Schroeder Steps Down as Leader of His Party

In a sign of how much his economic reforms have angered the liberal core of his party, German Chancellor Gerhard Schroeder surprised the nation Friday by taking a political gamble and resigning as leader of the Social Democratic Party.

The abrupt move marked the widening divide between one of Europe’s oldest political parties and Schroeder’s attempts to overhaul the nation’s generous welfare state. The chancellor’s plans to cut health and social programs were increasingly viewed as political liabilities for Social Democrats facing tough local elections later this year.

“We have made up our minds for a division of labor,” Schroeder said during a news conference where he announced his resignation as chairman of the party, known as the SPD. “I will concentrate on my job as chancellor and chief of the government.... I am reluctantly giving [up my party post]. But it is in favor of the reform process in Germany.”

The political marriage between Schroeder and the Social Democrats -- always a bit testy -- began to publicly fall apart last summer. Much of the SPD sees the chancellor as betraying Social Democratic principles and catering to corporations and the wealthy. But faced with an 11% unemployment rate and a $54-billion federal debt, Schroeder said he had been forced to undertake one of the most sweeping reform plans since World War II.

Schroeder’s resignation as SPD chairman drew glee from the opposition Christian Democratic Union, or CDU. The conservative Christian Democrats had been chiding Schroeder for not being more aggressive on welfare reform.

CDU leaders and many political experts believe that Schroeder’s move to distance himself from the SPD will hurt his base of support if he seeks reelection in 2006.

“This is the beginning of the end of Chancellor Schroeder,” CDU leader Angela Merkel said.

Heribert Prantl, political editor of the daily newspaper Sueddeutsche Zeitung, characterized Schroeder’s decision this way: “This was an act of desperation. It can mean the end of his chancellorship, not immediately, but let’s say by the end of the year.”

Surveys show that Schroeder’s reforms -- along with high unemployment and the SPD’s low poll standings -- are hurting the party. A recent survey found that only 26% of voters favored the SPD. Party officials fear that a further slip in the polls will damage their chances of retaining a governing coalition with the Greens after the next federal elections.

The chancellor’s reform plan, known as Agenda 2010, is outraging much of the public. Most Germans support reducing their costly welfare state, but every trim of a euro is met with clamor. Social Democrats are most upset by Schroeder’s proposed reductions of workers’ compensation programs and a new medical plan forcing Germans to pay $12.50 as an “entrance fee” for their initial visit to a doctor.

Schroeder stressed in Friday’s news conference that he would press forward.

“This is one of the most important reform periods of Germany’s postwar history,” he said. “I am in a special way obliged to [see through] this reform process.... I am convinced about the necessity” of transforming German society.

Schroeder’s resignation is expected to be approved by party vote in coming days. His successor will be Franz Muentefering, SPD leader in the lower house of Parliament. Muentefering said the party -- whose membership since 1990 has dropped to 630,000 from 920,000 -- must move beyond animosity.

“We Social Democrats do not want to change into reverse gear,” he said. “We want to regain the confidence of the people.... Everybody in the party must help. There has to be an end of this talking about and talking against one another.”

Petra Falkenberg of The Times’ Berlin Bureau contributed to this report.