The shortest post-election honeymoon is over.
No other postwar German government has suffered such a catastrophic collapse in support so soon after being elected as Gerhard Schröder's embattled SPD-Green coalition.
At the beginning of this year, just three months after narrowly winning the general election, support for the SPD had plunged to 28 percent in the opinion polls. Unemployment is spiralling. The economy stands on the edge of a full-blown recession. Employers are demanding swingeing cuts to workers' living standards and the unions, closely linked to the SPD, are echoing rank and file calls for serious confrontation with the government over pay. Some 71 percent of people oppose war on Iraq, but Schröder has abandoned his election promises and is now set to back George Bush in all but name.
Oskar Lafontaine, the charismatic left wing SPD politician who was forced out as finance minister three years ago, wrote in December that Schröder resembles Heinrich Brüning, the last chancellor of the Weimar Republic before it gave way to increasingly authoritarian rule in the years before Hitler seized power. That's an overstatement. But there is no doubting the turmoil that is engulfing Germany--Europe's largest economy, the bedrock of the euro, and a pillar of stability across the continent for decades. Schröder reportedly threatened to resign at a meeting of SPD leaders at the beginning of December, saying, 'If anyone in this hall thinks they would be able to do it better he should do it.'
Whether Schröder goes or not, his version of the Third Way (the 'Neue Mitte') is dead, torn apart by sharp class polarisation. The centrepiece of his programme before last year's election was big tax cuts for big business. His finance minister, Hans Eichel, drove the policy through against opposition within the SPD. It was a signal of a fundamental drive to do what German big business, bankers and the International Monetary Fund have demanded for a decade--radical 'reform' of the welfare state and wholesale deregulation.
Then, facing seemingly certain election defeat, Schröder tacked left. He invoked old-style social democratic class rhetoric in the dying weeks of the campaign and provoked a bitter row with Bush by declaring Germany would not support war on Iraq 'with or without the UN'.
He scraped in. But deepening economic crisis became apparent a few weeks later. Hans Eichel had to report a huge fall in tax receipts and a gaping budget deficit of 3.8 percent, a breach of the 3 percent limit set by the 'stability and growth pact' that underpins the euro. The budget deficit stands at 30 billion. It is set to widen as the economy slows and unemployment rises. It is already well over 4 million.
The government's response was to increase general taxation, which disproportionately hits workers. In a deeply unpopular move, it raised tax on heating oil just as winter set in. It also announced cuts in welfare benefits. The measures were not enough to reassure big business, which complains that German workers work 25 percent less hours a year than those in the US and that 24.2 percent of total labour costs go to social insurance.
But they did enrage workers and large sections of the salaried middle class. An anti-Schröder CD went to the top of the charts. People began sending in old shirts to Schröder before he 'ripped the last shirt off our backs'. The German equivalent of the Sun and the Tory CDU tried to tap the discontent, organising populist protests led by small businessmen against the government. However, in December clear working class and left wing opposition to Schröder emerged. The leaders of the two biggest unions in Germany--Verdi and IG Metall--launched a campaign for a wealth tax. Their slogan, taken up in petitions and leaflets in workplaces, was 'Millions are paying tax, soon the millionaires will have to too'. Schröder crushed attempts by SPD leaders in the states of Hessen and North Rhine Westphalia to adopt a tax on the millionaires.
Those local state leaders saw it as the only way to avoid serious defeat in two important state elections in February. The Verdi public sector union did not back down and said it was prepared to call serious strikes from the end of this month if they do not get a 3.5 percent wage increase in talks on 22 January.
In linking calls for strikes with a highly popular demand to tax the rich, the unions have opened a very powerful challenge to the government. That's compounded by anger and anguish at the base of the SPD over Schröder's U-turn on the war. He is increasing the German deployment in Afghanistan (to free up US troops for the Gulf), opening up German airspace for US attack flights, maintaining German ships off Somalia to relieve the US navy, and wants to boost weapons sales to Israel.
The Greens, his junior coalition partners, held a tumultuous party conference at the beginning of December where they replaced their joint leaders and reaffirmed an anti-war position. But their MPs remained wedded to the coalition and, on economic and social policy, are keener on neoliberal reforms than the mainstream of the SPD--one of their leaders called for an economic policy of 'blood, sweat and tears'. The result is bitter rows inside the coalition and a feeling among increasing numbers of people that their views are not represented by any of the parties in parliament.
The German anti-war movement is building for a major demonstration in Berlin as part of the European day of action against the war on 15 February. The politicised response of the unions is encouraging large layers of activists to tie together opposition to the war on Iraq with support for strikes at home.
Schröder's government is in a feeble position to deal with either, let alone both.