Farewell Oskar, hello a fresh start for Europe

IN TWO WEEKS Germany will stage the EU's make-or-break summit, the one that is supposed to take a scythe to agricultural subsidies and sort out which country gets a rebate from whom. Germany will not have a finance minister at these crucial negotiations, because the last incumbent walked out in a huff on Thursday night.

Such a state of affairs might, in normal circumstances, be regarded as little short of a calamity. But since Oskar Lafontaine - aka "The Most Dangerous Man in Europe" - fled into the hills of the Saarland, the entire continent has been in the grip of an epidemic of optimism. After the demise of "Red Oskar", everything seems possible. The euro has perked up, share prices are racing, and hopes are rising that a deal might yet be possible at the Berlin summit.

Mr Lafontaine will be lamented by the Murdoch press, but the passing of their bogeyman is a great stroke of luck for the British government. There will be no more careless talk of tax harmonisation in Bonn. The cordial relations between Tony Blair and Gerhard Schroder will no longer be disrupted by the loose cannon from Saarbrucken.

Mr Lafontaine's eventual successor, Hans Eichel, is guaranteed to be on-message. Mr Eichel, the 57-year old prime minister of Hesse, is a friend of bankers and businessmen a Social Democrat of the Nineties.

But Mr Eichel will not attend the Berlin summit, because he is still serving out his last days in his regional job. In the coming interregnum, the workings of this most chaotic of governments are bound to become even more haphazard.

Thanks to Mr Lafontaine's retirement from politics - he is even giving up his seat in the Bundestag - the Chancellor has been gifted control over the party machinery. He will be up against a party consumed by resentment at the downfall of their favourite son. The silence from Saarbrucken, meanwhile, is deafening. Mr Lafontaine will not take calls from the Chancellor, but nor will he make any statements on the events of these astounding days. Everybody has heard the accounts from Mr Schroder's side, how he humiliated the finance minister in front of other - including, horror of horrors, Green - cabinet members on Wednesday. The Chancellor was not prepared to go along with Mr Lafontaine's attacks on German industry, it was revealed by sources close to Mr Schroder. The finance minister's chips were down, and Mr Schroder made sure the whole country knew that.

Still, the resignation on Thursday came as a shock. Mr Lafontaine evidently did not feel the need to discuss it with his boss. He had complained to friends about finding "no joy" in his work. He had grown tired of the personal attacks on him, marshalled from the Chancellery. Damaging "leaks" about Mr Lafontaine coveting Jacques Santer's job as head of the European Commission did not come from nowhere.

That is one explanation of Mr Lafontaine's abrupt departure, but to conspiracy theorists it is not enough. A rumour is sweeping the German media world, implying that the former prime minister of Saarland had been forced out by a scandal. The "red-light district" affair had caused him acute embarrassment several years ago. His name had cropped up at a murder trial in Saarbrucken which ended in 1997.

The defendant, accused of killing the boss of a brothel, had claimed to be in possession of "compromising pictures" of Mr Lafontaine. Have these alleged pictures suddenly surfaced again? We may never know. For the first time in his life, Mr Lafontaine is keeping mum.

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