Chancellor Schröder Announces Germany’s New Cabinet

"We did it!" exclaimed a triumphant Chancellor Gerhard Schröder before signing the 88-page coalition agreement in Berlin’s New National Gallery on Wednesday. The paper is the result of twelve rounds of negotiations between Schröder’s Social Democrats and their junior partner the Greens.

At the crux of the agreement is a tax and savings plan that requires businesses and high wage earners to pay more, while families and the environment stand to benefit. In the next four years, the government aims to boost Germany’s flagging economy while at the same time slashing spending to fill a 14.2 billion euro gap in the budget. The majority of it, 11.6 billion euro, will come from across the board cuts.

The burden of the new tax reform will fall largely on businesses and high income earners. Corporations and investment trusts will be required to pay a minimum tax. Furthermore, companies’ rights to carry forward losses and deduct them from before-tax profits will be limited. Social security payments will increase too, while people with higher incomes will have to contribute more to the state pension system.

On the other side of the economic spectrum, the agreement establishes new policies intended to benefit working parents. Through the increased taxes collected from corporations, more money will flow back to the communities to help finance an increase in the number of day care centers for small children. Subsidies for home ownership will remain for families, but will no longer apply to people without children.

The coalition plan also addresses environmental concerns by committing the government to work towards reducing the amount of environmentally-harmful emissions in the EU to 30 percent by 2020. If this target is reached, Germany will reduce its own emissions by 40 percent in relation to its 1990 levels.

Influence concentrated on a few

The cabinet reshuffle has shifted focus to four ministers, Hans Eichel, Wolfgang Clement, Manfred Stolpe and Peter Struck, who are expected to play the greatest roles in shaping this government’s term. It’s likely, however, that Finance Minister Eichel (SPD) will loose some of his influence now that the coalition has agreed to concentrate on boosting the economy and lowering unemployment, as opposed to relying primarily on saving.

The new "super-minister" Wolfgang Clement (SPD), responsible for both the labor and economics ministries, will play a key position in the next four years. Not only will the former state premier of North Rhine Westphalia have to fuse two previously independent ministries, he will also have to tackle the government’s main priorities: bringing life into the economy and creating jobs. v East German Manfred Stolpe (SPD), also a "super-minister," takes over the portfolio for transportation and construction along with the added responsibility for eastern German development. Stolpe’s designation as minister came after vociferous calls, in particular from eastern German members of the SPD, that someone east of the Elbe be responsible for the portfolio. The former state premier of Brandenburg will be vying for funds, as his main job will consist of distributing money to the eastern German states.

Defense Minister Peter Struck has stayed in his recently appointed position and is expected to wield significant influence in the cabinet. As the former SPD coalition leader in parliament, Struck is well-regarded among parliamentarians. Although his ministry commands one of the highest budgets in the government and is continually asking for more, the defense minister can still rely on support from his former colleagues in the Bundestag.

Nine of the thirteen members of the Chancellor’s last cabinet have kept their jobs. Among them, Foreign Minister Joschka Fischer (Green), the country’s most popular politician, and Interior Minister Otto Schily (SPD).

Greens have more leverage

Thanks to the Green Party’s good showing in the election, it had more leverage in coalition talks with the SPD this time around. Instead of insisting on further ministries, however, the Greens opted for more influence elsewhere.

Cabinet members, Jürgen Trittin (Environment) and Renate Kunäst (Consumer Affairs), have both received enlarged portfolios. Trittin is now responsible for renewable energy, and Künast is adding genetic engineering on plants to her list of competencies. Other leading Green politicians have moved into high positions in the Foreign Office and in Wolfgang Clement’s ministry.

In addition to the new cabinet members Clement and Stolpe, former Bavarian SPD leader Renate Schmidt will be the new head of the Ministry for Family, while Interior Ministry State Secretary Brigitte Zypries (SPD) assumes the job of Justice Minister.

The new cabinet will be sworn into office on Thursday in the Bundestag.