Rather weak reporting in the English language media tonight on the web and on television and my German is not good enough to pick up the subtleties, but Green spokespersons sounded disappointed and terse about implications for the coalition.
There appears to have been a standoff at a cabinet meeting yesterday. The exact wording is presumably confidential but I guess it was on a formula that would have summed up a whole number of things, but most likely that cabinet members should not make statements that sound anti-business.
I guess that Schroeder was prompted to the showdown more by the set back for the SPD in the Hesse regional elections, than by the further slip in the Euro prompted by Soros's prediction, which perhaps came after the cabinet meeting.
Tonight CNN TV had a clip linking his resignation to his support of currency exchange regulation, which seems to me unlikely. Their Europe website appears to have blundered with no item that I could see at 11pm GMT.
BBC site seems best, FT had little specific to Germany, more general about Euro, Guardian was better on Germany, Bloomberg's was detailed about Euro effect.
I could not find a web-access site for a similar breaking news service in German.
Chris Burford
London
BBC:-
Thursday, March 11, 1999 Published at 20:28 GMT
World: Europe
Resignation rocks German
Government
Oskar Lafontaine: Gave no reason for quitting
German Finance Minister Oskar Lafontaine has resigned
after a prolonged power struggle with Chancellor Gerhard
Schröder over economic policy.
Mr Lafontaine, 55, the most powerful
man in the German Government after
Mr Schröder, has also quit his
chairmanship of the Social
Democratic Party (SPD).
The surprise resignation had an
immediate impact on the money
markets, with the Euro - for whose weakness Mr
Lafontaine was blamed by many analysts - rising from
$1.0880 to $1.0930 in New York.
Speaking shortly after the
resignation, Chancellor
Schröder said the German
Government would remain
stable and that the SPD
would propose a successor
to Mr Lafontaine on Friday.
The decision will be made in
a "friendly and united"
atmosphere, he said.
BBC Berlin Correspondent
Caroline Wyatt says the
chancellor's authority will be bolstered by the resignation
of his powerful rival.
The SPD heads the centre-left coalition which took office
in October, 1998, ending 16 years of conservative ruler.
Mr Lafontaine wrote his resignation in
a three-line letter which simply
thanked the SPD's membership for
their "trust and friendly co-operation".
It ended: ''I wish you successful work
for freedom, justice, and solidarity.
Yours, Oskar Lafontaine."
No reason was given for the
resignation, but newspapers reported
that the chancellor had warned Mr
Lafontaine during a Cabinet meeting
on Wednesday that his leftist policies
- particularly on taxes - were
alienating voters and industry.
In stern tones, Mr Schröder accused Mr Lafontaine of
making a "strategic error" in raising taxes on the energy
industry during negotiations on phasing out nuclear
power, Die Welt reported.
Power struggle
The cabinet outburst followed
a power struggle between the
chancellor and Mr Lafontaine
and months of wrangling
between his Social
Democrats and the ecologist
Greens.
Mr Schröder's centrist
policies are aimed at
establishing a good business
climate, while Mr Lafontaine's
traditional leftist politics lean
more towards relieving
average earners.
Mr Lafontaine took over the
SPD at a low point in its
political fortunes in 1995.
But he reluctantly put aside
his own ambitions for the
chancellery in favour of the more popular Schröder -
setting the stage for a simmering rivalry that continued
after the Social Democrats' election victory last fall.
'Most dangerous man in Europe'
Mr Lafontaine was branded "the most dangerous man in
Europe" by one British newspaper when he outraged UK
eurosceptics by suggesting that the country should lose
its power to decide its own tax rates.
Reports said his departure from the German Government
would leave him free to challenge former Italian Prime
Minister Romano Prodi for the coveted role of next
President of the European Commission.
_______________________________________________________
from Guardian site:-
> Since the euro's launch in January his
> persistent demands for the European
> Central Bank to reduce interest rates to
> help the German weakening economy had
> been blamed for entrenching the ECB's
> resistance to a cut in order to assert its
> political independence.
>
> The Bundesbank blamed him for the fall in
> the value of the euro and his policies led
> to a collapse in the popularity of
> Germany's recently-elected "Red-Green"
> coalition.
>
> It was the left-wing Mr Lafontaine's
> determination to push ahead with tax
> changes - which were estimated to add
> £10 billion to the costs of German
> industry - which lay at the heart of the
> crisis.
>
> It led to a showdown at Wednesday's
> meeting of the German Cabinet when the
> centrist Chancellor Gerhard Schroeder
> confronted Mr Lafontaine and his allies in
> the Green Party.
>
> Afterwards the German press reported
> that Mr Schroeder had threatened to quit,
> but it was Mr Lafontaine who had to go.
_________________________________________________________
>From Bloombergs:-
> Central bankers had said Lafontaine's repeated
badgering for
> a cut in the ECB's benchmark 3 percent interest
undermined the
> bank's independence, possibly having the opposite
effect on the
> bank's rate decision.
> ``You get rid of somebody that isn't considered a free-
> market thinker and that's good for the euro,'' said Bob
Lynch, a
> currency strategist at Paribas Corp. ``Traders didn't
like the
> socialist side of his policies which emphasized government
> involvement in markets.''
>
> Euro money-market rates fell as traders bet his
resignation
> would remove an obstacle to an ECB rate cut. The yield
on the
> June three-month Euribor futures contract fell 7 basis
points to
> 2.88 percent, far enough below current three-month
market rates
> of 3.07 percent to suggest the likelihood of a cut by
mid-year.
> ``It gives (the ECB) a chance to be driven not by
> personalities but by fundamentals,'' said Mike Grimble, an
> investment strategist at Norwich Union Investment
Management in
> Norwich, England, which has $49 billion in assets.
> Not all investors and analysts believe the resignation
means
> a steady recovery in the euro.
> ``If the ECB had reason not to cut, I don't think having
> Lafontaine out of the way is going to change that,''
said Eric
> Nickerson, global head of currency strategy at
BankAmerica Corp.,
> who expects the euro to drop to $1.05 by mid-year.