German elections: Schroeder's jobs panic

MARTIN WALKER, UPI Chief International Correspondent

HAMBURG, Germany, Sept. 16 (UPI) -- Determined to hold onto the narrowest of opinion-poll leads ahead of Sunday's election, German Chancellor Gerhard Schroeder found $388 million from his overstretched budget to save 5,500 jobs at Mobilcom, the newly bankrupt German mobile phone subsidiary of France Telecom.

The measure may yet run into trouble at the European Commission in Brussels, where state aid is being challenged as distorting competition. But the promised bailout will certainly hold for the last week of Germany's neck-and-neck election campaign.


The government bailout for Mobilcom provoked TV and media commentators to bring up an earlier charge from conservative challenger Edmund Stoiber of Bavaria that "The only job Schroeder is really worried about is saving his own."

Schroeder got a boost from across the Baltic Sea Sunday, where Social Democrat premier Goran Persson and his left-wing allies were re-elected with a small but absolute majority.

This was the first time Europe's wave of conservative election successes of the last two years had been stopped, despite a strong showing by the opposition coalition of liberals and center-right, campaigning on the need to reform Sweden's costly welfare state and to control immigration.


But the Swedish economy is in far better shape than in Germany, where a new wave of job losses, starting with 4,000-6,000 jobs at Telecom, was reported in Monday's edition of Die Welt. With total unemployment more than 4 million, and Germany scoring the lowest growth of all 15 EU countries over the past seven years, Schroeder's coalition government of Social Democrats and Greens have looked vulnerable.

Although lagging the conservative challengers by 8 points in the polls five weeks ago, Schroeder has fought back to a narrow lead by changing the subject from unemployment through his skilful response to last month's flood emergency, and also by his firm stand against joining an American-led war on Iraq.

Two polls show Schroeder's Social Democrats and Bavarian premier Edmund Stoiber's conservative coalition at 38 percent each. Another poll gives Schroeder a 2-point lead, and all agree that the momentum of the campaign has swung heavily in Schroeder's favor, helped by a lackluster campaign performance by Stoiber.

But neither side will have enough seats to govern alone, and so far the conservatives likely partners, the liberal Free Democrats, still hold a narrow lead over the Greens, currently members of the coalition government.

Stoiber's conservatives over the weekend used the grim news of the Mobilcom bankruptcy to renew their attacks on Schroeder's economic record, in an attempt to put unemployment back at the top of the election agenda.


"Every week, more bad news come for German jobs and for our economy," Stoiber charged on the campaign trail Sunday. "This government is simply incompetent, and Germany deserves better."

The last week of the campaign will be decisive, because an unusually large number of voters have still to make up their minds, or tell pollsters they might still change their vote.

"Something important is changing in our politics, to give Germany a far more volatile electorate," Werner Weidenfeld, director of the Center for Applied Policy Research think tank, told United Press International. "German voters have traditionally been loyal. Until unification after the fall of the Berlin Wall in 1989, over 70 percent of German voters always voted for the same party, and unusually for the same party their parents had supported. But just a month before this election, 50 percent of voters were still undecided, and of that half that had decided, one in three said they could still change their minds."

So far, with his adroit handling of the flooding crisis and his stand on Iraq, Schroeder has been doing better at sweeping up the undecided vote. The conservatives are pulling out all the stops in the final week to bring the economy back to center-stage, even though there are only modest policy differences between the platforms of Schroeder and Stoiber. The only full-blooded economic reformers are the Free Democrats, who want tax cuts and a radical overhaul of Germany's rigid labor markets -- and more government bailouts for stricken companies like Mobilcom.


The rescue deal was put together by Economics Minister Werner Mueller, and involves an immediate cash infusion of $40 million, with another $350 million credit standby for the remainder of the year. Like other big phone companies, Deutsche Telekom and France Telecom, Mobilcom suffered under a burden of debt assumed to buy costly licenses for the new 3G generation of mobile phone systems which are yet to reach the market.

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