Germany's Schroeder hits Merkel on reform record

Former German Chancellor Gerhard Schroeder addresses a news conference following a Social Democratic (SPD) parliamentary faction meeting in Berlin, March 12, 2013. (REUTERS/Fabrizio Bensch)

BERLIN: In a return to the national political stage, former German Chancellor Gerhard Schroeder criticised his successor Angela Merkel for failing to build on his welfare reforms and raising Berlin's euro zone crisis bill by acting too slow and too late.

The 68-year old Schroeder, a Social Democrat (SPD), has kept a low profile since being beaten by Merkel in a tight election in 2005, giving the occasional interview but largely staying out of the national limelight.

But on the 10th anniversary of his controversial "Agenda 2010" reforms, Schroeder returned to Berlin, sat in on a meeting with SPD lawmakers, and held a news conference with Frank-Walter Steinmeier, his former chief of staff and loser to Merkel in the last election in 2009.

"I don't think it would be unfair to her to say that she's added nothing," Schroeder, looking older but still boasting a full head of chestnut brown hair, said when asked about Merkel's reform record.

"In Europe, Merkel always acted too late, which made everything more expensive," he added.

Merkel, 58, is favoured to win a third term as chancellor in September and the SPD may be hoping that Schroeder's appearance will give a boost to their struggling candidate Peer Steinbrueck, who served as finance minister in the "grand coalition" that ruled Germany from 2005-2009.

Schroeder's reforms, which reduced income taxes, overhauled unemployment insurance and made the labour market more flexible by liberalising temporary work, initially pushed joblessness to a post-war high above 5 million.

The political storm that resulted sent Schroeder's approval ratings plunging, turned him into a divisive figure within the SPD, and prompted him to call an early election which he lost narrowly to Merkel.

She has become a hate figure for some in the SPD because she has enjoyed the fruits of Schroeder's reforms over the past half-decade, using Germany's economic strength to solidify her grip on power.

While many of Germany's partners in southern Europe have been struggling with deep recessions, Europe's largest economy grew by 4.2 percent in 2010 and 3.0 percent in 2011.

Unemployment is hovering near a post-reunification low at 6.9 percent, while the jobless rate in Spain and Greece is more than three-times as high.

But the anniversary of Schroeder's reforms has also cast a spotlight on Merkel's domestic record.

Some economists and businessmen accuse her of gambling away Germany's hard-earned economic gains by encouraging higher wages, pushing up energy costs with a mismanaged switch from nuclear to renewables, and taking a piecemeal approach to tackling the country's big demographic and education challenges.

They point to data showing German productivity gains have stalled over the past half-decade and foreign direct investment slowed.

"It has become much less attractive for companies in Germany," Roland Berger, founder of the business consultancy of the same name, told Reuters in a recent interview. "This is because of rising wages and energy costs, but also a paradigm shift towards a greater state role" in the economy under Merkel.

In the news conference, Steinmeier contrasted Schroeder's "courage" in pushing through "Agenda 2010" and breaking with Germany's close post-war ally the United States over the Iraq war with Merkel's self-described "step-by-step" approach to the euro crisis and domestic reform.

"If Gerhard Schroeder had acted as timidly back then as the current government has done with the challenges it has faced, then Germany probably wouldn't be looking better than its European partners," Steinmeier said.





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