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Germany

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Flag of Germany
Index
  1. Germany Main Page
  2. The Rise of Bismarck and the Birth of the Second German Reich
  3. Adolf Hitler and WWII
  4. Post-War Germany Is Disarmed, Demilitarized, and Divided
  5. Federal Republic of Germany
  6. Democratic Republic of Germany
  7. Berlin Wall Falls, Germany Reunifies
  8. Centrist Gerhard Schroder Elected Chancellor
  9. Germany's Unemployment Rate Reaches 12%
  10. Germany Takes Major Role in Managing Euro Debt Crisis
  11. New Island Emerges Off the Coast
  12. Merkel Elected to a Third Term; Spying Scandals Sour Relationship with U.S.
Centrist Gerhard Schroder Elected Chancellor

In its most important election in decades, on Sept. 27, 1998, Germans chose Social Democrat Gerhard Schröder as chancellor over Christian Democrat incumbent Helmut Kohl, ending a 16-year-long rule that oversaw the reunification of Germany and symbolized the end of the cold war in Europe. A centrist, Schröder campaigned for “the new middle” and promised to rectify Germany's high unemployment rate of 10.6%.

Tension between the old-style left-wing and the more pro-business pragmatists within Schröder's government came to a head with the abrupt resignation of finance minister Oskar Lafontaine in March 1999, who was also chairman of the ruling Social Democratic Party. Lafontaine's plans to raise taxes—already nearly the highest in the world—on industry and on German wages went against the more centrist policies of Schröder. Hans Eichel was chosen to become the next finance minister.

Germany joined the other NATO allies in the military conflict in Kosovo in 1999. Before the Kosovo crisis, Germans had not participated in an armed conflict since World War II. Germany agreed to take 40,000 Kosovar refugees, the most of any NATO country.

In Dec. 1999, former chancellor Helmut Kohl and other high officials in the Christian Democrat Party (CDU) admitted accepting tens of millions of dollars in illegal donations during the 1980s and 1990s. The enormity of the scandal led to the virtual dismemberment of the CDU in early 2000, a party that had long been a stable conservative force in German politics.

In July 2000, Schröder managed to pass significant tax reforms that would lower the top income-tax rate from 51% to 42% by 2005. He also eliminated the capital-gains tax on companies selling shares in other companies, a measure that was expected to spur mergers. In May 2001, the German Parliament authorized the payment of $4.4 billion in compensation to 1.2 million surviving Nazi-era slave laborers.

Schröder was narrowly reelected in Sept. 2002, defeating conservative businessman Edmund Stoiber. Schröder's Social Democrats and coalition partner, the Greens, won a razor-thin majority in Parliament. Schröder's deft handling of Germany's catastrophic floods in August and his tough stance against U.S. plans for a preemptive attack on Iraq buoyed him in the weeks leading up to the election. Germany's continued reluctance to support the U.S. call for military action against Iraq severely strained its relations with Washington.

Next: Germany's Unemployment Rate Reaches 12%
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