solid. The post-war racist excesses of extremists
have been confined to a minority and condemned
by the majority.
The Kohl era came to an end in 1998 after
sixteen years in power. Internationally they had
been years of achievement and success. Kohl was
credited with unifying Germany, gaining the trust
of its Western allies and the Soviet Union, pre-
siding over a mature democracy. The Bundestag
elections saw the CDU and its Bavarian CSU
partners garner the gratitude of the population in
the east and substantially raise its vote in 1994.
But over the next four years the Kohl chancellor-
ship no longer looked unassailable. German
exports were suffering. The generous social pro-
visions, pension rights, protection of the workers,
the cost of subsidising the new easternLänder,
were exacting their toll on the economy. The
economy was stagnant and unemployment rose to
4.2 million or about 11 per cent of the workforce.
Social welfare and unemployment payments were
generous. Germany was mindful of the last
Weimar years. Schröder campaigned in 1998
promising to reduce unemployment from just
over four million by a modest half a million
during his period as chancellor. The CDU vote
fell especially precipitously in the eastern Länder
where employment was exceptionally high, ex-
communists and the SPD benefited. There was
also an alarming rise among the young for anti-
immigration racist neo-Nazis. Overall, the SPD
in coalition with the Greens were able to form
a coalition under Schröder with a convincing
majority in the Bundestag.
Early on, Schröder appeared to be on target to
make good on his promise to reduce unemploy-
ment. The international value of the mark fell, or
rather the euro declined in value. On 1 January
1999 the Monetary Union began and Germans
gave up their beloved stable mark. Kohl had
agreed to Germany joining and Schröder followed
through. The boost given to German exports by
this devaluation did not last. The problems were
fundamental: inflexible labour, workers’ rights
were well protected and making them redundant
expensive for employers who were consequently
reluctant to risk taking on too many. The welfare
payments required high taxation; the unions were
powerful and went on strike when their wage
demands were not met. The unemployed did not
have to accept jobs that were of a lower kind than
what they had before. During the last years of
Weimar longer term unemployment meant dire
poverty and had paved the way for the Nazis.
That was the ‘lesson’ learnt. But high taxes and
social security were undermining German enter-
prise and the ability to adapt to change.
Unemployment began to rise again. The
opposition accused Schröder of breaking his
promise to bring it down. In the autumn of 2002,
with an election pending, unemployment had
climbed back to over 4 million. It looked as if the
SDP–Greens might well lose the general election
of 2002 in a close-run contest.
Three events revived Schröder’s chances. An
astonishing scandal broke over the heads of the
CDU and Kohl. The amount of money that could
be contributed to political campaigning was lim-
ited by law. In the 1990s, the party treasurer
admitted that large sums had been secretly con-
tributed to party coffers by some businesses in
return for favours. Kohl admitted knowing and
was implicated. A criminal investigation into
Kohl’s conduct began and was only finally halted
on his agreeing to pay a substantial fine. Then dur-
ing the summer of 2002 the Elbe burst its banks
and caused horrendous floods. Schröder was seen
everywhere in the affected regions, the concerned
and active chancellor. Proposed tax cuts were
postponed to help the stricken regions. The
opposing chancellor candidate Edmund Stoiber
was wrong-footed. Stoiber was prime minister of
Bavaria and so in any case handicapped, but he
was also stiff and lacked charisma, unlike
Schröder. Finally there was the growing crisis with
1
THE GERMAN FEDERAL REPUBLIC 841
Bundestag elections, 1998
Percentage Seats
SPD 40.9 298
CDU/CSU 28.4/6.7 198/47
Greens 6.7 47
FDP 6.2 43
PDS 5.1 36
