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Four More Years? Kohl Just Might Pull It Off


International Outlook

FOUR MORE YEARS? KOHL JUST MIGHT PULL IT OFF

Helmut Kohl looked like political road kill a few weeks ago. But he might now just succeed in becoming Germany's longest-serving Chancellor, beating Otto von Bismarck's 19-year record. On Apr. 3, his 67th birthday, an energized and thinner Kohl took time out from his annual spring diet vacation at Austria's tony Bad Hofgastein spa to drop a bombshell: He will run for a fifth four-year term in the general election that must be held by October, 1998.

Kohl's preemptive strike could gain force from a quickening economy. He will deliver sizable chunks of an $18 billion tax cut before election day. Cheap money and a weak currency should help to accelerate the economy past its subpar 1.4% growth last year. Faster growth should reduce unemployment, which peaked at 12.2%, or 4.7 million--the highest since the Nazi era--in February before falling to 11.7% in March.

Finance Minister Theo Waigel, meantime, is tackling Kohl's second-biggest political headache. Germany must meet tough goals to participate in the European Monetary Union when it starts on Jan. 1, 1999. Kohl risked having to snuff out Germany's incipient recovery by slashing spending to bring its budget deficit down to 3% of gross domestic product, one of EMU's targets.

"YEARNING." But Waigel signaled on Apr. 6 that Germany was ready to be more flexible about the 3% target than it has ever admitted. Waigel's move is astute diplomacy as well as smart domestic politics. It appeals to European leaders, such as French President Jacques Chirac, who are hard-pressed to meet EMU targets. And while three-quarters of Germans prefer the mark to the planned Euro, a majority believes Kohl can best defend German interests within the EMU.

Kohl's candidacy declaration has halted the dangerous drift inside his Christian Democratic Union (CDU) party. Policy bungling and backsliding over tax and welfare reforms sparked a minirevolt in January as several thirtysomething CDU politicians, dubbed "the wild ones," publicly challenged his authority. Now, the CDU is rallying behind him.

But Kohl is still trailing the opposition Social Democratic Party (SPD) in the polls. The latest show the CDU five points behind the SPD. One suggests that if it were to ally with the Greens today, they could together rustle up 52% of the votes and consign Kohl's center-right coalition to history. Besides, Kohl's personal popularity is at a three-year ebb. Indeed, Gerhard Schruder, the SPD Prime Minister of Lower Saxony who attracts centrist voters, has a 12-point lead over Kohl in the polls. "Voters yearning for a sensible alternative can see that we offer one," says Herta Daumbler-Gmelin, deputy leader of the SPD group in the Bundestag.

Despite that yearning, SPD leaders seem unable to capitalize on their lead. Instead of quickly naming its own candidate after Kohl's announcement, the SPD is sticking to its original plans, giving Kohl a year of unopposed campaign exposure. It won't decide between Schruder and party leader Oskar Lafontaine, Prime Minister of the Saarland, until results of Lower Saxony state elections that Schruder faces are known.

Even the prolonged tax-reform debate is now going Kohl's way. The SPD is near to agreeing to cut top corporate tax rates from 45% to 40% in 1998 and 35% in 1999. Gernot Nerb, an economist at Salomon Brothers Inc. in Frankfurt, says this could spur investment growth by at least 5% to 6% this year, after a flat 1996.

Kohl still faces a raft of problems even if he wins reelection. But the man who reunited Germany in 1990 may still be able to realize his dream of uniting Europe east and west by enlarging NATO and completing monetary union before he leaves office.EDITED BY JOHN TEMPLEMAN By Karen Lowry Miller in BonnReturn to top

PALESTINE ACCOUNT QUESTIONS

Leading members of Prime Minister Benjamin Netanyahu's Likud Party failed in an Apr. 7 bid to get the Israeli Knesset to close a Palestinian National Authority bank account that recently came to light. Israel has paid more than $150 million in taxes, due the Palestinians under the 1993 Oslo peace accord, into the account at Bank Leumi in Tel Aviv. Likud Knesset member Silvan Shalom, who spearheaded the campaign, claims the account is a Palestinian political slush fund. Netanyahu may have staved off another damaging blow to the peace process. But he is still facing pressure for better oversight of Palestinian finances. Shalom and others insist the Palestinians should account for use of the funds.EDITED BY JOHN TEMPLEMANReturn to top


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