News Digest Toward a Shareholder Society

By David Hudson Chancellor Schröder wants employees to be paid in part with shares in the companies they work for. Also: The Stasi knew all about Kohlgate.

The Frankfurt DAX has its ups and downs but overall, as with stock exchanges around the world, the numbers are on the up and up. Let Alan Greenspan worry, the world keeps on investing.

20 percent of the German population is currently playing the markets but only 6 percent of German employees own stock in the companies they work for. Chancellor Gerhard Schröder unveiled a plan on Tuesday at the 50th annual meeting of the Workers's Union for Partnership in Industry (AGP) in Wolfsburg that would increase that percentage.

When wages rise, workers would be paid in shares, mutual funds or options rather than cash. Schröder aims to place this model on the table when the Alliance for Jobs, a group of representatives comprised of government, management and union leaders, convenes in June.

The proposal is classic Gerhard Schröder. His Social Democrats (SPD) have fallen into two camps ever since his election as chancellor and then as party chairman. On the one side are the traditionalists, the union leaders, those who argue that "social justice" trumps all other concerns. They fear globalization, cry foul when, say, Vodafone, the British telecom, succeeds in its hostile takeover bid for Mannesmann, but cheer when Schröder steps in and the government bails out the ailing construction firm Philipp Holzmann.

On the other side are the modernizers. Their fear is that the global boom will pass Germany by if the country doesn't relinquish its old postwar model of "consensus capitalism" and get with the 21st century program. Tony Blair and his New Labour have shown the way in Britain, and with varying degrees of enthusiasm that fluctuate with the polls, Schröder has proposed that the SPD-led government follow.

With his plan to turn workers into shareholders, Schröder is holding out carrots to both sides. In June, both sides will decide whether or not to bite.

The Berlin daily "Der Tagesspiegel" broke a story on Tuesday that throws an astonishing twist on the scandal that has dominated headlines in Germany for months. Revelation after revelation has shown that on local, state and national levels, Germany's main opposition party, the Christian Democrats (CDU), held secret accounts, many of them outside the country, which it used to finance election victories and generally grease the wheels of the machine Helmut Kohl ran as chancellor for 16 years and as CDU party chairman for 25.

Kohl himself has admitted piecemeal to accepting anonymous donations but has denied knowledge of most of the vast network of illegal party financing. Politicians across the political spectrum have expressed shock at the extent of the system. The public certainly knew next to nothing, and when the mood was lowest, pundits openly worried about the state of democracy in Germany.

But former East Germany's state security, the Stasi, knew all about it all along. The Stasi had been tapping the phones of key Kohl staff members including Walther Leisler Kiep, former CDU treasurer and a main Kohlgate figure, and all-round CDU treasury watchdog Uwe Lüthje. On Tuesday, "Der Tagesspiegel" published excerpts from hundreds of pages of conversations such as the one in 1980, just as an example, in which Lüthje tells a businessman not to transfer 50,000 marks ($25,000) directly to the CDU's account because it'd have to be reported.

The Gauck Committee, which has been overseeing Germany's investigation of the Stasi, allowing former East Germans to peek at the files the Stasi kept on them, making reparations whenever possible and so on, has offered the documents to the parliamentary committee investigating Kohlgate. But Volker Naumann (SPD), head of the committee, has said the material cannot be used as official evidence. Others in the ranks of the SPD and Greens aren't so sure.

For his part, Kohl is furious. His lawyers claim there's nothing new to be found in the Stasi files and that their publication is just another in a long line of efforts to damage his reputation. And this just days before his 70th birthday. Official CDU celebrations, by the way, have long since been called off, but Berlin Mayor Eberhard Diepgen (CDU) says the Berlin Senate will be honoring the city's honorary citizen with a reception and dinner.

Meanwhile, you'd think the race for Chancellor Schröder's office scheduled for 2002 were already on. The weekly "Die Woche" has conducted a poll to find out who the Germans would choose if they were able to elect their chancellor directly (they can't) and the results show Angela Merkel, the new leader of the CDU (see the March 20 "Digest"), neck-and-neck with Schröder. Both score 39 percent each.

But in a parliamentary democracy, voters elect parties, not personalities, and the SPD remains ahead of the CDU, 41 to 33 percent. The Liberals (FDP), Democratic Socialists (PDS) and Greens each rack up 7 percent.

Germany and Europe on the Web today:

"The good relations that prevailed between Germany and the United States over most of the postwar period have turned sharply worse," writes William Pfaff in the "International Herald Tribune". Pfaff's list of confrontations seems fairly petty at first, but it all adds up to trouble. Recent flash points have been the IMF brouhaha, the US embassy in Berlin, Echelon, defense issues and that's just the half of it. "The German economy and German society's evolution over the past half century have, of course, been heavily and profitably influenced by the United States. But the exceptional intimacy of the relationship rested on an assumption of limited German sovereignty. That is no longer sustainable."

Also in the "IHT": John Schmid on the remarkably smooth negotiations between IG Metall, Germany's "biggest and often most militant union," and employers which led on Tuesday to a breakthrough "setting the tone for a potentially peaceful bargaining climate at a time of rapid economic change." The deal should ease pressure on the euro , reports Tony Major in the "Financial Times".

Schmid on what the 34 percent stake in Mitsubishi means for DaimlerChrysler .

That deal follows GM and Fiat's and was in turn followed by Volkswagen taking a one-third stake in Swedish truck-maker Scania. "The way the deals are being structured suggests that, for all the global nature of the business, national sensitivities  still count," write the "Guardian" business editors.

Speaking of which, BMW chairman Joachim Milberg claims the company had "no choice " but to sell Rover, reports Andrew Mullins in the "Independent". James Doran's take in the "Times" of London: Milberg "blames  British consumers for the collapse of Rover." And David Gow and David Hencke report in the "Guardian" that British trade secretary Stephen Byers was warned  as early as last December. Uta Harnischfeger writes in the "FT" that a sharp decline in sales of top car ranges "demonstrate[s] the pressure  BMW faced to end its costly Rover debacle." Still, the British can't be pleased with the news that BMW is thinking about investing in Hungary , writes the "Guardian's" Nicholas Bannister.

On Monday, Chancellor Schröder commented himself on the recent wave of negative coverage of Germany in the British press: "Sometimes, I see in the reports on Germany in the British press  a kind of time lag. I would like more reports on the Germany of today and not on the Germany that was." John Hooper in the "Guardian" and Toby Helm in the "Telegraph".

More from Helm on Kohl's admission that he took more donations  for the CDU earlier than he'd previously let on; and the Stasi files  on the CDU.

Stock exchanges in Paris, Amsterdam and Brussels have merged to form Euronext. "And if it works, this union should generate a wave of consolidation that will, ultimately, result in a pan-Europe an exchange for blue-chip stocks," writes Thomas K. Grose in "Time". Also: James Graff on Europe's plans to catch up  with the US on the Internet and Aisha Labi on sweeping changes in the European art market.

Deutsche Börse, operator of the Frankfurt financial markets, is planning an IPO of its own in July, report Doris Grass and Vincent Boland in the "FT". Also: John Plender suggests Europe's "social model " is damaging the euro.

"In Europe as in the United States and Japan, investors are serving notice that they're finally paying a bit more attention to details like profits and business plans," writes Karen Lowry Miller in "Newsweek": "After starting the year in a rally, Europe's high-tech markets have slumped  for most of March." Also: Prince Sadruddin Aga Khan argues that the Alps  must never become "just another truck stop on the Continental highway."

11 skiers  were killed by an avalanche near Salzburg, Austria, on Tuesday, and two have gone missing. "One woman who was missed by the cascade of snow, rock and ice managed to telephone emergency rescuers even as the avalanche swept her friends from sight," writes Allan Hall in the "Times". On Wednesday, rescuers had to call off their efforts because of hostile weather conditions.

Also in the "Times": Hall and Michael Harvey on how German authorities will be cracking down on soccer hooligans  before England and Germany meet at the Euro 2000 match in Belgium in June; and Roger Boyes on another indicator of just how quickly and dramatically German society is changing: Politicians are horrified by a study showing 400,000 underaged kids working  illegally, but the kids themselves are generally enthusiastic about the pocket money they're earning.

Did Werner Heisenberg  fail to build an atom bomb  for the Nazis deliberately or simply because he couldn't? The question is at the center of "Copenhagen", a play by Michael Frayn opening soon on Broadway, as well as at a meeting of historians and scientists at the City University of New York. Two fascinating pieces by James Glanz in the "New York Times".

Bernd Eichinger is one of Germany's most successful film producers but as for his debut as a director, "it fails," writes Elke de Wit in the "Central Europe Review". Also: Jan Culik argues that Prague-based publisher Michal Zítko has a right to bring out a Czech version of Mein Kampf  .

In the "New York Review of Books", John Updike marvels at the works of late 15th century sculptor Tilman Riemenschneider currently on view at the Metropolitan and notes how variously Germans have interpreted his work throughout history. Also: Andrew O'Hagen on Billy Wilder.

For the "Times", Hilary Finch interviews 75-year-old Dietrich Fischer-Dieskau  who "made a greater impression on the history of singing in the 20th century than any other performer."

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