Page last updated at 21:24 GMT, Friday, 20 May 2005 22:24 UK

Schroeder's heartland set to crumble

The BBC's Ray Furlong reports from the German state of North Rhine-Westphalia, where Chancellor Gerhard Schroeder's ruling coalition seems set to lose power in Sunday's election in its industrial heartland.

"There's minimal future here, and no party will really change that," says Klaus Mucha, sipping a beer and gazing at the black-and-white photographs of Gelsenkirchen's industrial heyday on the pub wall.

Peer Steinbruck with Chancellor Schroeder
SPD leaders have been haunted by the unemployment issue
Klaus is sitting with other members of a miners' choir. Thirteen of this town's 14 pits have now been closed - but the songs live on.

"There's more interest in the songs now than there was before. Perhaps it's nostalgia," he muses.

Gelsenkirchen was once called the "city of a thousand fires", but the death of much of its industry means it's now best known for its 25% unemployment rate.

It's also a key battleground in this weekend's regional elections in North Rhine-Westphalia, Germany's most populous state.

Opinion polls show the Social Democrats (SPD) are set to lose power here for the first time in 39 years - a huge blow to Chancellor Gerhard Schroeder in Berlin.

'Lesser evil'

If they cannot win in Gelsenkirchen, a classic working-class stronghold, their chances elsewhere are very poor indeed.

It may be beginning of the end of the government in Berlin
Richard Kiessler
Neue Ruhr Zeitung chief editor
"This region has lost its way. North Rhine-Westphalia has huge debts and more than a million unemployed people," says Frank Beran, the only man at the pub table who is still working in a mine.

"We need an alternative. But I don't see one. So I'm going to vote for the SPD as a way of voting for the lesser evil. Maybe it will save my job."

His friend, retired miner Heinz Kirchoff, says he'll vote for the CDU - the conservative opposition. "We can't go on subsidising coal. We need to invest in research, and create jobs in other fields," he argues.

For all the gloom, North Rhine-Westphalia still has Germany's largest economy. Its GDP is higher than that of Brazil or Russia.

This means that Germany's high unemployment rate cannot be reduced without progress here.

'Plague of locusts'

The CDU have portrayed this region as an engine that will not start - as well as playing on the unpopularity of wide-ranging welfare reforms pushed through by the government in Berlin.

CDU candidate Juergen Ruettgers with party leader Angela Merkel (r)
The CDU has exploited discontent with reforms
The strategy seems to be working. '"The election may be an historic event," says Richard Kiessler, chief editor of the Neue Ruhr Zeitung newspaper.

"It may be beginning of the end of the government in Berlin, because 10 of the 16 federal states will be governed by the conservatives. The government of Gerhard Schroeder and the Greens will be very limited in action."

The irony is that the Social Democrat candidate in North Rhine-Westphalia is personally more popular than his challenger. But Peer Steinbruck has been haunted by the jobs issue.

"We are struggling with a very hard structural change in the northern part of the Ruhr area. This is one of the oldest industrialised regions in Europe," he says.

"It's not me alone who can create jobs, it's the economy," he adds - hinting at an aggressive campaigning stance taken by the Social Democrat leader in Berlin, and key Schroeder ally, Franz Muentefering.

Mr Muentefering has dominated the campaign by comparing foreign investors to a plague of locusts devouring the German economy.

Hypocrisy charge

Local media reported that he had a black-list of companies which buy German firms and then reduce staff size, moving production abroad.

Sometimes it's a question of closing one factory to save two others
Patric Marous
Con PAIR equity fund
"I think he's right because the equity funds are not looking if firms are profitable in 10 years, or 15 years. They are looking if they are profitable now, and if they're not they are closing them," says Jorn Miners, an official with the IG Metall trade union in Gelsenkirchen.

"Property comes with responsibilities: not only for profit, but for the workers. Owners of businesses have a social responsibility for people who live in this country."

He has been particularly critical of private equity funds - which buy companies, restructure them, and then sell them on at a profit.

But Mr Muentefering's rhetoric has been roundly criticised by business leaders who say it is damaging Germany's image.

"He's a hypocrite. This government actually passed laws to enable private equity firms to come to Germany and invest," says Patric Marous of the Con PAIR equity fund in Essen.

His office is a long way from the grime of heavy industry. Modern art hangs on the white-washed walls. Sparkling water sits on a glass table.

Attacks 'unhelpful'

"It's not about us being locusts," Mr Marous says. "Many German companies can't get credit from banks. Equity funds are an important alternative source of financing."

"Sometimes it's a question of closing one factory to save two others."

But North Rhine-Westphalia has seen plenty of factory closures over the last decades - and there seems no end.

Only this week the American owners of Linde Kaltetechnik, which makes electrical refrigeration systems, announced they were axing half the workforce and moving production to the Czech Republic to save money.

More than 200 jobs will go - more bad news for the Social Democrats ahead of the election, because Mr Muentefering's radical attacks on capitalism do not appear to have helped.

"The same people he addressed - they know exactly who, in their eyes, is guilty for the situation," says Richard Kiessler.

"These people who are angry now at the Schroeder government say: well, it's the result of your reform policy that we are in a bad mood."

Schroeder in battle for jobs
18 Mar 05 |  Business
German jobless rate at new record
01 Mar 05 |  Business
German business confidence slides
23 Feb 05 |  Business
Country profile: Germany
20 Jul 04 |  Country profiles

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