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### Viewing cable 03FRANKFURT3948, SOUTHWEST SPD SPLIT ON SCHROEDER'S AGENDA 2010

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
03FRANKFURT3948 | 2003-05-15 14:03 | 2011-08-24 01:00 | UNCLASSIFIED | Consulate Frankfurt

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    This record is a partial extract of the original cable. The full text of the original cable is not available.

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    UNCLAS SECTION 01 OF 03 FRANKFURT 003948

    SIPDIS

    SENSITIVE BUT UNCLASSIFIED

    E.O. 12958: N/A
    TAGS: PGOV PINR ECON ELAB SCUL GM
    SUBJECT: SOUTHWEST SPD SPLIT ON SCHROEDER'S AGENDA 2010

    ¶1. (SBU) Summary:  Many in the Social Democratic Party (SPD)
    in Baden-Wuerttemberg (B-W), Hesse, Rheinland-Pfalz (R-P)
    and Saarland are fiercely opposed to Chancellor Schroeder's
    Agenda 2010 reform plan.  In B-W and R-P, the SPD leadership
    generally approves the Schroeder plan but the rank-and-file
    does not.  In Hesse and the Saarland, SPD party leaders are
    determined to water down the proposed reforms.  Saarland's
    SPD chairman Maas is in the lead in opposing Agenda 2010,
    grabbing it as an early campaign theme for 2004 state
    elections.  (See also septel.)  End Summary.

    New Hesse SPD leader Aligns with Unions - Party Split
    --------------------------------------------- --------

    ¶2. (SBU) New Hesse SPD Chairperson Andrea Ypsilanti, elected
    in March 2003, has vowed to resist reform proposals that
    would lessen the clout of Germany's strong trade unions.
    She has been particularly vocal in favor of maintaining
    Germany's generous legal protections against the dismissal
    of employees.  She has said on national television that
    Agenda 2010 needs to be more socially equitable.  To the
    annoyance of her predecessor, former Hesse Minister
    President and current Federal Finance Minister Hans Eichel,
    she has continued to emphasize these themes.  (Eichel finds
    Ypsilanti's approach too extreme.)  Together with Saarland's
    SPD Chairman Heiko Maas, Ypsilanti is one of the most
    outspoken critics among SPD state leaders of the Agenda 2010
    reform plan.

    ¶3. (SBU) In a conversation with the Consulate, Ypsilanti
    proposed the following changes to Agenda 2010:

      -    Re-introduction of a wealth tax and reform of the
         inheritance tax. (She refers to a verdict of the
         constitutional court next year and expects that the
         inheritance tax will need to be reformed anyway.)

      -    A citizens' health insurance ("Buergerversicherung").
         (Basic insurance for all, all must contribute, premium could
         be privately insured.)

      -    The definite withholding tax has no majority in the
         party. "It is dead," Ypsilanti said.

      -    A tax on companies that do not offer apprenticeship
         positions (Ausbildungsplatzabgabe).  Ypsilanti thinks
         Schroeder will have to act on that soon.

      -    Changes to the reform of unemployment benefits.
         Ypsilanti wants to use the model worked out by the
         "Bertelsmann Foundation" that says unemployment benefits
         should be 10 percent above welfare.

    ¶4. (SBU) Ypsilanti held a joint press conference with Hesse
    German Trade Union Federation (DGB) chairman Stefan Koerzell
    on Agenda 2010 to show public support for the unions, but
    her views are not uniformly supported in the party.  Newly-
    elected Hesse SPD Caucus Leader Juergen Walter has
    criticized the unions for being backward-looking.  "It
    cannot be in the best interest of the unions to drive the
    social security system over the brink," Walter said.  North
    Hesse party chairman Manfred Schaub, number three in the
    Hesse SPD, criticized Ypsilanti and other rebels in the SPD
    for using a membership poll (Mitgliederbegehren) to pressure
    the party leadership.  "There is no alternative to the
    Agenda 2010," Schaub said.  He is proposing to make the
    program more socially equitable and have more tax-based
    elements to include groups do not currently participate,
    such as the self-employed and public servants.

    Saarland's Heiko Maas - A Mediator Among the Opponents
    --------------------------------------------- ---------

    ¶5.  (SBU) The Saarland SPD has been more united than Hesse
    in its opposition to the Agenda 2010 reforms (see septel).
    State Chairman Heiko Maas gathered moderate opponents of
    Agenda 2010 presenting a paper May 4.  Maas told us he
    expects Agenda 2010 will achieve a majority at the SPD party
    convention June 1, but he still hopes to make changes.  He
    proposes a more differentiated model of unemployment
    benefits in favor of older employees.  In addition, he would
    like to see the planned 2004 lowering of the top income tax
    delayed and replaced with accelerated tax cuts for low-to-
    middle incomes.  Maas also rejects the definite withholding
    tax and wishes to introduce more tax-based elements into the
    social security system to broaden its financial base.  To
    maintain social equity, Maas would like to reintroduce the
    wealth tax and a reform of the inheritance tax.  He suggests
    private elements in the pension system "systematically
    strengthened."

    ¶6.  (SBU) Maas' political problem is that he feels strong
    pressure from the left, namely from former SPD chairman
    Oskar Lafontaine and Ottmar Schreiner, leader of the twelve
    "Agenda 2010 rebels" in the Bundestag.  While Maas has not
    permitted Lafontaine to play a major political role, Maas
    has less influence over Schreiner, who is respected in the
    Saarland SPD for his thoughtful, critical views.  Maas
    countered this threat to his authority (as party insiders
    describe it) by working out a six-point position paper that
    will be voted on a party convention May 15.  The paper seeks
    to build a common ground with other critics of the Agenda
    2010, for example, in Hesse.
    B-W Leadership Surprised by Growing Opposition
    --------------------------------------------- -
    ¶7.  (SBU) Baden-Wuerttenberg (B-W) SPD Chairperson Ute Vogt
    admitted in a recent interview that she had underestimated
    the growing unease in the party over Schroeder's Agenda
    ¶2010.  She criticized the unions for attempting to turn the
    SPD into a pawn.  "I almost threw my Ver.di-membership book
    away," Vogt said.  According to Vogt, there are problems
    with Schroeder's merger of unemployment and welfare
    benefits.  Unhappiness with Agenda 2010 has not resulted in
    a significant loss of SPD membership, however.  Between
    January and March, 129 members left the party, not an
    extraordinarily high number.  Vogt defended Schroeder's plan
    as an absolute necessity.  Wolfgang Drexler, SPD caucus
    chief, supports her as most of the members of the SPD caucus
    in the B-W State Parliament do.

    ¶8.  (SBU) One of the first prominent SPD members openly
    opposing Agenda 2010 was Rainer Bliesener, the B-W Chief of
    the German Trade Union Federation (DGB).  Bliesener called
    for a special convention in B-W to discuss the reform.
    Bliesener criticized in particular the reduction of
    employment benefits and the proposed changes to German labor
    law. Along with Bliesener, several SPD sub-organizations in
    B-W with a considerable share of union members have voiced
    their distress at the Chancellor's plan.  The SPD rank-and-
    file is critical of Vogt's unwavering support of Schroeder.

    ¶9.  (SBU) The tensions within the B-W SPD have grown
    steadily in recent weeks.  Members of the SPD's left wing,
    led by Ulrich Maurer, former State Chairman and mentor of
    Ute Vogt, and Hilde Mattheis, the SPD's deputy party leader,
    are organizing under the logo "BWL" (Baden-Wuerttemberg
    Left) to protest Agenda 2010.  Maurer and Mattheis are also
    the most prominent Social Democrats thus far to sign a
    manifest entitled "reforms are necessary."  The four-page
    paper explains in detail why Schroeder's proposals are not
    feasible.

    Rheinland-Pfalz SPD stands firmly behind Agenda 2010
    --------------------------------------------- -------

    ¶10.  (SBU) Leadership as well as rank-and-file members of
    the Rheinland-Pfalz (R-P) SPD stand behind Schroeder's
    reform plans.  Minister-President Kurt Beck, who represents
    the moderate wing of the SPD, has clearly spoken out in
    favor of Agenda 2010.  According to Beck, Agenda 2010 is an
    absolute necessity and there is no turning back. In
    conversations with SPD contacts we were told that Andrea
    Nahles, the former national chief of the SPD youth
    organization JUSOS critical of the Schroeder plan, is not
    representative of R-P SPD.  In addition, Dietmar Muscheid,
    the DGB chief for Rheinland-Pfalz has also taken a rather
    moderate position.  The SPD leadership is aware of the fact
    that Agenda 2010 can only be a first step and that much
    deeper cuts will be needed in the future, particularly in
    the health-care and pension system.

    ¶11.  (SBU) There is also agreement within the R-P SPD that
    some measures of Agenda 2010 have to be discussed in more
    depth.  For example, Schroeder's proposal to limit the
    length of unemployment benefits for employees 55 years and
    older to eighteen months does not consider the fact that
    this segment of the population may never find work and
    cannot just be left out in the cold.  Malu Dreyer, R-P
    Social Minister, admits that Germany's social welfare system
    needs a complete overhaul.  Clinging to old measures will
    not help to bring the desired relief, Dreyer said.
    Nevertheless, the changes in the system should be socially
    balanced.  Dreyer also criticized Schroeder for combining
    approval of his agenda with yet another vote of confidence.
    This is the third time he has resorted to this strategy and
    it is wearing thin, Dreyer said.

    Comment
    -------

    ¶12. (SBU) Opposition to Agenda 2010 is strongest in the left-
    leaning Hesse and Saarland SPD.  While Saarland SPD chairman
    Heiko Maas has managed to unite his party behind a critical
    position paper, the Hesse SPD remains split.  This has
    partly due to with the still relatively weak leadership of
    Andrea Ypsilanti, but also with a traditional shift between
    the more left leaning south and the more moderate north
    (Hans Eichel's home).  Maas has much to lose at home with
    state elections coming up in fall 2004.  Saarland is the
    first state the SPD has a realistic chance of winning back
    from the CDU next year.  This will only succeed if Maas can
    prove he is independent of the old guard.  In the state,
    which is the most highly unionized in Germany, Maas has
    little choice but to oppose major points of Agenda 2010.
    ¶13.  (SBU) In Rheinland-Pfalz, the SPD stands firmly behind
    the Chancellor's concept.  The party leadership and grass
    roots members accept the overall plan.  There is widespread
    recognition within the party that clinging to old concepts
    will endanger the whole social system and that there is no
    alternative to the Schroeder plan.  In B-W, things are not
    as simple.  Although the majority of the leadership stands
    behind Agenda 2010, there is a small but strong opposition
    toward the reform plan that has joined forces under the logo
    "BWL" (Baden-Wuerttemberg Left).  Nevertheless, we expect B-
    W state leader Ute Vogt to keep the opponents of the Agenda
    under control.  End Comment.

    BODDE

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