BERLIN, July 8: A combination of good fortune and shrewd tactics is helping German Chancellor Gerhard Schroeder restore his tarnished reputation as resistance to his economic reforms crumbles.

Ten months into a second term that has seen state election defeats for his Social Democrats, a recession, a party revolt, public ridicule and an opinion poll slump, Schroeder has regained respect by giving the impression he is back in control.

A surprise 33,000 drop in June unemployment to 4.407 million announced on Tuesday showed that labour reforms are beginning to take effect, even as the economy remains stagnant.

Commentators have credited Schroeder for bringing forward 15.6 billion euros ($17.59 billion) of tax cuts to next year to revive the economy — a popular U-turn that could still backfire if it fails to spur growth and the budget deficit continues to swell.

“For the first time in a long time, perhaps the first time ever, Schroeder is conveying the impression he has plans for Germany,” liberal daily Sueddeutsche Zeitung wrote last week.

The move has put the opposition conservatives in a quandary. Block the cuts with their majority in the Bundesrat upper house and voters will blame them for choking off the economy. Approve the cuts, and a grinning Schroeder will get the credit.

Criticism of the media-savvy northerner has died down as the focus shifts to infighting among the conservatives.—Reuters