Embattled Schroder may yet have the last laugh

Monday marks the first anniversary of Mr Gerhard Schroder's election victory over Dr Helmut Kohl, but for the German Chancellor it will be a melancholy occasion. As his Social Democratic Party (SPD) receives one battering after another and his own popularity plummets, Mr Schroder has become a figure of scorn and amusement for the media that once worshipped him.

His coalition partners in the Greens are in such a fragile condition that the Foreign Minister, Mr Joschka Fischer, warned this week that they could soon have to choose between "a slow death or a speedy one". The opposition Christian Democrats (CDU) are on a roll, capturing one federal state after another - just a year after they were driven from office by an angry and frustrated electorate. In the east of the country, the formerly communist Party of Democratic Socialism (PDS) is rapidly supplanting the SPD as the party of choice for working-class voters.

"The SPD's profile as a party of equality and social justice has become so unclear that a section of the voters have gone over to the PDS. While campaigning, this was summed up for me in a single sentence: You're no different from the others", the SPD's deputy chairman, Mr Wolfgang Thierse, said this week.

It was all so different a year ago when Germany heaved a sigh of satisfaction as a new generation took power after 16 years of conservative rule. "We won't do everything differently, but we'll do a lot of things better" Mr Schroder promised. Many Germans hoped, however, that the new government would take a different approach, particularly to the country's chronic unemployment. Green voters were confident their agenda of environmentally responsible economic policies and more rights for minorities could at last be realised. Things began to go wrong for Mr Schroder's government almost from the start with ministers announcing dramatic initiatives too hastily, only to retreat in the face of opposition from powerful interest groups and the media. Thus, when Environment Minister Jurgen Trittin declared that Germany would ban the recycling of nuclear waste within 12 months, the nuclear industry and Germany's partners in Britain and France howled with outrage - and the Chancellor overruled the initiative. In the same way, a plan to allow some of Germany's seven million immigrants to carry two passports was an intelligent approach to reforming the country's antiquated citizenship law. But under pressure from a shamelessly xenophobic street campaign organised by the Christian Democrats, the Government watered down its proposal, confining dual citizenship to those under 23.

"They should have known that you can't introduce a proposal like that without getting the public behind you first. It's not like putting up taxes or cutting public spending. It goes to the heart of who we are as a society", said one prominent Berlin Green, himself of Turkish origin.

The other big problem of Mr Schroder's first few months in office was his Finance Minister, Mr Oskar Lafontaine, who fired up the party faithful with calls for greater social justice but infuriated business leaders and central bankers by questioning the prevailing neo-liberal economic orthodoxy.

Mr Lafontaine's abrupt resignation in March was viewed by many as a victory for the Chancellor but, according to Mr Fischer, it also served to upset the ideological balance within the Government. "The house of German social democracy was constructed on the foundations of Schroder and Lafontaine. Schroder embodied competitiveness, Lafontaine social justice. The moment Lafontaine threw in the towel, overnight the whole architecture was no longer right. Social justice suddenly looked like a wasteland - not in fact, but in appearance. In that sense, Lafontaine's resignation was irresponsible. He is answerable for a good part of the problem," he said.

To be fair to the Chancellor, he was distracted from domestic matters by Germany's six-month presidency of the European Union and by the Kosovo conflict that took place during that period. Mr Schroder defied most predictions by securing agreement on EU budget reform, even if he failed to make a substantial reduction to Germany's contribution, and his government's role in ending the Kosovo conflict was greater than is generally acknowledged.

Even now that those distractions have disappeared, the coalition has failed to dispel the impression that it is lurching from one crisis to another - as the recent spate of electoral disasters demonstrates.

Germany's economy is improving, but unemployment remains stubbornly above four million and Mr Schroder's Alliance for Jobs has yet to bear fruit. Meanwhile, both governing parties are plagued by internal divisions and ideological battles that are fought out in the newspaper columns every day.

Next month's state election in Berlin is likely to provide further embarrassment for the government, but there are signs that the worst political weather may soon be over. A massive and unpopular package of spending cuts will almost certainly become law by the end of the year - even if some changes are necessary to secure the support of opposition parties in the Upper House of Parliament, the Bundesrat.

Meanwhile, the Chancellor has installed a new team to revitalise the Social Democrats in time for next May's crucial state election in Germany's most populous state, North Rhine Westphalia. The Greens look set to accept changes to their leadership structure too, even if some senior figures reacted sharply when Mr Fischer called this week for the creation of a centralised campaign headquarters.

If unemployment finally begins to fall next year, and the Greens are seen to make progress on the closure of Germany's 19 nuclear power stations, many of this year's woes may soon appear to have been nothing more than teething trouble. As he contemplates his present unhappy state, Mr Schroder might do well to recall the early years in office of another chancellor which were characterised by a catalogue of disasters and public rows that turned him into a standing joke for the media.

His name was Helmut Kohl.