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Germany

Country in central Europe, bounded north by the North and Baltic Seas and Denmark, east by Poland and the Czech Republic, south by Austria and Switzerland, and west by France, Luxembourg, Belgium, and the Netherlands.

Government

With reunification in 1990 the German government remained almost identical to that of former West Germany. It is based on the West German constitution (the Basic Law), drafted in 1948–49 by the Allied military governors and German provincial leaders in an effort to create a stable, parliamentary form of government, to diffuse authority, and to safeguard liberties. It borrowed from British, US, and neighbouring European constitutional models. It established, firstly, a federal system of government built around ten (11 including West Berlin, which did not have full status; the number rose to 16 since reunification) Länder (federal states), each with its own constitution, elected parliament, and government headed by a minister-president. The Länder have original powers in education, police, and local government, and are responsible for the administration of federal legislation through their own civil services. They have local taxation powers and are assigned shares of federal income tax and VAT revenues, being responsible for 50% of government spending.

The constitution, secondly, created a new federal parliamentary democracy, built around a two-chamber legislature comprising a directly elected 672-member lower house, the Bundestag (federal assembly), and an indirectly elected 69-member upper house, the Bundesrat (federal council). Bundestag representatives are elected for four-year terms by universal suffrage under a system of ‘personalized proportional representation’ in which electors have one vote for an ordinary constituency seat and one for a Land party list, enabling adjustments in seats gained by each party to be made on a proportional basis.

Political parties must win at least 5% of the national vote to qualify for shares of ‘list seats’. Bundesrat members are nominated and sent in blocs by Länder governments, each state being assigned between three and five seats depending on population size. The Bundestag is the dominant parliamentary chamber, electing from the ranks of its majority party or coalition a chancellor (prime minister) and cabinet to form the executive government. Once appointed, the chancellor can only be removed by a ‘constructive vote of no confidence’ in which a majority votes positively in favour of an alternative leader.

Legislation is effected through all-party committees. The Bundesrat has few powers to initiate legislation, but has considerable veto authority. All legislation relating to Länder responsibilities requires its approval, constitutional amendments need a two-thirds Bundesrat (and Bundestag) majority, while the Bundesrat can temporarily block bills or force amendments in joint Bundestag–Bundesrat ‘conciliation committees’. Bundestag members also join an equal number of representatives elected by Länder parliaments in a special Bundesversammlung (federal convention) every five years to elect a federal president as head of state. The president, however, has few powers and is primarily a titular figure.

The 1949 constitution is a written document. Adherence to it is policed by an independent federal constitutional court based at Karlsruhe which is staffed by 16 judges, who serve terms of up to 12 years. All-party committees from the Bundestag and Bundesrat select eight each.

The court functions as a guarantor of civil liberties and adjudicator in Federal–Land disputes. (Similar courts function at the Land level.)

History For German history prior to 1949 see Germany: history 1919–49. For the earlier history of Germany see Germany: history to 1519, Germany: history 1519–1815, and Germany: history 1815–1919.

Germany divided

In 1949 Germany was divided by the Allied powers and the USSR, forming the German Democratic Republic (East Germany) in the eastern part of the country (formerly the Soviet zone of occupation), and the Federal Republic of Germany (West Germany) in the west (comprising the British, US, and French occupation zones under Allied military control following Germany's surrender at the end of World War II in 1945).

For the next four and a half decades West and East Germany were divided by the policies of the Cold War, with West Germany becoming the strongest European NATO power, and East Germany a vital member of Comecon and the Warsaw Pact. During the era of Soviet leader Leonid Brezhnev, Soviet medium-range nuclear missiles were stationed on East German soil.

The formation of the Federal Republic

In post-war West Germany, a policy of demilitarization, decentralization, and democratization was instituted by the Allied control powers and a new, intentionally provisional, constitution framed, which included eventual German reunification. The Federal Republic (West Germany) came into existence on 23 May 1949, when the Basic Law, or constitution, was signed by members of the Parliamentary Council in the presence of the Allied military governors (thereafter called commissioners).

West Berlin was blockaded by the Soviet Union 1948–49 (see Berlin blockade), but survived to form a constituent Land in the Federal Republic, after an airlift operation by the Allied powers.

Adenauer comes to power in West Germany

Politics during the Federal Republic's first decade were dominated by the Christian Democratic Union (CDU), led by the popular Konrad Adenauer.

The first elections to the Bundestag, or lower house of the German Federal parliament, were held on 15 August 1949, the Christian Democrats emerging as the strongest party. Theodor Heuss was elected first president of the Republic, and Adenauer was elected first German Federal chancellor (16 September). The first government of the Republic was a right-wing coalition. In the declaration of policy of his government on 20 September Adenauer voiced the determination of his ministers to cooperate closely with the Western powers. In retaliation for the institution of the German Federal Republic, an East German state, the German Democratic Republic, was established under Soviet auspices in the eastern zone of Germany in October 1949.

Economic recovery under Adenauer

Chancellor Adenauer and his economics minister, Ludwig Erhard, established a successful approach to economic management, termed the ‘social market economy’, which combined the encouragement of free-market forces with strategic state intervention on the grounds of social justice.

This new approach, combined with aid under the Marshall Plan and the enterprise of the labour force (many of whom were refugees from the partitioned East), brought rapid growth and reconstruction during the 1950s and 1960s, an era termed the ‘miracle years’. In additional factor in Germany's economic performance was that it did not have the rearmament burden of the other leading Western countries.

Western defence alliances

During this period, West Germany was also reintegrated into the international community. Adenauer's government supported the Federal Republic's proposed participation in West European collective defence. This subject, raising the question of a recreated German army and possible conscription, caused considerable controversy in West Germany over the next few years, and in many other countries, especially France, where the prospect of a new German army was viewed with much popular misgiving, in the light of recent history.

The German Social Democrats (SPD) were opposed to the Federal Republic tying itself militarily to the West, primarily because they claimed that this would prejudice any chance of German reunification with East Germany; and this fear was played upon by Soviet propaganda. However, Adenauer had the necessary majority to carry through his policy, with only minor modifications. In the elections of 1953 his party increased its majority.

In 1952 it was agreed that on West Germany's formal joining of the proposed European Defence Community (EDC) the Allied occupation should end, although Allied troops would continue to be stationed in the Federal Republic for German and European defence purposes. The London and Paris agreements, which followed French rejection of the EDC in 1954, resulted in West Germany being invited to join NATO and officially restored to the Federal Republic full sovereignty. French distrust of the German rearmament that this involved was allayed by various safeguards. As a result, the Western European Union, of which the Republic was a member, came into being on 7 May 1955; and seven days later the Federal Republic formally joined NATO, becoming a loyal supporter of the USA. A small regular army was soon built up; but conscription was not started until 1956–57.

In 1955 Adenauer visited Moscow. As a result, diplomatic relations were established between the USSR and West Germany and the USSR returned to Germany several thousand German prisoners still detained in the USSR.

European integration

West Germany was admitted to the Organization for European Economic Cooperation (OEEC; the predecessor of the OECD) in 1949; and became a full member of the Council of Europe in 1951. It was one of the founder members of the European Coal and Steel Community.

When in 1955, against Adenauer's advice, the inhabitants of Saarland voted against ‘Europeanization’, and by implication, in favour of union with West Germany, relations between France and the Federal Republic were temporarily strained. Agreement was eventually reached, however, as a result of which Saarland was united to West Germany at midnight on 31 December 1956.

West Germany was one of the signatories of the Treaty of Rome in 1957, under which the European Economic Community (EEC) came into being on 1 January 1958. Germany has continued to play a dominant role in the EEC and its successors, the European Community (EC) and European Union (EU), and has been a constant advocate of closer European integration.

After Charles de Gaulle's return to power in France in May 1958 relations between France and West Germany grew closer, due partly to a personal friendship between Adenauer and de Gaulle. In January 1963 a ‘treaty of reconciliation’ between the two countries was signed in Paris. When Adenauer retired from the chancellorship later in the year, however, the warmth of Franco-German relations began to diminish and differences between the two countries concerning the future course of such organizations as the EEC and NATO became more open.

Government in East Germany

The People's Council, elected in 1948, and consisting mainly of a communist-dominated Socialist Unity Party (SED), was converted into a People's Chamber (Volkskammer) on the establishment of the Democratic Republic of Germany (7 October 1949). After that all elections were on the pattern of a one-party list of candidates.

East Germany dissolved its five Länder (Brandenburg, Mecklenburg–West Pomerania, Saxony, Saxony–Anhalt, and Thuringia) in 1952, and its Chamber of States, or upper house, in 1958, vesting local authority in 15 Bezirke, or administrative districts. Under the 1968 constitution the supreme legislative and executive body in the German Democratic Republic was the Volkskammer (people's chamber), whose 500 members (including 66 from East Berlin) were elected every five years by universal suffrage.

The sovietization of East Germany

On the inauguration of East Germany, Wilhelm Pieck became the president, Otto Grotewohl (former leader of the SDP in the East) became premier, and Walter Ulbricht deputy premier. From the beginning the real power resided with Ulbricht, who was first secretary of the SED Politburo. After Pieck's death in 1960 the presidency was abolished, and a council of state was elected by the Volkskammer. Its chairman, who was given dictatorial powers, was Ulbricht. His position was further strengthened after Grotewohl's death in 1964.

The years immediately after 1949 saw the rapid establishment of a communist regime on the Soviet model, involving the nationalization of industry, the formation of agricultural collectives, and the creation of a one-party political system. East Germany made periodic suggestions for talks on German reunification, but its drafts invariably included clauses designed to perpetuate forcibly its own communist regime, and were rejected by the Western powers and by West Germany.

Shortly after its inauguration, East Germany recognized the Oder–Neisse line as its permanent boundary with Poland, and acknowledged the expulsion of over 2 million Germans from the Sudeten area of Czechoslovakia as ‘permanent and just’.

The 1953 revolt

From its inception the poverty of East Germany contrasted markedly with the prosperity of West Germany, and the curbs on personal liberties added to a discontent that found expression in the thousands of refugees who poured into West Berlin, and thence to the Federal Republic, from the eastern sector. In June 1953 opposition to sovietization led, during food shortages, to severe rioting in East Berlin and in several other East German towns (see East German revolt). In Berlin only the intervention of Soviet tanks restored order.

The revolt was followed by repressive measures, and though the Democratic Republic was proclaimed a sovereign state in 1954 (recognized at first only by the communist powers), large Soviet forces continued to be stationed there until the collapse of the communist regime in 1989.

The Berlin crisis of 1960–61

Friction between East and West Germany came to a head in 1960–61, because of the continuing flow of refugees entering West Berlin from the east. This had caused the population of East Germany to decline sharply between 1949 and 1961 and was undoubtedly affecting its economy adversely.

On 13 August 1961 East Germany closed the Berlin border, and subsequently built a heavily policed wall along it (see Berlin Wall). The flow of refugees was thus virtually stopped, though a limited number of sensational successful escapes continued to be made, together with many equally sensational and often fatal failures, which severely shocked public opinion in the West.

From December 1963 an agreement was reached between the East and West Berlin authorities under which West Berliners could visit relatives in East Berlin and the Democratic Republic for limited periods at festive seasons, and some elderly citizens of East Germany were permitted to go and settle with their relatives in the West.

Adenauer gives way to Erhard

In 1959 Heuss was succeeded as West German president by Heinrich Lubke. After the elections of 1961 the Christian Democrats lost ground, and governed in a coalition with the Free Democrats (FDP). Though the economic boom continued, the CDU and its allies lost prestige on account of various government scandals, and an increasingly public rift between the ageing Chancellor Adenauer and his economics minister, Erhard, centring on the question of Adenauer's retirement.

The emergence of a new and youthful SDP leader, Willy Brandt – who had vaulted to international prominence as mayor of West Berlin during the construction of the Berlin Wall – suggested a strong threat to future CDU dominance of West German politics. Erhard eventually succeeded Adenauer as chancellor in 1963 and resigned in 1966.

Erhard had to face differences within his own party, and public controversy on such matters as to whether the law should be amended to allow for trials of war criminals to take place after May 1965 (when they would normally have qualified for the 20-year indemnity exemption). Additionally, relations with several Arab states were strained by West Germany's agreement to establish ambassadorial relations with Israel, to whom, by 1965, it had completed payment of large reparations for the Holocaust.

A closer understanding with Britain was reflected in a highly successful state visit of Queen Elizabeth II to West Germany in 1965, and by a subsequent agreement between the two countries on a West German contribution towards the support costs of the British Army of the Rhine. In September 1965 Erhard led his party to victory in the federal general election.

Brandt and Ostpolitik

During the 1960s Willy Brandt played a major role in shifting the SPD away from its traditional Marxist affiliation towards a more moderate position. Support for the SPD steadily increased after this policy switch and the party joined the CDU in an uneasy ‘grand coalition’ (1966–69), with Brandt as the junior partner and foreign minister to CDU chancellor Kurt Georg Kiesinger.

But by the later 1960s most younger people felt that the time had come to face realities and regularize West Germany's relations with its eastern neighbours. This mood found expression in Brandt's foreign policy of Ostpolitik (‘eastern policy’), which sought reconciliation with Eastern Europe as a means of improving contacts between East and West Germany.

The SDP, with Brandt as chancellor, gained power in 1969, with the support of the FDP under Walter Scheel (1919– ). Under Brandt's moderate socialist government, West Germany concluded treaties with Poland and the USSR (1970), treaties that normalized relations, recognized the de facto boundaries, and provided for limited cooperation in various fields. In 1972 a treaty was effected with East Germany, acknowledging East Germany's borders and separate existence and enabling both countries to enter the United Nations in 1973.

In 1974 Brandt was forced to resign after the revelation that his personal assistant (Günther Guillaume) had been an East German spy, and was succeeded by Helmut Schmidt. Also in 1974, Gustav Heinemann (1899–1976), president since 1969, was succeeded by Walter Scheel.

Developments in East Germany in the 1960s and 1970s

Apart from the unsuccessful uprisings of 1953, East Germany proved a notably quiescent member of the Eastern bloc. By the 1970s there was a considerable improvement in living standards and the availability of consumer goods. East Germany's policy of economic austerity had yielded good results, and by 1969 it had a higher per-capita GNP (gross national product) than Austria, Japan, and Italy, almost two-thirds that of West Germany, and it was the world's 10th industrial power.

During the 1970s there was some relaxation in government rigidity, a more moderate political stance was adopted, and the Stalinist Walter Ulbricht was replaced as leader of the Socialist Unity Party (SED) by the pragmatic Erich Honecker. Economic and diplomatic relations with the West were extended. In 1972–73 the number of countries officially recognizing East Germany soared, and East Germany achieved international status as an independent state, although the West German constitution continued to declare that there was only one German nationality.

Schmidt's centrist course

As SPD chancellor of West Germany, Helmut Schmidt adhered to Ostpolitik and emerged as a leading advocate of European cooperation. In the 1976 general election Schmidt's SDP–FDP coalition won a narrow majority over the CDU–CSU alliance headed by Dr Helmut Kohl. The CSU is the more right-wing sister party of the CDU in Bavaria, and in the 1980 election the CDU–CSU alliance was headed by the CSU leader, the controversial Franz-Josef Strauss, but was once more comfortably defeated by the SPD–FDP coalition.

Between 1980 and 1982, the left wing of the SPD and the liberal FDP were divided over military policy (in particular the proposed stationing of US nuclear missiles in West Germany) and economic policy.

Chancellor Schmidt fought to maintain a moderate, centrist course but the FDP eventually withdrew from the federal coalition in 1982 and joined forces with the CDU, led by Helmut Kohl, to unseat the chancellor in a ‘positive vote of no confidence’. Helmut Schmidt immediately retired from politics and the SPD, led by Hans-Jochen Vögel, was heavily defeated in the Bundestag elections in 1983, losing votes on the left to the new environmentalist Green Party.

Kohl's chancellorship in the 1980s

The new Kohl administration, with the FDP's Hans-Dietrich Genscher remaining as foreign minister, adhered closely to the external policy of the previous chancellorship, while at home a freer market approach was introduced.

Unemployment rose to 2.5 million in 1984, problems of social unrest emerged, and violent demonstrations greeted the installation of US nuclear missiles on German soil in 1983–84. Internally, the Kohl administration was rocked by scandals over illegal party funding, which briefly touched the chancellor himself. However, a strong recovery in the German economy from 1985 enabled the CDU–CSU–FDP coalition to gain reelection in the federal election in 1987.

During 1988–89, after the death of the CSU's Franz-Josef Strauss, support for the far-right Republican Party began to climb, and it secured 7% of the vote in the European Parliament elections of June 1989. In 1989–90 events in East Germany and elsewhere in Eastern Europe caused half a million economic and political refugees to enter the Federal Republic (see below); they also prompted the reopening of the debate on reunification (Wiedervereinigung). This resulted in West German politics becoming more highly charged and polarized. The CDU gave strong support to swift, graduated moves towards ‘confederative’ reunification, if desired, following free elections in East Germany.

Exodus to West Germany

In East Germany Honecker had been urged by the liberalizing Soviet leader Mikhail Gorbachev since 1987 to accelerate the pace of domestic economic and political reform; his refusal to do so increased grassroots pressure for liberalization. In September 1989, after the violent suppression of a church and civil-rights activists' demonstration in Leipzig, an umbrella dissident organization, Neue Forum (New Forum), was illegally formed.

The communist regime was further destabilized between August and October 1989 both by the exodus of more than 30,000 of its citizens to West Germany through Hungary (which had opened its borders with Austria in May) and by Honecker's illness during the same period.

Reform in East Germany

On 6 and 7 October 1989 the Soviet leader Mikhail Gorbachev visited East Berlin, and made plain his desire to see greater reform. This catalyzed the growing reform movement, and a wave of demonstrations (the first since 1953) swept East Berlin, Dresden, Leipzig, and smaller towns. At first, under Honecker's orders, they were violently broken up by riot police. However, the security chief, Egon Krenz, ordered a softer line and in Dresden the reformist Communist Party leader, Hans Modrow, actually marched with the protesters.

Faced with the rising tide of protest and the increasing exodus to West Germany (between 5,000 and 10,000 people a day), which caused grave disruption to the economy, Honecker was replaced as party leader and head of state by Krenz (18–24 October). In an attempt to keep up with the reform movement, Krenz sanctioned far-reaching reforms in November that effectively ended the SED monopoly of power and laid the foundations for a pluralist system. The Politburo was purged of conservative members; Modrow became prime minister and a new cabinet was formed; New Forum was legalized, and opposition parties allowed to form; and borders with the West were opened and free travel allowed, with the Berlin Wall being effectively dismantled.

Moves towards reunification

In December 1989 West German Chancellor Kohl announced a ten-point programme for reunification of the two Germanys. While the USA and USSR both called for a slower assessment of this idea, reunification was rapidly achieved on many administrative and economic levels.

By mid-December the Communist Party had largely ceased to exist as an effective power in East Germany.

Political crisis in East Germany

Following revelations of high-level corruption during the Honecker regime, Krenz was forced to resign as SED leader and head of state, being replaced by Gregor Gysi (1948– ) and Manfred Gerlach (1928– ) respectively. Honecker was placed under house arrest awaiting trial on charges of treason, corruption, and abuse of power, and the Politburo was again purged. (Honecker was finally allowed to leave Germany for exile in Chile in January 1993.)

An interim SED–opposition ‘government of national responsibility’ was formed in February 1990. The political crisis continued to deepen, with the opposition divided over reunification with West Germany, while the popular reform movement showed signs of running out of control after the storming in January of the former security-police (Stasi) headquarters in East Berlin. The economy continued to deteriorate – a total of 344,000 people had fled to West Germany in 1989 and 1,500 continued to leave daily – and countrywide work stoppages increased.

East German elections in March 1990 were won by the centre-right Alliance for Germany, a three-party coalition led by the CDU. Talks were opened with the West German government on monetary union and a treaty unifying the economic and monetary systems signed in July 1990.

Reunification

Official reunification came about on 3 October 1990, with Berlin as the capital (although the seat of government initially remained in Bonn). In mid-October new Länder elections were held in former East Germany, in which the conservative parties did well. The first all-German elections since 1932 took place on 2 December 1990, resulting in victory for Chancellor Kohl and a coalition government composed of the CDU, CSU, and FDP, with only three former East German politicians. In Berlin, which became a Land, the ruling SPD lost control of the city council to a new coalition government. The former states of East Germany resumed their status as Länder.

Social conflict

During 1991 divisions grew within the newly united nation as the economy continued to boom in the west, while in the east unemployment rose rapidly. More than 90% of Ossis (easterners) said they felt like second-class citizens, and those in work received less than half the average pay of the Wessis (westerners). Hundreds of racist attacks on foreigners took place, mainly in the east. Public support for Kohl slumped, notably after taxes were raised in order to finance both the rebuilding of the east and the German contribution to the US-led coalition against Iraq.

Economic crisis in the east

Eastern Germany's GDP fell by 15% during 1990 and was projected to decline by 20% during 1991, with a third of the workforce either unemployed or on short time. There were large anti-Kohl demonstrations and outbreaks of right-wing racist violence in eastern cities March–April 1991 as the economic crisis deepened. In western Germany, the ruling CDU suffered reverses in state elections during the spring of 1991 as Wessi voters reacted against Kohl's backtracking on his promise not to raise taxes to finance the east's economic development.

Defeat in Kohl's home Land of Rhineland–Palatinate in 1991 meant that the CDU lost, to the SPD, the majority it had held in the Bundesrat (upper chamber) since October 1990. In May 1991 Björn Engholm, the minister-president of Schleswig-Holstein since 1988, was elected chair of the SPD. He replaced Hans-Jochen Vögel, who continued as the SPD's leader within the Bundestag.

In June 1991 the Bundestag (lower chamber) voted to move to Berlin. The Bundesrat (upper chamber) the following month voted to remain in Bonn, agreeing to reconsider its decision in later years.

Racist violence

Throughout 1991 and 1992, neo-Nazi and other far-right groups continued their campaign of violence against foreigners. A shift to the right emerged in elections in Bremen in September 1991, with support for the CDU and the right-wing, anti-foreigner German People's Union rising significantly.

Recession

By January 1993 unemployment exceeded 7% and, as recession gripped the country, a 1% decline in national output was predicted for the year ahead. Rudolf Scharping took over as SPD leader in April 1993. In July, parliament introduced restrictions on asylum seekers (more refugees from the Balkan civil wars had been received by Germany than by all other countries combined). In a state election in Hesse in March 1993 support for the CDU slumped while the extreme-right Republicans captured 8% of the vote.

Kohl elected to fourth successive term

In May 1994 Chancellor Kohl's nominee, Roman Herzog, was elected president. A resurgence of the German economy helped the ruling CDU–CSU–FDP coalition to secure a narrow 10-seat majority in the October 1994 Bundestag elections. Support for the opposition SPD and the Greens increased, while the reform-communist Party of Democratic Socialism – strong in the east – achieved the election of 30 deputies. The following month Kohl was re-elected to an unprecedented fourth successive term as chancellor.

At the start of 1995 the government banned leading neo-Nazi groups in a determined effort to curb right-wing racial violence, and in June the Bundestag broke with a 50-year taboo and approved the deployment of 1,500 soldiers and medical staff in the Balkans region. This followed a 1994 constitutional court ruling that allowed for armed missions outside of the NATO region provided they were for humanitarian reasons. Support for the SPD slumped to a post-war low of 23% in state elections in Berlin in October 1995, and the following month Oskar Lafontaine replaced Rudolf Scharping as SPD leader.

Worsening economic conditions

By the end of 1995 unemployment had reached a post-war high of 3.8 million and in January 1996 the Kohl government announced a 50-point reflation plan to tackle the problem. In a bid to reduce the public sector deficit to 3% of GDP by 1997, enabling entry into the European Union's economic and monetary union (EMU) in 1999, a DM 70 billion ($46 billion) savings package was announced. Plans to reform the welfare system by cutting sick pay and job protection, raising the retirement age, and freezing public-sector pay for two years were rejected by trade unions and employers and a spate of warning strikes by public sector workers accompanied the country's entry into recession. Federal tax reforms were rejected by the country's 16 states (Länder) in May 1996. In a referendum in the same month voters in Brandenburg rejected a merger with Berlin.

In November 1996 the government announced plans for emergency spending cuts to hold the budget deficit below 3%, the ceiling set for participation in European economic and monetary union. Measures to cut social welfare benefits, including unemployment benefit and sick pay, caused widespread industrial unrest.

In January 1997 unemployment rose to a post-war record of 4.7 million, representing 12.2% of the labour force (10.6% in western Germany and 18.7% in eastern Germany).

The Social Democrats (SPD), led by the reformist Gerhard Schroeder, won the September 1998 general election, to end the 16 year chancellorship of Helmut Kohl. Schroeder formed a coalition government with the Greens, with Joschka Fischer of the Greens becoming foreign minister. Oskar Lafontaine became the new finance minister, and its former leader, Rudolf Scharping, became defence minister. Kohl resigned as leader of the Christian Democrats (CDU), and was replaced by Wolfgang Schäuble. Theo Waigel, the former finance minister and leader of the Bavarian-based Christian Social Union (CSU), one of the CDU's coalition allies, also stepped down, and was replaced as CSU leader by Edmund Stoiber, Bavaria's state premier.

In November 1998 the new chancellor, Gerhard Schroeder, in his inaugural speech to parliament, stated that job creation was his government's top priority, although it would be constrained by inherited ‘financial burdens.’ He also pledged to create a federal republic of the new centre (Neues Mittel), and stated that he would take personal charge of eastern German reconstruction. Dual citizenship was awarded to many of the seven million foreigners living in the country. Schroeder confirmed plans for the closure of nuclear power plants, but through cooperation with those within the energy sector. In January 1999, following French and British criticisms, the German government agreed to postpone a ban on the reprocessing of nuclear waste, and to delay legislation phasing out German nuclear power.

In November 1998 President Herzog moved his office from Bonn to Berlin, becoming the first federal agency to do so. The chancellor and most ministries were scheduled to move there in September 1999.

In November 1998 the ex-communist Party of Democratic Socialism (PDS) entered a governing coalition for the first time when they formed a coalition government with the Social Democratic Party (SPD) in the east German land (state) of Mecklenberg-Western Pomerania.

Reichstag reopened

The refurbished Reichstag, which was burned down in February 1933, was officially reopened in April 1999.

Racial legislation

The parliament, in May 1999, put an end to the ‘Blood Law’ of the Second Reich, under which ‘Germanness’ was deemed to reside only in the genes. An estimated four million immigrants would be able to claim German passports under an amended nationality law which was adopted by the Bundestag with a massive majority.

After a bomb in Dusseldorf in July 2000, and a series of attacks on asylum seekers in Germany, hundreds of Germans protested at neo-Nazi violence in their country in August 2000. The government responded to fears about neo-Nazis by setting up an investigation into one of Germany's far-right parties, and on 16 August announced a heavily funded government programme aimed at German youth to educate against Nazi values.

Presidential election 1999

Johannes Rau, a Social Democrat, was elected German president in May 1999. Rau, the former prime minister of North Rhine-Westphalia, was chosen by an electoral college of MPs and delegates. It was only the second time in its 50-year history that Federal Germany had a Social Democrat president.

Corruption scandal

In 1999 Kohl admitted to having received secret (and therefore illegal) donations on behalf of the Christian Democrats while he was chancellor, and the ensuing inquiry sought to establish whether the payments were connected to arms deals. In January 2000, he resigned from the honorary leadership of the party, seemingly a direct result of the revelations of the criminal investigation which also incriminated other members of the party; Schäuble resigned as leader of the Christian Democrats after admitting that in 1994 he had accepted payment from an arms dealer on behalf of his party. Manfred Kanther, party chairman, admitted financial irregularities in previous positions as aide to Kohl and former regional chief of the Christian Democrats. Friedrich Merz, the deputy leader, was elected to lead the party in parliament. The general secretary, Angela Merkel, took over the national leadership.

Kohl, meanwhile, was left to raise millions to help his party to pay the fine incurred by illegal financing under his leadership. In June 2000, he testified before a parliamentary committee investigating the scandal, but refused to name donors who contributed 2 million marks/US$950,000 to his party, as well as denying that the contributions had bought any government favours. In February 2001, he was fined 300,000 marks/US$143,000, but spared a criminal trial.

BSE crisis

The first two cases of BSE (bovine spongiform encephalopathy), or mad cow disease, detected in German-born cattle were announced on 24 November 2000. Chancellor Gerhard Schroeder banned the sale of meat-and-bone meal in all animal feed. Sales of beef in Germany slumped and farmers' organizations said the industry was on the verge of collapse. On 21 December, Austria banned all imports of German cattle and beef. The German government unveiled plans to promote organic farming and tighten controls on meat production in January 2001, but the ministers for health and for agriculture resigned a week later. At the end of January 2001, 20 cases of BSE had been confirmed in Germany, and the government, under pressure from the EU, ordered the destruction of 400,000 cattle. It also set the target that by 2006 10% of German farmland should be under organic production (the current figure was less than 3%).

Foreign minister investigated

In February 2001, prosecutors announced that Germany's foreign minister, Joschka Fischer, would be formally investigated regarding allegations that he had lied in court in January regarding his revolutionary past. The court case in question was the trial of a friend of Fischer's, Hans-Joachim Klein, who was accused of taking part in a terrorist attack on ministers from the Organization of Petroleum-Exporting Countries (OPEC) in Vienna, Austria, in 1975.

New FDP leader

Guido Westerwelle became leader of the opposition FDP in May 2001.

On 1 January 2002, euro notes and coins were introduced as the national currency. In the same month, Edmund Stoiber was selected by the CDU and the CSU as their candidate for chancellor in the general elections schedules for later in the year.

Industrial action

Thousands of industrial workers staged strikes in April in support of demands by IG Metall, the metalworkers' union, for a 6.5% wage rise in the country's biggest industries. The union promised further industrial action if employers did not increase their 2% offer.

New chancellor

Chancellor Schroeder was re-elected in September 2002, but with a much reduced majority. The close results in the elections of September 2005 was followed by coalition talks, which were finally resolved in November, with a coalition of the CDU, CSU, and SPD. Angela Merkel of the CDU became Germany's first female chancellor.

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