- The Washington Times - Thursday, November 11, 2004

BERLIN — German Chancellor Gerhard Schroeder, hit by a spate of midterm election defeats over his cutbacks in social welfare spending, is regaining his popularity in opinion polls after the re-election of President Bush.

“This way it’s simpler for Schroeder,” said Richard Hilmer, head of the Infratest polling institute in Berlin. “With [Senator John] Kerry in the White House, the pressure to make a contribution in Iraq would have mounted.”

The latest opinion polls even suggest that Mr. Schroeder, whose vocal opposition to the war in Iraq helped him win a second term in 2002, could win a third term in 2006.

Mr. Schroeder’s center-left Social Democrats have narrowed their gap with the opposition conservatives by five to seven percentage points in recent months after trailing by about 20 points for much of this year and the last, polls show.

In Mr. Schroeder’s case, the dispute over Iraq provides a diversion from issues closer to home — a massive network of social welfare benefits that Germany no longer is able to afford.

His refusal to back down on the biggest welfare system overhaul since World War II, despite regional election routs and rebellions in his party, also has won grudging respect among voters.

In a direct comparison of who Germans want as their next chancellor, Mr. Schroeder bests conservative leader Angela Merkel by 49 percent to 32 percent, Mr. Hilmer said.

Most analysts see the reforms as a crucial downsizing of a welfare system that is choking off economic growth by keeping labor costs among the world’s highest.

The most unpopular measure affects the long-term unemployed.

From January, people unemployed for more than 12 months will get about $445 per month in western Germany and $421 in the east. Previously, benefits were paid as a percentage of previous wages — from 53 percent to 57 percent.

After three years of stagnation, Germany is recovering modestly and should grow just under 2 percent this year amid surging global demand for its autos, machinery and chemicals.

But consumer spending remains stagnant because Germans fear benefit cuts and unemployment, which hit a 61/2 year high in October and stands at 10.7 percent.

Miss Merkel, often compared to former British Prime Minister Margaret Thatcher, is struggling to establish herself as the conservative choice to challenge Mr. Schroeder in 2006.

Meanwhile, there are signs that Germans are getting Mr. Schroeder’s message that they can’t cling to the comforts they enjoyed in recent decades. Car giant Volkswagen reached a deal this week freezing pay for 103,000 workers until 2007 in return for job guarantees.

Risks persist for Mr. Schroeder, but the conservatives have no one who can match his charisma. Mr. Schroeder and Mr. Bush, though miles apart on most issues, are similar in their appeal to voters.

“They’re both instinctive politicians, prone to making gut decisions which they then stick to,” Mr. Hilmer said.

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