THE German government yesterday denied reports that the Chancellor, Dr Helmut Kohl, threatened to resign four times last week because of divisions within his centre right coalition over next year's budget. Both the Christian Democrats (CDU) and the small Liberal Free Democrats (FDP) repeated their commitment to the three party coalition yesterday but there was no sign of a resolution of the divisions between them.
The FDP is blocking proposals to increase petrol tax and postpone a cut in the "solidarity tax" levied since reunification to pay for the economic reconstruction of eastern Germany. The CDU and its Bavarian sister party, the Christian Social Union (CSU), argue that the tax rises are necessary to plug a gaping hole in next year's budget estimates.
The FDP has held a tenacious grip on power for most of the postwar era and has been part of every German government since 1969. But the current budget dispute goes to the heart of the tiny party's identity now that it has abandoned most of its social liberalism in favour of a single issue platform of cutting taxes.
"Opposition would be dangerous for the FDP, tax rises would be fatal," the party's former chairman, Count Otto Lambsdorff, said yesterday.
Senior Christian Democrats are losing patience with the FDP's blocking tactics at a time when the government is already struggling to fit into the straitjacket of the Maastricht criteria. But the CDU chairman, Mr Peter Hintze, insisted yesterday the government would overcome its problems and complete its full term in office.
"We are absolutely determined, despite the current difficulties, to continue with this coalition and deal with the challenges," he said.
According to a report in yesterday's Hamburger Morgenpost, the finance minister, Mr Theo Waigel, went to Hamburg last week to ask the former chancellor, Mr Heliput Schmidt, to broker the formation of a new coalition with the opposition Social Democrats (SPD). The newspaper suggested that, if the FDP continued to veto new tax increases, the CDU and the CSU could form a grand coalition with the SPD to take the measures needed to balance the budget and prepare Germany for Economic and Monetary Union (EMU).
Mr Schmidt, who was chancellor from 1974 until 1982, confirmed he met Mr Waigel on Thursday but declined to say what they discussed. Instead, he called on both the chancellor and the finance minister to resign over their chaotic management of the public finances.
"The only thing left to do is to make way for people with new ideas," he said.
Bavaria's finance minister Mr Erwin Huber denied that the idea of a grand coalition was floated at the meeting, and the SPD leader Mr Oskar Lafontaine repeated his call for fresh elections as soon as possible. But Germany's system of fixed term parliaments makes it difficult to call an election ahead of time and places a heavy constitutional obligation on party leaders to do all they can to avoid it. Some Social Democrats believe a grand coalition could serve their party's interests and prevent Dr Kohl from claiming all the credit if, as seems likely, the German economy improves.
The chancellor denied reports at the weekend that he was reconsidering his decision to seek a record fifth term next year and he told a group of leading CDU figures yesterday that he would devote himself "with full power" to the task of winning next year's election.
