12 May 2003, 17:18  Schroeder backs Eichel against resignation calls

BERLIN, May 12 - German Chancellor Gerhard Schroeder backed his embattled finance minister on Monday after a public admission that the government's long-standing budget goals were out of reach prompted calls for Hans Eichel to go. "There's no discussion about Hans Eichel," the German leader told television channel ZDF during an interview on an official visit to Malaysia. Eichel abandoned the target he has championed of balancing the budget by 2006 and said Germany's deficit would again bust European Union limits this year. "We can't make it by 2006 any more, that is unless there is an economic miracle," Eichel told Der Spiegel weekly magazine.
Spiegel rival Focus reported Eichel had told his cabinet colleagues that if Germany broke EU-agreed limits on government borrowing again in 2004, Schroeder would have to find another finance minister. The finance ministry denied Eichel had threatened to quit. However, opposition politicians and even some from Eichel's own Social Democratic Party (SPD) issued a chorus of demands that the man touted at one time as a possible successor to Schroeder should step down.
"I'm not one to make regular resignation demands... But what has happened in the past days, surely that is enough reason to say that the finance minister has failed across the board and personally too," Friedrich Merz, deputy chairman of the conservative CDU/CSU in parliament, said on German radio. A European Commission spokesman said the news that Germany expected to break EU deficit limits came as little surprise given lower-than-expected growth rates. Economists said the calls to replace Eichel made no sense given the sluggish growth facing Europe's largest economy. "It's ridiculous. Any finance minister would face the same problems, regardless of what party he belonged to," Wolfgang Wiegard, one of the government's five independent economic advisers, told business daily Handelsblatt.
CRITICS IN OWN PARTY
Eichel's predecessor, left-leaning Social Democrat Oskar Lafontaine, who quit unexpectedly only months after gaining office, told Bild that Eichel should throw in the towel, while the head of the "Young Socialists", a branch of the SPD, accused Eichel of inactivity. Private economists said his freedom of manoeuvre was limited, although some criticised him for sticking too long to over-optimistic growth forecasts. "To be fair, one has to admit that economic developments are not exactly helping reaching a balanced budget by 2006," Eckart Tuchtfeld, an economist at Commerzbank said.
The chancellor is battling trade unions and left-wingers in his own party to push through a package of welfare cuts and labour reforms dubbed Agenda 2010 to try to revive the economy, which has ground to a near halt in the last two years. "I will put into practice this agenda 2010 together with Hans Eichel," Schroeder said. Eichel is set for more bad news this week when new tax estimates are published. A source close to the panel of experts releasing its report on Thursday said 2003 tax revenues were set to fall short of the latest estimates by 10 billion euros. Sluggish economic growth has eaten into tax revenues, while spiralling unemployment has increased welfare spending sharply.//www. .com

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