GERMANY: The German Chancellor, Mr Gerhard Schröder, believes his government has made a false start since taking office, but denied misleading voters by hiding a €15 billion budget shortfall until after the general election.
Mr Schröder says in today's issue of the weekly newspaper, Die Zeit, that his government has made mistakes as a result of "poor communication" and poorly-planned coalition talks.
In the weeks since taking office the Social Democrats (SPD) and the Green Party have fought running battles on pension reform and emergency tax legislation drafted to reduce the growing budget deficit.
"When tax proposals are put on the table and the economic consequences haven't been properly looked into, one can do better," said Mr Schröder.
The opposition Christian Democrats (CDU) have accused him and his government of electoral fraud for waiting until after the election to announce the €15 billion budget shortfall.
Mr Schröder rejects the charge and says that, having lost the election, the CDU is conducting a vindictive campaign to "destroy my integrity".
A survey last week showed that four out of five Germans believe the government hid information about the economic crisis until after the election.
The budget shortfall has prompted new borrowing and driven Germany's budget deficit above the deficit ceiling of 3 per cent of gross domestic product set down in the Growth and Stability Pact.
Mr Schröder said he expected the government to receive an official budget warning from Brussels, but it was time to make the Stability Pact more flexible to external influences.
"Do inflation rates and unemployment not play a role in what is judged to be economically sensible?" he asked.
Mr Schröder said his government was determined to take a tough line to tackle the structural problems that have led to mass unemployment and economic stagnation in Germany.
He said his government would force change to ensure the retention of German society but said that interest groups would have to lower their expectations.
Meanwhile the Chancellor reiterated yesterday that Germany would not participate in any military strikes against Iraq.
However, he said Germany would open its airspace and airbases to the US and other NATO members.
However, he told Die Zeit that Germany had a moral obligation to provide Israel with missile defence equipment to defend itself in the event of a war in Iraq.
"If Israel needs this increased security we will help. It is our historical and moral obligation. The security of the state of Israel and its citizens is outstandingly important to us," said Mr Schröder.
Germany has agreed to provide Israel with Patriot missile defence systems and special Fox armoured vehicles used to detect chemical and biological weapons.
The defence ministry has rejected a request from the US government for similar equipment and said that Fox vehicles already in place in Kuwait as part of Operation Enduring Freedom would not be made available for war.
"We expect that there will be no need for a military intervention. That is the German government's political goal," said Mr Schröder. "I think it would be wrong to assume that the country will have to be rebuilt."
His opposition to a war on Iraq in the run-up to September's general election caused a transatlantic diplomatic crisis that only appeared on its way to being resolved at last week's NATO summit in Prague.
Separately, Mr Schröder said that he would seek a concrete signal for the start of EU accession talks with Turkey when he meets other heads of state at the Copenhagen summit next month.