GERMANY: Gerhard Schröder means business.That much was clear from the determined glint in his eye as he addressed a May Day workers' rally near Frankfurt last week. What should have been a cake-walk for the Social Democratic.
Chancellor turned into a bruising encounter with angry workers no longer interested in hearing what he had to say.
No matter how loud he shouted, the Chancellor could hardly be heard over the jeers and whistles of the assembled crowd.
"All the whistlers are showing is that they have plenty of wind in their cheeks but not much in their heads," shouted an exasperated Mr Schröder in an unscripted deviation from his speech defending proposed reforms to revive the economy and save the social welfare system.
The May Day scrap could well prove to be a turning point in Mr Schröder's chancellorship, as he appeared to admit on national television the next day.
"Running away [from reform] would be completely wrong," he said. "I am not doing this out of some misplaced zeal but because I am deeply convinced that these changes are necessary and that the way that we now have to go along is the right one for our country."
The months since the Social Democrats (SPD) returned to power last September have been plagued with false starts, something Mr Schröder freely admits.
But with pressure building from without and within, and his personal popularity in the cellar, he has decided that now is the right time to grasp the nettle of reform. Europe's largest economy grew just 0.2 per cent last year, its slowest rate in nine years, while the government has cut its 2003 growth forecast to 0.75 per cent from 1.0 per cent.
Unemployment is stuck on the wrong side of 10 per cent, pushing up spending to a point where Berlin is once again likely to breach the budget deficit rules devised to protect the euro. It is the second time Germany's national debt has risen above the 3 per cent ceiling set down by Brussels, and could result in an embarrassing, not to mention expensive, fine for Berlin.
The Chancellor's plans to get the country back to work have been knocking around Berlin in various forms for years and have been announced more often than Dublin's metro. The reform proposals would make it easier for small firms to fire workers and cut the duration and value of unemployment benefits as well as trim the cost of the state health and pension insurance systems.
The proposals have the backing of most of the SPD leadership, business leaders and even the conservative opposition. But the proposals have been opposed steadfastly by the unions and the left wing of the Social Democrats, a party where three-quarters of its parliamentarians are union members.
The matter will come to a head in a special party conference on June 1st. The SPD leadership is employing a mixture of charm and blackmail to win over its members before then. They also hope to increase public awareness and approval of the reform plans in a new poster campaign around Berlin, sponsored by a public interest foundation with trustees who include Mr Wolfgang Clement, Germany's powerful new Economics Minister.
The poster caption - "More jobs through a less social state" - sounds more like the work of a conservative government and gives some idea why the unions and SPD left-wingers oppose the reforms.
"You can't punish people who are looking for jobs and can't find them," said Mr Florian Pronold, one of the leading SPD left-wingers.
He said the reforms go against last September's election promises and basic Social Democratic principles. "It's millionaires who should have to pay taxes, not the millions."
Mr Michael Sommer, head of the German Union Federation (DGB), said: "What we need is not to dismantle the welfare state but to rebuild it in a socially just way."
At the heart of the debate is the concept of social justice and the dignity of the individual, enshrined in the first article of Germany's post-war constitution. Germans are suspicious of the Anglo-American ideas of social welfare and the hire-fire culture, and are proud of their worker protection laws and social welfare system.
But Germans are slowly realising that they can no longer afford the system they have grown up with and seem increasingly resigned to the fact that reforms, not principles, are what will create jobs. "Either we modernise as a social market economy or we will be modernised by the unchecked forces of the market," said Mr Schröder in a speech to parliament last March to announce his reforms.
A new poll suggests that the Chancellor's argument is finally getting through. Compared with steadfast opposition a few months ago, voters are now evenly divided on the merits of the reforms, with 45 per cent opposed and 45 per cent believing they are on the right track.
The SPD leadership has less than four weeks to win over the hearts and minds of SPD parliamentarians. Mr Franz Münterfering, the party chairman, warned in a letter to members that voting down the reforms would "bring us to the verge of paralysis and threaten our ability to govern".
For his part, Mr Schröder has delivered a veiled resignation threat, at least his third since taking office. It's an old but effective way of concentrating SPD minds.
"It reminds the rank-and-file party members that there is no alternative to Mr Schröder's leadership or his policies," said one opinion pollster this weekend.
Few doubt Mr Schröder's ability to get his own way on the reforms. Some 60 per cent of Germans polled recently said they believed Mr Schröder would be successful in implementing the reforms, a figure that rises to 74 per cent among SPD voters.
"No one doubts that he will succeed. The question is whether after that victory he will sit back and relax as he has done before, or whether he will see that victory as an incentive to really set the reforms in motion," said Ms Susanne Höll, a columnist with the Süddeutsche Zeitung newspaper. "If he stops now, the current fight will have been for nothing. Now is not the time to rest."