Schroeder Names Finance Minister
Bonn, Germany (AP) -- Chancellor Gerhard Schroeder named a low-key economics expert as Germany's new finance minister today and was nominated himself to head the governing Social Democrats.
The Social Democrats' executive committee backed Schroeder's choice of outgoing Hesse state governor Hans Eichel to replace Oskar Lafontaine as finance minister.
The moves consolidate Schroeder's grip on power a day after the left-leaning Lafontaine's stunning resignation from both influential posts, and give Schroeder the chance to reshape his 4-month-old government after a shaky start.
Schroeder also was chosen to head the party, concentrating critical decision-making in one post. He must be confirmed by a vote of the full party at a congress. No date has been set.
How quickly Schroeder could assert authority over a party whose left-wing views him with suspicion was unclear.
``He does not represent the breadth of the party,'' Andrea Nahles, head of the Social Democrats' youth wing, said on ZDF television today.
Lafontaine, on the other hand, enjoyed strong party loyalty, which he used to quash infighting after taking over the Social Democrats in 1995. He was credited with a large share of their victory over conservative Helmut Kohl in elections last September.
Lafontaine's exit came amid reports of a power struggle with Schroeder over the finance minister's controversial tax reform. But SPD officials said the plan probably won't be amended.
``If we got rid of the tax reform now, one could declare a state of ruin for the country,'' said Joachim Poss, the finance spokesman for SPD lawmakers.
The resignation also served as a warning to the environmentalist Greens, who have strained the coalition by pushing for immediate closure of nuclear power plants and other projects that reflect their ideology.
The Greens had some sympathies for Lafontaine, and leaders of the party appeared shaken Thursday night. But they said they were confident the coalition would hold.
To back that up, coalition leaders announced agreement late Thursday on a proposed new citizenship law after weeks of squabbling between the two parties.
Lafontaine did not give a reason for his resignation, but he unsettled financial markets with persistent calls for Europe's central bank to lower interest rates to create jobs.
Many economists blamed his attempt to exert political influence over monetary policy for the weak start of the new European single currency, the euro, which lost 7 percent of its value since its Jan. 1 launch.
Business leaders welcomed Lafontaine's exit. Dieter Hundt, head of the German Employers' Association, said it ``cleared the way for a new beginning.''
Mathias Joerrs, an analyst at BHF Bank, said Schroeder now had the chance to put his stamp on economic policy.
``One approach has been tried now, and that has failed,'' he said on n-tv television.
Eichel, 57, was coordinator for finance policy for Germany's SPD-dominated states. He adheres to Social Democratic values of relieving the burden on the average taxpayer and providing a strong safety social net, but is considered less radically leftist than Lafontaine.
Popular as governor of Hesse state, Eichel lost the post last month in an election that turned on opposition to the government's plan to grant dual citizenship to many foreigners. He is to formally step down April 7.
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Carl Remick