- The Washington Times - Monday, May 2, 2005

No ‘Iron Lady’

The chief economist of one of Germany’s largest corporations laments the absence of a strong conservative leader like Britain’s Margaret Thatcher and hopes his country’s socialist government can solve Germany’s economic troubles.

“There is no ‘Iron Lady’ in sight for us,” Ruediger Puf of the DaimlerChrysler Corp. said on a recent visit to Washington, referring to the nickname the Soviet press gave to Mrs. Thatcher.

Mr. Puf told the American Institute for Contemporary German Studies that center-right leader Angela Merkel of Germany’s Christian Democratic Union (CDU) “can’t win against the trade unions,” our correspondentBen Tyree reports. Mr. Puf also said the CDU has “not offered much” in the way of reforms.

He said the Social Democratic Party (SPD) may have the credibility with labor to make the necessary tough choices, even though the socialists have lost several German state elections and face an uncertain future in the next parliamentary elections that could come as early as next year.

Mr. Puf said the “participation of the left” is “crucial” to restructuring the German economy and holding down the costs of runaway social programs.

“But that is only part of the cake,” he said.

The federal government collects close to half of the nation’s economic output in taxes, and only “part of that is redistributed,” he said.

Mr. Puf said reducing the tax burden to provide economic stimulus and to get people back to work is more important than debating whether the deficit is 3 percent, 4 percent or 5 percent. There has been talk of cutting the corporate tax from 29 percent to 19 percent, “but nothing has happened yet,” he added.

“For us, it is better if the SPD would do all that,” he said.

Six German institutions recently slashed their forecasts for the economy to about 1.1 percent annual growth, which Mr. Puf called “economically a stagnant pool.”

The consumer spending outlook is worse. Economists expect a 0.7 percent increase this year, down from 1 percent last year and 2 percent five years ago.

“People have money but don’t spend,” Mr. Puf said.

Unemployment has risen from a low of about 150,000 in 1970 to more than 5 million today. The unemployment rate is 12.6 percent, more than twice the U.S. and British rates, both 5 percent. Private investment has plunged from 10.1 percent five years ago to minus 0.2 percent.

Mr. Puf said DaimlerChrysler nevertheless is still hopeful that the economy will improve. The corporation is investing more than $7 billion in Germany in engine plants, design and research and development.

CAFTA summit

President Bush will meet with the leaders of the Dominican Republic and five Latin American nations next week to discuss the prospects for a free-trade agreement facing growing opposition in Congress.

Mr. Bush will host a May 12 meeting with Presidents Abel Pacheco of Costa Rica, Leonel Fernandez of the Dominican Republic, Tony Saca of El Salvador, Oscar Berger of Guatemala, Ricardo Maduro of Honduras and Enrique Bolanos of Nicaragua. They represent the nations covered by the proposed Dominican Republic-Central America Free Trade Agreement, known as CAFTA.

Treaty supporters say the United States will benefit from the elimination of import tariffs in the CAFTA countries, but members of Congress from states with powerful sugar and textile interests say the pact will cost American jobs.

New at OAS

Interior Minister Jose Miguel Insulza of Chile is the new secretary-general of the Organization of American States. He was elected yesterday to a five-year term without opposition.

Mexican Foreign Minister Luis Ernesto Derbez dropped out of the race last week. The two candidates tied with 17 votes apiece last month in a first round of voting among the 34 nations in the OAS.

Call Embassy Row at 202/636-3297, fax 202/832-7278 or e-mail jmorrison@washingtontimes.com.

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