Last-chance Chancellor?

It Is 63 years since there were so many unemployed workers in Germany, and in those days Hitler's financial guru - a banker named Hjalmar Schacht - spent government money freely to create new jobs.

When German unemployment reached 4,658,000, or 12.2 per cent, last Thursday, Chancellor Helmut Kohl must have felt tempted to reach for the same remedy. But he can't.

If the German government spends heavily to attack joblessness, it will fail to meet the Maastricht criteria for entry into European Monetary Union. But, in order to achieve the end he most devoutly desires, the Chancellor is steadily destroying his own power base at home. And the strain is showing.

For the first time since taking up residence in Bonn, Mr Kohl seems listless and unsure of himself. His authority is eroding within the government's inner circle and the Christian Democrat Party as a whole; his poll ratings tumble with every rise in the unemployment figures. According to a survey published last week, a mere 32 per cent of Germans think Mr Kohl is the right man to put the country back on its feet, and 55 per cent are of the opinion that he should not stand again in next year's elections.

Mr Kohl has tried to put a brave face on this. A few days ago he boastfully invited his rivals to put up or shut up, saying: "The people who are against me are lurking in the bushes again, and now they think they might dare to come out into the open." But the strategy backfired disastrously - the bushes outside Helmut Kohl's bedroom window are now rustling with predatory wildlife. Suddenly, enemies old and new are mustering the courage to take a stab at the Chancellor's exposed back.

Mr Kohl stands accused of having lost control over the economy, and perhaps even the will to govern, and the unemployment figures measure the scale of his failure. The roots of Mr Kohl's malaise lie in his European vision, and his sudden departure would mark a sea change in the balance of power and priorities on the continent. Without him, the driving force of integration, the process is bound to slow down, or perhaps even go into reverse.

On two occasions recently, Mr Kohl is reported to have told leaders of his Christian Democrat Party that he would step down if Germany failed to launch monetary union on schedule on 1 January 1999. Bonn's rumour mill is also grinding out speculation that Mr Kohl is planning to call it a day at the conclusion of the Inter-Governmental Conference in Amsterdam in mid-summer.

Both scenarios envisage a prospect that would have been laughed out of the Chancellor's court only a few months ago - that Germany will prove incapable of running its own accounts in accordance with rules it had laid down for the other members of the club.

If Mr Kohl cannot deliver a single currency, he is history; if it does go ahead, it will be the only "achievement" to dangle before the voters at next year's elections.

There are many in the party who are now beginning to say openly that EMU might not be enough, especially if it means doom for the potent symbol of Germany's post-war prosperity - the Deutschmark. Under the cover of sniper fire from an increasingly vociferous Euro-sceptic wing, senior Christian Democrats in the provinces have begun to lambast Mr Kohl's dithering. As a result of their ambush, the Chancellor's manifesto commitment to a radical reform of taxation and the welfare state lies in ruins.

The skirmishes have now spread to the cabinet, with ministers slandering one another and their boss in public, and the coalition parties and powerful regional grandees plotting escape routes.

There is a "Wild Bunch" of thirty-somethings in the regions determined to distance themselves from the Chancellor before the coming local elections. There are Christian Democrat prime ministers in the Lander, dumped there by Mr Kohl after a power struggle that went wrong, who have now decided that it is time to have another go. There is, in addition, a "Munich-Hannover" axis, forged by the conservative Euro-sceptic Prime Minister of Bavaria and the Social Democrat but equally Euro-sceptic leader of Lower Saxony.

The latest celebrity combatant is Labour Minister Norbert Blum, the only member of the government to have served Mr Kohl throughout the last 14 years and three months of his reign. Mr Blum first had the temerity to vote in cabinet against tax reform plans that were to have been the centrepiece of Mr Kohl's re-election manifesto.

Next, Theo Waigel, the Finance Minister who had worked very hard at his tax plans, paid Blum back by rubbishing the pension reform blueprint submitted by the Labour Minister a week later. Everybody else in the party thought Mr Blum's ideas were a disaster, but the Labour Minister, one of a few who is on du terms with his boss, threatened to quit because Mr Kohl had not backed him.

By this time, the political debate was degenerating into a series of personal tiffs. When one faction called for Mr Waigel's resignation, the Waigel camp aired its grievances through Bild Zeitung, the tabloid regarded as the Chancellor's house organ. Then it was revealed that Mr Blum opposed the abolition of tax breaks because he had not yet paid off his mortgage and his wife had just installed a new kitchen. The Labour Minister hit back by telling another newspaper that the Chancellor could not be trusted.

Not so long ago, that comment would have guaranteed speedy retribution, yet Mr Blum remains in government. Mr Kohl has spent the best part of the week mending fences, with little evident success. The outspoken Labour Minister says he is not going to make up, because he is his own man and a principle is at stake. "I do not check my head into the cloakroom when I enter the chancellery," he declared.

Mr Blum escapes discipline because he is popular in the country, and he commands the respect of the party's left wing. Mr Waigel, the Finance Minister, who has capped a career characterised by his bungles by botching tax reform, must also be retained because only he can whip into line his unruly Bavarian colleagues on the government benches.

Mr Kohl, aged 66, has not said whether he will run for Chancellor next year, but his intentions may well become academic. The party already has a candidate it likes: the Chancellor's trusted right-hand man, Wolfgang Schauble, the Christian Democrats' leader in the Bundestag.

Mr Schauble, who was paralysed from the waist down in an assassination attempt a few years ago, threw his hat into the ring in an astonishing magazine interview. He was very keen to become Number One, he noted, and he was certain that a "cripple" like himself could run Germany. Mr Schauble then listed eight other plausible candidates by name: hardly a vote of confidence in the incumbent.

For the first time, the leader is now saddled with a leader-in-waiting - a younger man reputed for his intellectual vigour and organisational skills.

Behind him in the queue to the chancellery, three men are jostling for position. Jurgen Ruttgers, the 45-year-old Science Minister, is highly regarded by government colleagues and enjoys rising grass-roots popularity. Next in line is Volker Ruhe, the Defence Minister, aged 54, who is capable of charming Christian Democrat audiences one moment and provoking hostility the next.

The most intriguing candidate is Edmund Stoiber, Prime Minister of Bavaria and scourge of Scientologists, Eurocrats and anyone on welfare. Mr Stoiber, aged 56, can demonstrate an excellent economic record - the lowest unemployment rate in Germany - immaculate right-wing credentials and an unrivalled thirst for power.

The time for a Euro-sceptic to take the centre stage in German politics may be approaching. With Helmut Kohl, the last generation of Germans with vivid memories of the war will pass into retirement, and with them will go their dream of securing eternal peace by absorbing Germany into a superstate. The next Chancellor will be too engrossed by the growing crisis at home to go chasing after the Holy Grail of federalism.