Alex, I do not recall any period in time where leadership mix was as it is..Clinton, Shroeder, Blair, Italian Communists......I think Inflation and Hyperinflation is a given...just watch and see next round of strikes in France.....Now these are people who are in charge of "helping" Russia, Brasil and who knows who...
The start of a new era
By Andrew McCathie
Today marks the beginning of a new era in Germany – when Gerhard Schroeder formally takes over as the country's seventh Chancellor since the end of World War II. The 54-year-old Mr Schroeder's rise to the leadership of the world's third-biggest economy comes just four weeks after his decisive election victory brought to a close 16 years of conservative rule under the outgoing Chancellor, Dr Helmut Kohl.
The formation of the new Government will also set the stage for an historic year in Germany, beginning in January with the merging of the deutschemark with 10 other currencies to form Europe's new common currency and ending in November with the 10th anniversary of the breaching of the Berlin Wall.
Moreover, next year will also see the return of the German Government to the nation's capital, Berlin. This in turn will mark the Berlin Republic's eclipse of the so-called Bonn Republic which has guided Germany since the end of World War II.
Apart from signalling the change to a new generation of political leaders in Germany, the arrival of a new Social Democrat-led administration represents a dramatic political shift in the European Union's leading partner, with Mr Schroeder teaming up with the environmental Green Party to form a new left-of-centre coalition.
It is the first time that the Greens have formed part of a national government since they emerged more than 10 years ago as a radical pacifist party on the German and European political stage.
Although Mr Schroeder is very much on the right-wing of his Social Democratic Party, he promotes himself as an industry-friendly politician who is very comfortable in a political world of big government, big unions and big business.
During his latest job as premier of the northern German State of Lower Saxony, Mr Schroeder gained practical skills in German industry with his State's holding in Volkswagen AG, Europe's biggest car maker, giving him a seat on the VW board.
A perpetually tanned and telegenic political leader, Mr Schroeder, who also has a penchant for big cigars, has over the years attempted to carve out what he describes as a "New Centre" or a new political middle ground in Germany.
Mr Schroeder's new Government has already moved swiftly towards an overhaul of Europe's powerhouse economy by drawing up a blueprint for reform of Germany's notoriously cumbersome and complicated tax system.
There have also been other signs of the change which have taken place in Germany since last September's election, with leading members of the new Government more prepared to speak out on the need for change in monetary policy to help shore up the economy and jobs market.
Previously, this was almost the sole preserve of Germany's powerful central bank, the Bundesbank.
There have also been suggestions emanating from the new Government to forge a financial markets' stability pact with France and Britain, including a drive for linked exchange rates, as a way of stabilising world markets.
As part of its program, the new Government is also planning to phase out nuclear power in the country.
However, equally significantly – and after using its majority in the upper house of parliament to block Dr Kohl's reform program and to break up the political consensus on reform – the Schroeder-led Government has the numbers to press its own reform plans through parliament.
In doing so, it brings to an end the paralysis which has descended on Germany's reform process over the past 18 months.
The question of tax reform is, however, also linked to the drive for much broader reform of Germany's economy and, in particular, to introduce greater flexibility into the country's rigid labour market and to boost the nation's standing as a place to invest.
A key part of the tax reform package has been to increase the tax on energy, therefore generating funds for cutting employee and employer social security contributions which are seen as hindering employment.
Although foreign direct investment into the country appears to have picked up this year, there seems no end to the flood of investment money out of the country.
At 30 billion deutschemarks ($30 billion) in the first half of this year, foreign direct investment seems likely to exceed the more than DM50 billion worth of investment that left the country last year.
However, it was the recent surge in unemployment which finally forced the political establishment to focus on the need for economic reform. In the past few years, the jobless rate had risen to levels not seen in the Germany since the rise of Hitler.
While Mr Schroeder has stressed continuity in Germany's foreign relations, it will be in domestic affairs where the new Government will face its greatest tests, especially in tackling the nation's high unemployment.
With an array of job benefits and tough labour laws making many German workers among the highest paid in the world, doing business in Germany can be a costly affair.
According to a recent survey of business, about 80 per cent of German companies said one reason for investing abroad in the past two years was to save on labour costs.
The election itself was a manifestation of the build-up of the desire for change in the country, with Dr Kohl's Christian Democratic Union suffering its worst electoral defeat in 50 years. However, change does not come easily to a conservative country like Germany and there is hope that fundamental economic reform might also spark a rethink in the nation about the way it approaches a range of issues.
One glaring example of this could be Germany's inability to face up to the multicultural nature of its society, with the new Government already outlining changes to the country's outmoded citizenship laws.
Even so, and despite Mr Schroeder's effort to woo German industry, the new Government has so far failed to win many friends among Germany's influential big business.
While the Social Democrats' election manifesto sets out a clear commitment to market economics and the modernisation of the German economy, the new Government has aggravated relations with business by moving to withdraw some of the labour and social reforms introduced by the Kohl Government.
Moreover, since the new coalition's tax package was unveiled earlier this month, there has been a stream of criticism of the plan from leaders of German industry, who claim it would add to their tax burden.
Political change in Germany is also taking place at a time of growing economic uncertainty.
Steady economic growth among Germany's principal trading partners in Europe has so far helped Germany to withstand the pressures exerted on the global economy by the crisis gripping Asia and other emerging economies. However, economic forecasters have already begun downgrading their 1999 growth projections for Germany in the face of the contraction in world trade and slumping international economic growth.
As result, Mr Schroeder may find his political ambitions for his first year in office increasingly shaped by a weak economic outlook.
afr.com.au |
