[A-List] Germany: political crisis

["Michael Keaney" <michael.keaney@xxxxxx>]

Schröder humiliated as jobless pass 4m
By Tony Paterson in Berlin
The Independent, 05 December 2002

Gerhard Schröder suffered two humiliating setbacks yesterday when German
unemployment came in at its highest level for five years and the opposition
demanded his government face a fraud inquiry for allegedly lying to voters
about the economy.

Figures released by the Federal Labour office showed the number of jobless
had leapt by 96,000 to 4,026 million in November, the highest rate for the
month since Mr Schröder was first elected as Chancellor in 1998 on a pledge
to halve unemployment.

The grim news was compounded by the government's prediction that
unemployment would rise to more than 4.5 million by next spring largely
because of increasing labour costs from higher pension and health insurance
rates.

Mr Schröder admitted yesterday that Germany's economic position had
deteriorated. "There is no doubt that there are economic problems," he said.
He reiterated his coalition's line, blaming "global economic causes" and the
"negative effects of the Iraq crisis".

The conservative opposition swiftly condemned his remarks. Angela Merkel,
the Christian Democrat leader said: "You are a weak leader who is not up to
the task and your government stands for inertia and tax burdens. It is
incapable of implementing reform." She said her party would seek an
unprecedented parliamentary inquiry to establish whether the government had
lied to voters on the state of the economy during the general election
campaign this year. Such an inquiry requires the support of only 25 per cent
of MPs in the Bundestag.

The double blow could hardly have come at a worse time for Mr Schröder, who
has deluged the electorate with unpopular tax, insurance and pension
increases since his re-election to plug an apparently unexpected £20bn
budget deficit. The measures have been calledunworkable by prominent
industry representatives, and the such as Dieter Hundt, the head of the
German employers' association. The opposition has also alleged that the
Chancellor has reneged on a key election promise not to increase taxes.