BERLIN
German chancellor Gerhard Schroeder has been getting help from the heavens lately. On the last Saturday of the tightest election campaign in the history of democratic Germany, Schroeder chose the Baltic port of Rostock as the backdrop for his closing speech. The idea was to advertise his empathy for the former East German lands by showing off Rostock's expensively restored town square. And indeed, the place is as pretty as any coastal city in Holland. But pounding rainstorms were predicted for the whole day, driving indoors all but a few hundred hardcore party members and several beer-can-clutching malcontents, in their color-coordinated East European soccer-drunk sweat suits, who had come to howl about how little they liked being unemployed. It was a reminder that the jobless rate in this bleak region of warehouses and crabgrass is still near 20 percent, and that Rostock, like all other small cities in the east, continues to hemorrhage population. But seven minutes before Schroeder was due to climb onstage, the rain stopped and the clouds parted. By the time he appeared, the barriers were mobbed by clapping people and sunlight was streaming into the main square.
Schroeder's first term was like that. When he entered office in 1998, he was hailed as Germany's answer to Tony Blair and Bill Clinton. Schroeder was the man who would put an end to both his party's socialist cant and his country's scourge of chronic, double-digit unemployment. The jobless tally stood at 4 million then, and Schroeder told crowds that if
he couldn't get it under 3.5 million he wouldn't deserve to be reelected. Voters took him at his word. Every poll taken since 1993 has ranked unemployment as the country's number-one problem--and it has proved too much for Schroeder to handle, soaring this year to a record high of 4.3 million (in a shrinking workforce). Germany still has the highest nominal taxes in Europe, and it has been pummeled by the dot-com collapse--despite not having benefited from the dot-com boom. Tax revenues are through the floor. Financing for the government's trillion-dollar investment in prettying up places like Rostock now looks precarious, and the improvements like Potemkin ones. Formerly a model of fiscal discipline, Germany may soon get a "blue letter" from the European Union, warning it that its budget deficits have overshot the 3 percent upper limit (agreed to by E.U. member countries at Germany's--a bygone Germany's--insistence). Schroeder avoided this sanction by withholding crucial federal budget statistics until after the elections. His own government predicts a growth rate under 1 percent this year, and non-government prognosticators call that estimate too rosy. The country's health system is overgenerous and overburdened. Its retirement system, which kicks in at an unofficial age of 57 or 58, is reaching the point of actuarial absurdity. Watching Gerhard Schroeder strut behind a rostrum or joke in a television studio, one is pulled up short to remember that the "brash young chancellor" is 59--an age when the solid majority of his countrymen are collecting pensions.
All year long, Schroeder had been running behind his challenger, Bavarian governor Edmund Stoiber of the Christian Social Union (CSU), local sister party to the national Christian Democratic Union (CDU). Stoiber had combined his region's Catholic conservatism with tax breaks for business in a kind of right-wing socialism that came to be called the "laptops-and-lederhosen" model. It seemed to work. Immigration was limited in Bavaria, but anti-immigrant violence was lower than elsewhere in Germany. Businesses were moving in, but the state environmental laws were among the country's toughest. Most important, the unemployment rate in Bavaria--5 percent--was at or below American levels. Stoiber promised to cut taxes nationwide and to do for Germany what he had done for his home state. The writing was on the wall for Schroeder.
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