroeder's pledge to sweep away the bureaucracy, legal restrictions and high costs dogging his business would bring an end to the notorious "German disease" crippling the economy.
After Mr. Schroeder's re-election in September, Mr. Bach, 63, is bitterly disillusioned.
"My company is currently facing its deepest crisis in 40 years" and the prospect of mass layoffs next year because of the stagnation, he said. "If anything, the Schroeder government has made matters worse."
Mr. Bach's loss of faith in the administration is reflected across Germany. The chancellor and his party have fallen from grace at a rate unprecedented in postwar German politics. Since the election, the party has plummeted 11 percentage points in the opinion polls to 27 percent while the popularity of the opposition conservatives has risen to nearly 50 percent.
Poll predictions indicate that the Social Democrats will be defeated in key regional elections in Lower Saxony and Hesse early next year. Even party supporters from Mr. Schroeder's home state of Lower Saxony are voicing criticism. Defeat at the polls could bring down his coalition.
The chancellor overcame a gaping Christian Democrat lead in the polls to win the September election after taking a stridently anti-American line in his opposition to war against Iraq, even if the United Nations would back action.
That issue has been eclipsed rapidly by economic stagnation, mass unemployment which is predicted to rise nearly half a million to 4.5 million people by early next month and a gaping $31.9 billion budget deficit.
The crisis has provoked deep rifts among the Social Democrats. Left-wingers want to impose a wealth tax, which is strictly opposed by Mr. Schroeder, while the trade unions are rebelling against the government's plans to extend shopping hours on Saturdays in an attempt to boost the economy.
Last week, the bickering caused Mr. Schroeder's nerve to snap. At a party executive meeting in Berlin, he threatened to resign as chancellor. "If anyone thinks they can do it better, then let them," he said.
A swath of unpopular new taxes, social security and pension payments the government's initial answer to the deficit problem has provoked public outrage.
"It looks bad," said Jurgen Wunsche, a Social Democrat activist in Hanover for 30 years. "The voters are deserting us in droves, and Berlin is to blame."

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