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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