and it's "end of history" for germany: neo-liberal reform passed party, next parliament.. thatcherite conditions coming up! the german industrialist elite has got to be pleased..

long live flexibility

Chancellor Gerhard Schröder yesterday won overwhelming support from his party's rank and file for a new, more "Blairite" approach aimed at jolting Germany out of its economic lethargy. Cowed by the threat of an election the Social Democratic party (SPD) would almost certainly lose, delegates to an emergency conference in Berlin voted by around 90% in favour of Mr Schröder's blueprint for economic and social reform. Yesterday's vote gave Mr Schröder and his project a huge boost. But there was no mistaking the deep misgivings in his audience, which greeted his speech with mostly tepid applause. Nor is he entirely out of the woods. His coalition with the Greens has a parliamentary majority of only four, and at least a dozen leftwing MPs are vowing to vote against his proposals when they come before the lower house in the autumn. [of course, right-wing and centrist votes will render this "automatic majority" (short).. no opposition]

For almost five years, Mr Schröder's centre-left government has tiptoed around the reform of Germany's welfare system and its labour market, concerned that any real changes would be deeply unpopular with an electorate accustomed to lifelong security and prosperity. But, said the chancellor yesterday, the time had come for an end to denial. "People who think everything can stay as it is are deluding themselves. We need change just to keep the wealth we have," [we = mincing upper class] the chancellor said. He added: "We must have the courage to declare the truth." Mr Schröder himself led the way, reversing endless government claims that Germany's high unemployment rate - now at almost 11% - was simply the result of cyclical developments in the national and international economies. "It has to be said clearly that the number of jobless has not risen to almost 4.5 million because of circumstantial weaknesses, but because of structural problems," Mr Schröder admitted.

He went on to tell delegates that 62% of the federal budget was now going on welfare provision and the servicing of the debt it was largely responsible for generating. "This situation cannot continue unchanged," he added. The chancellor's so-called agenda 2010 aims to cut unemployment and boost growth while at the same time containing Germany's burgeoning public deficit. It would include a big cut in health spending, a modest reduction in unemployment benefits for the long-term jobless and changes to the labour laws to make it easier for employers to hire and fire. As a sop to the neo-Keynesian left, it also includes extra funding for local authorities. Mr Schröder's decision to steer his party back to the right, after a period in which he had been stressing the need for "social justice" rather than economic reform, owed much to the outcome of a state election last February. This handed control of the upper house of parliament to the Christian and Free Democrats and made his government beholden to the centre-right for the passage of much of its legislative programme.

The announcement of agenda 2010 provoked dismay among the party faithful and a mutiny in the ranks that forced the leadership into calling yesterday's special conference. But the chancellor made it clear he would resign if his followers refused to back his plan [he's done that a couple of times], and that would have pitched the SPD into a general election at a time when it is mustering just 27% in the polls. Yesterday's vote owed more to an instinct for self-preservation than to any sudden conversion among Germany's Social Democrats to the cause of neo-liberalism. Mr Schröder's rousing, hour-long address was given a polite reception, but the applause lasted for less than is normal on such occasions and only a handful of delegates got to their feet to clap.

The party left had hoped it could secure a motion contradicting the thrust of agenda 2010. It pinned its hopes on a call for a wealth tax, but the conference organisers ensured that it was watered down to the point of virtual meaninglessness.