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Tuesday, 24 September, 2002, 17:14 GMT 18:14 UK
German Elections
German Chancellor Gerhard Schroeder
Iraq has dominated the German elections, and no sooner had Gerhardt Shroeder scraped home than he repeated his opposition to any military attack on Saddam Hussein.

The Iraq question was central to an election campaign whose outcome was far from clear until the closing moments.

The margin could hardly have been smaller, and its hard to avoid the conclusion that Gerhard Schroeder owes his victory to his tough position on Iraq.

Ben Geoghegan reported on increasing fears that Germany could pay heavily for what many regard as a cynical tactic to distract voters from Mr Schroeder's poor economic record.

The margin between the main parties was the narrowest in German political history in an election. It's difficult to avoid the conclusion that Gerhard Schroeder┐s late recovery is owed to his tough position on Iraq. But there are increasing fears that Germany could pay heavily for what many regard as a cynical ploy to distract voters from Mr Schroeder's poor handling of the economy.

Here's a family business which has survived the Weimar Republic, Adolf Hitler and one term of a Gerhard Schroeder government. But the owner, who voted for Mr Schroeder last time, is no longer a supporter. The chancellor's promises of economic reform haven't come quickly enough. For many companies, doing business is much harder than it was four years ago.

Owner, Kunsch Metallbau
One of Chancellor Schroeder's biggest mistakes was tightening the redundancy laws. I won't employ someone new because they'll be difficult to lay them off again. Instead I'll employ them on a short-term contract so I won┐t have that problem, which is bad for the labour market.

Complaints like that led many people to predict Mr Schroeder would lose the election. The big surprise is that he's won a second term. It seems as though the man they call "the gambler" has been lucky.

German Institute for Economic Research:
This is the first time that the government wins against the general economic situation: high unemployment, low growth. This would normally have been the conditions for a defeat.

If the election had only been about Mr Schroeder's ability to save small businesses, then the result might have been different. Only a few weeks ago it seemed inevitable that Gerhard Schroeder was going to lose this election because he had broken his promises to bring down unemployment. His recovery in the polls was helped by the whole question of Iraq and his staunch opposition to a military campaign. Some people are now saying that George Bush has effectively won this election for Gerhard Schroeder. Iraq became an issue late on in the campaign, when Mr Schroeder criticised US policy as an adventure. Seen from America, his opposition to military action didn't close the door on diplomatic relations, it slammed it in their face. Things got worse when the justice minister compared President Bush's political tactics with those of Adolf Hitler. Today, the chancellor announced his minister had been sacked. But to all those who thought Iraq had simply been used as an election tactic, only to be abandoned later, here was a clear signal that opposition is now official policy.

There's not much time to celebrate. There are important decisions to be taken on European enlargement. We have to make sure how we proceed on the Middle East is no different after the election than before.

But within his own party, there are questions about how far he actually thought about the policy in advance. He's said to be a man driven by instinct for political opportunity. This time his colleagues say that it may have got the better of him.

SPD, Bundestag Foreign Affairs Committee:
He first should have had a dialogue with his European partners to try and achieve a common position. Secondly, it's never good style on both sides of the Atlantic to make public announcements via television or newspapers. It's sometimes better to talk to each other on the phone. Thirdly, we must not exclude anything that comes from the United Nations because we have always been fostering International institutions. I think there are some problems now and we have to do something to get on line again.

The man who now has the job of getting on line again is the foreign minister and leader of the Green Party, Joschka Fischer. His success in the election guaranteed Mr Schroeder a return to coalition government. At his press conference this morning I asked him why he also did not support military action to support Saddam Hussein.

This is not only a question of getting rid of a dictator, we have a lot of them all around the world. It's a question of regional stability of the War on Terror. I explained our position in front of the General Assembly at the United Nations and asked the questions which must be asked. We will continue this discussion but should separate it completely from all the other problems. I hope we can solve it immediately.

Does it not risk losing Germany's influence internationally if she takes this approach?

It's not a question of influence. I think we must discuss very carefully the strategy.

What will be the consequences of a war against Iraq.

I don't want to talk about the consequences of a war. I think it's much more important to discuss now that the regime of Saddam Hussein. Open the borders, fully comply with the relevant resolutions of the Security Council and then let the inspectors in to do their job. I think this is crucial. We will, together with our allies, focus on this point.

Are you more worried about destabilisation in the Middle East or American power.

I'm not worried about American power. I think that the United States, as I've said twice in front of big crowds, are crucial for peace and stability in the world. We will not achieve Middle East peace, we will not have stability on the subcontinent between India and Pakistan, or even in Europe without the role of the United States. It's crucial. I'm not worried about American power. I would appreciate it very much if it could continue with the integration process in Europe. I think Europe must push forward and European policy must be more united so we can speak as one war and one position.

It would be hardly surprising if Americans in this part of Europe might want to spend their time in places where they feel at home. Like Donald Rumsfeld, they must be wondering why Germany no longer seems such a reliable power.

Aspen Institute, Berlin
When you consider the current dispute, I think two things have to be considered. First of all, the Berlin Wall came down 13 years ago and through many ways, shapes and forms, the Germans have been trying to renegotiate the relationship with the United States. They are united, they are sovereign, and they want more respect and more influence. Full stop. The second point here is Germans not only feel ambivalent about American power; they feel ambivalent about German power, too. Germany is searching to find itself and define its own identity.

On the day after the election, a demonstration against a war in Iraq. But there were just three protesters. Perhaps Germans don't feel they have to take to the streets because they though know that Herr Schroeder is very much on their side.

Here in Berlin, I am joined by Christian Sterzing, a Green Member of Parliament, and also on the foreign relations committee, and Clemens Betzel, an adviser to CDU MPs on foreign affairs. Clemens Betzel, how much damage really, in the end, do you think this row has caused in the relationship between the Americans and Germany?

CDU Foreign Affairs Adviser:
Unfortunately, I am afraid there is a lot of damage. To hear an American member of the administration calling the relations poisoned like Secretary Rumsfeld did today, to see the reaction in news print in America, to see the American President refusing to congratulate his colleague in Germany on his re-election, we hear from American companies rethinking purchasing arrangements with German companies. There is a lot still looming in the back, and we hope that we can get back on track very soon.

Mr Sterzing, your party is now in government, in coalition with Mr Schroeder's party. Never mind the policy on Iraq, diplomatically, how embarrassed are you by the way Gerhard Schroeder has handled all of this?

Well, I have said during the last weeks that I am or that I was not very happy about handling this. But I don't think that the damage is so great because there is an election campaign going on, not only in Germany, but in the United States as well, and I wouldn't dramatise the situation.

You heard Mr Schroeder today saying the policy before the election is going to be the policy we have after the election. No change?

You have to make a difference between, let's say the atmosphere, and still there is a fundamental dissent in the question of Iraq. That's not only a special German position. We have a discussion going on in the United States and in Great Britain as well and in many countries of Europe. I don't think that this is a very special German debate that's going on here.

Mr Betszel, is that not the point, that actually Gerhard Schroeder tapped into a mood among the people? We know that something like maybe more than 65% of people in this country don't want to fight a war with Iraq. He identified that as an issue. Your candidate didn't spell out his position clearly. Perhaps that was why he lost?

I think he spelt out his position, but the fundamental error in Mr Schroeder's position, in my view, is that he said no matter what, even if the Security Council decides, we will not participate. He puts himself in a position outside international law by claiming that he is protecting it. Therefore, he was isolating Germany and not doing our country a great service.

How do Germans restore the position that there was before all of this? How do they return to a harmonious relationship?

I think it's important to know that the big change of the American position during the last months, of course, is the cause of the dissent. It's a difference to push Saddam to accept the weapons inspectors to come in, or whether there is a regime change. Just to fight a war, to change a regime, it's just against international law. This fundamental dissent I think is worth discussing all over the world and especially within the UN.

Let me ask you that question. How does Germany restore relations with America now? Is it going to be possible now?

With difficulty. It will take Foreign Minister Fischer's great abilities to go over there. It's important that Mr Schroeder re-establishes contact. He should go to see the American President and explain his position. But when the President takes his case to the UN on that very day when Chancellor Schroeder was reaffirming his position. The British Government is now presenting its evidence. There are 55 pages apparently of evidence. Schroeder and Tony Blair will have to sit down and talk about it and Germany will not be able to stand on the sidelines forever.

Is this the sign of a more assertive Germany? Ever since the Second World War ended, there was a consensus that German defence depended on America. Is that now something that's breaking down, that Germany is increasingly going to go it alone in international relations?

No. I don't think that we want to go it alone. I think we have to find a European way. This is going on. We have had meetings within the European Union. The foreign ministers met and they have had a lot of discussions. This is going on and it's very important to come to some kind of a common position, because otherwise we can't have any effect on the American discussion.

This transcript was produced from the teletext subtitles that are generated live for Newsnight. It has been checked against the programme as broadcast, however Newsnight can accept no responsibility for any factual inaccuracies. We will be happy to correct serious errors.

Newsnight's Ben Geoghegan
"its hard to avoid the conclusion that Schroeder owes his victory to his tough position on Iraq"
Gerhard Schroeder

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