Kohl comes out fighting to stay on top

DURING 60 minutes of verbal pugilism, Chancellor Helmut Kohl heaped derision yesterday on speculation about his imminent demise, stating that he and his coalition were staying the unification course.

His speech to parliament on the second day of the budget debate contained not one new proposal, but resounded to the tones of a single message: Kohl is in control. The Chancellor was reacting to the past two weeks of chaos, when arguments about financing German unity plunged the three-party coalition into disarray, and provoked the beginnings of an internal challenge to Mr Kohl's leadership.

'For my 10th anniversary as Chancellor next month, friends are giving me a collage of all the headlines proclaiming my fall. I shall hang it on the office wall,' Mr Kohl said. The Chancellor's speech - truculent, scornful, supremely confident - was the public expression of a brutally successful counter-attack within his own Christian Democratic (CDU) party over the previous 48 hours.

Mr Kohl has bounded off the ropes from a position where it seemed he had lost the will to fight and was watching helplessly the chaos unfurl around him while there were growing indicators that his number two, Wolfgang Scauble, was seeking a grand coalition with the opposition Social Democrats (SPD).

Deploying his noted skills as a party in-fighter, he pulled the CDU notables into line. The head of the sister Christian Social Union, Theo Waigel, lent the Chancellor full support. At a small gathering of the most powerful men in the coalition, Mr Kohl threated Mr Schauble that, if he persisted, he would be crushed at the forthcoming party congress just as the last two plotters, Heiner Geissler and Kurt Biedenkopf, were crushed at the bloody Bremen congress in 1987.

Mr Waigel made some cautionary remarks to Volker Ruhe, the ambitious Defence Minister, who was also suspected of sympathy for the grand coalition strategy.

Though designed to counter recent accusations of lack of leadership - Mr Kohl hammered repeatedly the words 'courage' and 'decisiveness' - yesterday's speech will have done little to dispel the strong doubts about the government's handling of a fast- weakening economy and the ballooning costs of unification. References in the heat of the speech to the 'difficult crisis in the east', and the need for 'large financial transfers for much longer than we expected', offered hints of what the Chancellor otherwise dared not say.

The opposition SPD leader, Bjorn Engholm, said the government 'was like a ship rolling in heavy seas without a captain'. Mr Kohl must come clean about the state of the nation's finances, if he wants the SPD's co-operation, said Mr Engholm. Instead, Mr Kohl reiterated his appeal for a 'solidarity pact', part of which would involve wage restraint by the trade unions.

But to achieve their, and the SPD's support, for such sacrifice, Mr Kohl knows he cannot avoid some form of extra tax on the better-off in the west. Furthermore, his government, despite the disclaimers, needs new sources of money to repay the massive debts mounting in the east.

According to yesterday's report from the DIW Economic Institute in Berlin, 'if one looks beyond the short-term, there is little chance of the government getting by without further increases in taxes and duties'. The report criticises the government's financial policy for 'lacking any clear line, and especially a credible assessment of the medium-term prospects'.

The controversial compulsory-investment-loan proposal is still circulating within the coalition. But it was precisely this plan, and the prospect of a U-turn on tax increases, that plunged the coalition into chaos. Mr Kohl has beaten back the rebels and has stilled the panic, but the problems remain untouched.

In the party, too, the threat is contained, but not eradicated. Never has Mr Kohl been so alone. Mr Schauble, his former right- hand man, who holds the vital position of leader of the CDU parliamentary party, has been humiliated. Another rising star, Mr Ruhe, has been cautioned.

'Beneath the Chancellor there is now a vacuum,' a senior government official says. 'If things continue as they are, the pressure could become unsustainable.' In parliament yesterday, Mr Kohl rhetorically celebrated a victory. But he is not yet out of the trenches.

(Photograph omitted)