BY CARL-ERIK ISACCSSON
STOCKHOLM, Sweden - Gerhard Schroder, the Social Democratic head of the state government in Lower Saxony, Germany, was reelected March 1, defeating Christian Democratic Union (CDU) candidate Christian Wulff. The state election was closely watched on a national level as a prelude to the September 27 federal elections, which include the post of chancellor, the head of the federal government.

In the Lower Saxony vote, the Social Democratic Party (SPD) won 47.9 percent of the votes, up from 44.3 percent in the 1994 elections. The CDU, which leads the federal coalition government, won 35.9 percent of the votes, down from 36.4 percent in 1994. The Greens got 7 percent, down 0.4 percent, and the Free Democratic Party (FDP), a small but important coalition partner in Chancellor Helmut Kohl's coalition government, fell just short of winning the 5 percent needed to be seated in the local parliament.

This was the biggest vote the social democrats have ever received in Lower Saxony state elections. "The result is fantastic," Schroder said, "better than I had dared dream of, even in my wildest dreams."

The SPD had held off naming its candidate for chancellor until after the poll. Party chairman Oskar Lafontaine, who ran unsuccessfully against Helmut Kohl in last federal elections, and Schroder were the leading possibilities. Schroder is often compared in the press with Anthony Blair, the recently elected Labour Party prime minister in the United Kingdom. Both politicians take more openly procapitalist positions on domestic economic issues than traditional social democrats.

Soon after Schroder's victory was announced, Lafontaine endorsed him as the SPD candidate for chancellor. This will be formally ratified at the party's convention April 17 in Leipzig.

Before the elections in Lower Saxony, Schroder said that he would not stand as a candidate for chancellor if he received a lower percentage of the vote than in 1994. Chancellor Helmut Kohl strongly backed the CDU candidate Wulff and held 11 big election meetings in Lower Saxony to try to cut across Schroder's support.

Unemployment remains at record levels
The main theme in the social democrat's election campaign was unemployment, which is setting new post-World War II records nearly every month. In February unemployment in western Germany crept down a tenth of a point to 10.4 percent, but in eastern Germany the jobless rate grew from 21.1 percent to 21.3 percent. Thousands of people in 200 cities took part in protests demanding a 35-hour workweek and higher unemployment benefits. These actions are planned to continue monthly until the September elections.

Schroder repeatedly quoted Kohl's vow to reduce unemployment to half by the year 2000 - a promise that is extremely unlikely to be met.

Kohl's leadership of the CDU has been questioned during the last year by younger leaders in state governments, and after the elections in Lower Saxony speculations grew that Wolfgang Schauble, the most popular CDU politician, may replace Helmut Kohl as candidate for chancellor.

European Monetary Union
The governments constituting the European Union have decided to introduce a single currency, the Euro, on Jan. 1, 1999, with the mantra that it could become a competitor to the U.S. dollar in world trade and finance. Having a deficit of no more than 3 percent of Gross Domestic Product (GDP) is the main criteria for qualifying for the single currency. With what the New York Times described as "minimal tinkering," government officials across western Europe released figures in February that showed all of the 15 EU states except Greece had met this criteria. The Italian government, for example, with one of the weakest economies among the imperialist countries, announced a deficit of 2.7 percent, the same as Germany.

The French government managed to show a deficit of exactly 3 percent. It is now expected that 11 countries will be part of the single currency on Jan. 1, 1999. In early May the EU will formally decided which countries will take part from the start. The governments of the United Kingdom, Denmark, and Sweden have announced they will not participate from the beginning, although they meet the criteria.

Officials of the Bundesbank in Germany and other central banks in Europe have raised questions over whether all of the European Monetary Union (EMU) candidates, especially Italy and Belgium, have really met the criteria to join the single currency.

In Germany there is opposition to joining the single currency within every political party, as it is expected that the Euro will be weaker than the German mark and because the austerity measures - like cuts in sick leave payments and pensions and the introduction of tuition fees for students -that the single currency symbolizes. These austerity measures also tend to increase the deflationary pressures already at work in the crises-ridden capitalist world system, threatening economic collapse. Schroder had been among the politicians in Germany to propose a delay of the start of the single currency. During his election campaign, he steered away from the issue of the single currency. Immediately after his nomination for chancellor, however, Schroder promised to convene a "roundtable of the best brains in the land to analyze the risks of the euro in an impartial manner." Schroder said he would recruit Karl Otto Pohl, a former president of the German central bank and a Social Democrat, to lead the panel. Recently 150 prominent German economists made an appeal for a delay of the single currency.

In reassurance to Bonn's European partners, the Social Democratic Party's parliamentary leader Rudolf Scharping issued a response to Schroder's statement, declaring, "The goal of our party is to protect the consumers and ensure the stability of the currency. This has nothing to do with Euro- skepticism."

Kohl is set back over taxes
The biggest setback for Kohl has been the stalling of a "tax reform" by the social democrats in the Bundesrat, the upper house of the German parliament. Taxes are high in Germany, and next to unemployment are seen as the biggest political question. Both issues are deeply connected to the reunification of Germany, where two states with different social relations, a capitalist state in the west and a workers state in the east, began a process of unification of antagonistic social relations that has plunged Germany's rulers into crises. Schroder is sounding the theme of reducing income taxes and raising child allowances, while accusing the governing coalition of just wanting to lower taxes for the rich, such as corporate taxes and taxes on capital, which are included in Kohl's tax reform.

On February 6 the Bundesrat, which has a Social Democratic majority, approved a law that will reduce benefits to asylum seekers to the absolute minimum. Those who have come into the country "illegally" will receive no help at all. Some 200,000 war refugees from Bosnia will be especially hard hit by this measure.

One of the more outspoken supporters of this new law is the Social Democratic minister of interior in Schroder's Lower Saxony state government. Stricter asylum laws is a major theme in both the CDU and SPD campaigns. This feeds the right wing, with the media reporting an increase in rightist violence, especially in eastern Germany. Other themes that are expected in Schroder's campaign include harsher punishment for sex crimes and reducing unemployment by creating jobs at lower wages. Schroder's election program will be voted on at the special SPD convention in Leipzig.

Resistance among workers
The shift among workers toward an increased support for the social democrats in Germany follows a similar phenomena in the United Kingdom and France, where the Tory and the Gaullist governments respectively suffered electoral defeats last year. In Sweden, where the social democrats a year ago were capturing less than 30 percent of the vote in polls and the Conservative party was over 30 percent the picture has also changed. In the latest poll the Social Democrats had 36.5 percent support and the conservatives 27.5 percent. In Denmark, the minority social democratic government is feeling some wind in its sails and has called early elections for March 11.

This reflects resistance among workers to attempts to impose austerity measures and cut backs. The public workers unions in Germany have had two rounds of warning strikes this winter, for instance. Negotiations have been stalled and will go into an arbitration process next week, which could end with a strike vote by the public workers. One of the main issues in the negotiations is the governments' insistence on lowering sick leave payments from 100 percent to 80 percent, an issue that spurred labor demonstrations and strikes of hundreds of thousands in 1996, when Kohl's government made an earlier attempt to lower these benefits.

Other unions are also entering negotiations with similar demands as the public workers: increases in wages and benefits to compensate for inflation, more even wages and hours between workers in the east and west, and more jobs through government funding and a reduced workweek. Students have also been protesting the introduction of tuition fees in Germany, where education has been free of charge.

Crises in Asia hits German economy
Deutsche Bank announced January 29 that it had to put aside 1.4 billion D-marks ($788 million) to guarantee expected losses on loans in Asia. The bank said it had lent 9 billion D- marks to enterprises in south Korea, Thailand, Malaysia, and Indonesia.

Of all the imperialist financial institutions around the world, German banks are the most exposed to the Asain crises. At the end of 1996, their loans in these countries totaled more than $120 billion, about 17 percent of the total international bank credits to the crises-ridden economies in Asia, according to the Swedish daily Svenska Dagbladet.

The rise in the business cycle in Germany slowed down the last quarter in 1997, according to a report by Bundesbank, and even the export, which had been the motor force in the upturn, showed signs of a slowing down due to lower demand. Investments were also slowing down due to uncertainty about profits, although industry is operating at its highest capacity since reunification. Business failures, which have been rising every year since 1992, rose with 6.2 percent in 1997 compared to 1996. "It cannot be excluded that a weaker growth in Asia will have severe consequences for German exports if it dampens the import there. At the same time big devaluations there will give the industry there competitive advantages," stated the Bundesbank report.

Carl-Erik Isacsson is a member of the metalworkers union in Sodertalje, Sweden.  
 
 
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