BERLIN: Open warfare broke out on Monday among the Social Democrats, partners in German Chancellor Angela Merkel’s left-right coalition, in a row over key economic reforms that threatened to capsize the government.

The reform plan known as Agenda 2010 was introduced under Merkel’s predecessor, Gerhard Schroeder of the Social Democrats (SPD), and was the centrepiece of his bid to jumpstart Europe’s biggest economy.

It traded carrots for sticks in efforts to get Germany’s millions of jobless back to work by reducing the length of time that the unemployed can collect full benefits.

The measures have been credited with helping to spur an economic upswing and slash

unemployment, which reached a post-war high of five million under Schroeder and has

now plummeted to about 3.5 million.

Now SPD leader Kurt Beck is attempting to win back voters with a call to extend standard benefits to older unemployed people for a longer period of time – a stance backed by three out of four Germans.

But Franz Muentefering, the vice-chancellor, labour minister and former SPD leader, has dismissed Beck’s proposal as a ‘mistake’ and hinted that it was a cheap bid to win voters back to the party.

“I regret that many people are quick to believe that you can pursue populist policies,” he told ARD public television late on Sunday. “We must invest in jobs and not in unemployment.” German media said the argument, if it escalated, could bring down the two-year-old government.

The daily Frankfurter Rundschau, which is run by an SPD-owned holding company, said that it was growing increasingly likely that Beck would topple Muentefering and take over his role in the coalition.

“If the SPD presses on like this, Franz Muentefering will soon join Gerhard Schroeder in retirement,” it wrote in an editorial on Monday.

“What began as a mixture of traded barbs and debate on fine-tuning social welfare policy has grown into a veritable power struggle.” The left-leaning Berliner Zeitung said Muentefering’s exit would sink the ruling coalition.

“It would catapult his party into the opposition,” it wrote.

“The SPD would need a lot of discipline to not lose itself in blame-trading and jostling for position. The Union (Merkel’s conservative alliance) could then with reason say that such a weakened party can no longer be relied upon” and call for new elections, now scheduled for 2009.

Beck has struggled to outshine Merkel, who is basking in the international spotlight and was recently named the world’s most powerful woman by Forbes magazine for the second year running.

While Merkel has led her conservatives from strength to strength, the SPD is trailing in the polls at about 26 per cent support versus 39 per cent for the chancellor’s Christian Union.

With three state elections next year, Beck is under enormous pressure to get his house in order and fight off a strong challenge by the Left Party, a two-year-old alliance of disgruntled Social Democrats and former communists.

A showdown is now shaping up for an SPD party congress this month in the northern city of Hamburg where delegates will vote on the unemployment proposals.

If the party, as pundits expect, votes to back Beck’s call, many Social Democrats indicated that the pressure would grow on Muentefering to stand down – a prospect he dismissed on a Sunday talk show.

“Why should I not remain as minister? I am fighting for a reasonable policy,” he told ZDF public television.

“Let’s see what happens at the party congress.”—AFP