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Germany

Yearbook 1997

1997 GermanyGermany. According to Countryaah, Germany had major financial problems during the year, and Chancellor Helmut Kohl's government found it difficult to get a hearing for its solutions. Unemployment rose to more than 12%, or 4.7 million, the highest figure since 1933, which, through increased payments of subsidies and reduced private consumption, strained the state budget and slowed growth. For the time being, Germany was not considered to meet the EMU's demand for a budget deficit of no more than 3% of GDP. Finance Minister Theo Waigel presented in January the "tax reform of the century", which included reduced income and corporate taxes and lowered "solidarity tax" for financing the German reunification.

1997 Germany

Both the government parties and the opposition criticized the proposed financing of the tax evasion. The proposal to raise VAT was consistently rejected, and the Social Democratic SPD (Sozialdemokratische Partei Deutschlands) criticized the reform for overly burdening the low-paid. In April, tax negotiations between the government and the SPD were stranded and in July the proposal was rejected by the Bundestag. Since 1997 tax revenues were estimated to be D-18 billion lower than budgeted, the tax issue is expected to be a major topic of debate before the Bundestag election in 1998.

Waigel also received harsh criticism for a proposal to reduce the budget deficit by upgrading its gold and foreign exchange reserves to market value. According to Waigel, it would provide D-60 billion to the national treasury. The proposal was considered to threaten confidence in the planned EU currency euro. The German Riksbank, the Bundesbank, saw its independence threatened and the government and the Bundesbank agreed in June that a revaluation would take place but that the profit would not be added to the Treasury until 1998 so as not to affect the EMU issue. Waigel passed a vote of no confidence on the Bundestag, but the conflict was still considered to have hurt the government.

The government's plans for reduced support for the coal industry, which would close ten of 19 mines and render 50,000 unemployed, sparked violent protests among the miners. A strike broke out and a demonstration on March 11 paralyzed the Bonn government. After negotiations, the plan was revised to close down only a few mines; about 46,000 jobs will be completed by 2005, but only through natural resignation.

Construction workers protested in March against the government's savings plans, which were feared to lead to mass unemployment in the construction industry, and metal workers went on strike in protest of the merger between steel giants Krupp-Hoesch and Thyssen, which was believed to threaten at least 8,000 jobs.

Federal Chancellor Kohl announced in April his intention to stand for re-election in 1998 and, if elected, remain in office until 2002. In October, he appointed Christian Democratic CDU (Christlich-Demokratische Union) group leader in Bundestag, Wolfgang Schäuble, like the one he would one day prefer to see as his successor.

Germany's relationship with the United States deteriorated when the Church of Scientology was placed under surveillance by the security police. The US government criticized the "persecution" of Scientologists in Germany, and a number of famous Americans compared the treatment of Scientologists with the persecution of Jews in the 1930s.

Former East German leader Egon Krenz was sentenced in August to 6.5 years 'imprisonment for East German border guards' deaths against refugees by the Berlin Wall. Two other senior GDR representatives were sentenced to three years in prison each.

The summer's persistent rain in central Europe led to severe flooding along the river Oder at the German-Polish border in July-August. Over 5,000 people were evacuated from threatened villages near Frankfurt an der Oder.

In March, German police made their biggest and most expensive effort since the war when 30,000 people guarded a shipment of spent nuclear fuel to the Gorleben reprocessing plant. Clashes occurred between police and protesters who tried to prevent the train with the nuclear waste from arriving.

In late autumn a debate arose about right-wing extremist influence in the armed forces. Defense Minister Volker Rühe commissioned an investigation into how a notorious Nazi could lecture at the Military Academy in Hamburg in 1995.

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