The Bad News Keeps Coming for Schröder

One thing German Chancellor Gerhard Schröder probably wasn't bargaining for was a winter of discontent in the middle of the summer. But that's exactly what happened this week with the stormy resignation of Deutsche Telekom chief Ron Sommer and Schröder’s sacking of Defense Minister Rudolf Scharping.

Both were sacrificed for their bad judgement – but, more to the point – for jeopardizing Schröder's hopes of reelection on September 22. Schröder has plenty to worry about – unemployment continues to rise, the ecomomy is still stagnating and his election campaign is flagging.

Slipping out of favor

According to the weekly Emnid public opinion poll, voters still prefer Schröder over his challenger, Bavarian Premier Edmund Stoiber of the Christian Social Union. But during the past month, Schröder’s support slipped from 54 percent to 47 percent as one bad headline after another emerged. Unfortunate for Schröder is that Germany’s chancellor is elected by the parliament and not directly by the people.

In that regard, Schröder's prospects look far less promising. According to Emnid, the opposition Union bloc -- which is comprised of the CSU and the Christian Democratic Union -- is set to win 41 percent of the vote, with Schröder’s Social Democrats (SPD) clearing 35 percent.

The poll's numbers also show that the Union bloc, with its likely coalition partner the Free Democrats, would together win 50 percent of the vote – enough to build a government. The figures are far less rosy for the current SPD and Alliance '90/The Greens government, who would together garner just 41 percent of the votes. Even if Schröder tried to string together a coalition with the Party of Democratic Socialism (PDS) -- a step the Social Democrats have said they would not take with the successor party to East Germany's communists -- he would still fall four points shy of a majority in parliament based on Sunday's poll.

Damage control

Aware that any further scandal or economic development could end his reelection effort, Schröder quickly fired Scharping last week.

The move hardly came as a surprise -- it was only one in a long string of scandals the minister had been involved in. More schocking was that it was the eighth minister Schröder has sacked during his nearly four years in office.

Last summer, photos were published of Scharping splashing about in a pool, carefree, as German soldiers risked their lives on a dangerous and politically sensitive mission in the Balkans. He also used German military jets to shuttle between Berlin and Majorca, Spain, where he bronzes his skin in the summer with girlfriend Countess Kristina Pilati.

Then, this summer, members of parliament accused him of signing on to a deal with the European Union for the purchase of Airbus military cargo planes for the Bundeswehr that had only been given partial blessing.

The last straw came last week with the publication of an article in the weekly magazine "Stern" revealing that Scharping had received 71,600 euro ($72,000) from Moritz Hunzinger, a public relations consultant in Frankfurt, for lectures and book rights just before he became Defense Minister.

Enough was enough, the chancellor decided, and Scharping was let go. The decision enjoyed wide public support.

"Two-thirds of Germans didn’t feel that Scharping should continue to be in the cabinet after September 22," said Manfred Güllner, chief pollster for the Forsa Institute. "He was really the most disliked minister, and even SPD supporters said with a clear majority, ‘Scharping is no longer acceptable as a minister.’"

A magnet for bad economic news

Meanwhile, Schröder’s favorite role of the shining frontman of German industry seems like a distant memory this week, as does his image as rescuer of threatened corporations like the Frankfurt-based construction giant Holtzmann.

Worse yet, Schröder’s party is also embroiled in corruption and campaign finance scandals and is the subject of criticism each time a new round of negative business reports emerge – from the insolvencies of important companies like engineering giant Babcock Borsig to the perpetually climbing unemployment figures, which is unusual for summer, when season factors typically lead to decreases in the rate.

Additionally, key market indices and Blue Chip stocks are falling and little is to be seen of the promised economic upswing in Germany.

"Schröder’s economic competency has certainly suffered in recent weeks and months," said Güllner.

Critics: Telekom firing "hectic and unnecessary"

But the most damaging incident for Schröder’s election chances appeared to be his instigating Sommer’s ouster at Deutsche Telekom. Critics described his backstage role as hectic and unnecessary. Just six months earlier, Schröder loved to be seen publicly with the savvy and smart Sommer, who came to represent the New Economy in Germany. But last week, he let Sommer fall, hastily, without offering a convincing alternative to replace him as Telekom’s chief executive.

Combined, the events came as a huge blow to Schröder’s reelection chances, especially coming less than two months before election day, with the SPD at least three points behind the opposition Union bloc in most public opinion polls.

"It has become highly unlikely the SPD and Green coalition government will be able to attain the votes they got in 1998," Güllner forecasted. "It’s not unthinkable, but it’s highly unlikely. But it’s still plausible that the SPD could come in ahead of the Union."

But that can only happen if Schröder is able to win over more voters in the final stretch of the election. And that won't be easy.