December 19, 2002	Thursday	Shawwal 14, 1423

BERLIN: Just a week ago, German Chancellor Gerhard Schroeder was forced to vow he would not abandon ship amid threats of mutiny from his Social Democrat crew and severe storm warnings for Europe’s biggest economy.

But the man who earned a reputation as a “comeback kid” after sneaking from behind to narrowly win September’s general election has since seized the tiller of the German government. He appears determined to steer it back towards the modernizing reforms dubbed the “Neue Mitte” or new centre in his first term.

Schroeder’s unveiling on Monday of plans for a withholding tax on interest income of 25 per cent, instead of a controversial wealth tax pursued by some on the left of his party, won praise from business lobby groups and opposition parties alike.

Coming hot on the heels of moves to liberalize Germany’s notoriously rigid shopping laws and a compromise with opposition conservatives on reforms to promote low wage jobs, Schroeder seemed back at the helm after a rocky start to his second term.

Still, with the seventh monthly fall in the Ifo business sentiment index showing the German economy is still in the doldrums, war looming in Iraq, the threat of public sector strikes and the blocking of a landmark immigration law, Schroeder’s woes are by no means over.

“Since election day, there has been a lack of direction,” said Peter Loesche, Goettingen University politics professor. “At the moment things are looking up but it is not to be expected that the sun will shine for the next three months.”

At least the haemorrhaging of support for Schroeder’s SPD seen since the election as the government admitted the dismal state of public finances seemed to have stopped, with a Forsa poll showing them gaining a point from last week to 30 per cent.

BACK ON TRACK: After fierce criticism from German business of tax hike plans announced since the election, Schroeder’s apparent willingness to discuss cuts to the welfare state won rare praise from Michael Rogowski, head of the BDI industry federation.

“The announcements of the chancellor point in the right direction,” he said. “Much is still not clear enough... but we do stand at the beginning of a debate which must be translated into concrete policies as quickly as possible.”

“We must not hesitate with the necessary structural reforms, but must drive forward the modernization of our economy and our country,” Schroeder wrote in Monday’s Handelsblatt, prompting the business daily to say he was returning to a centrist course.

“Schroeder is an agile chancellor. Just as the opposition are still accusing him of paying back the trade unions for their support in the election campaign, the chancellor is going in the opposite direction — back to the centre,” the paper wrote.

Meanwhile, the opposition Christian Democrats, who had hoped to profit from the government’s plunge in popularity to cement their control of the upper house of parliament in two regional elections in February, have had a gaffe- and strife-filled week.

Simmering rivalry between CDU leader Angela Merkel and party finance policy spokesman Friedrich Merz broke out into the open at the weekend while Roland Koch, the CDU premier of Hesse facing a state vote in February, drew fire for suggesting rich Germans were being persecuted like Jews under Hitler.—Reuters