The Saturday Profile: Oskar Lafontaine: Europe's most dangerous man?

Oskar Lafontaine, German Finance Minister

THERE IS a little man in Germany who looks very much like Napoleon, bangs on about "harmonising" all things European from cucumbers to taxes, and in political outlook harks back to the idyllic pre-Thatcher days of socialism. If he did not exist, he would have to be invented by British Euro-sceptics. But Oskar Lafontaine, Finance Minister of Germany and so much else, is flesh and blood. He may well be the embodiment of the Gallic- Teutonic monster the Murdoch press has been warning us about all these years.

Not since the glorious "Up your Delors" days has The Sun had so much fun. Mr Lafontaine, the readers were told this week, poses the greatest threat to Britain's independence since 1945. That would appear to rank the Finance Minister on the Richter scale of evil alongside Adolf Hitler, and streets ahead of previous bogeymen, such as Helmut Kohl. And Mr Lafontaine has only been in his job for a month.

But his words speak for themselves. "It must remain our goal to overcome the nation state in a united Europe," he said. This is heady stuff, but before someone at Wapping's Agitprop department is fired for missing such a damning confession, it should be stated that Mr Lafontaine uttered those words in 1990 at the time of German re-unification. Then the candidate of the Social Democrat party, he was voicing concern at German enlargement. He was, in this respect, an ally of Margaret Thatcher.

In subsequent years, Mr Lafontaine's scepticism was to overlap with the British variety again. He was against European monetary union, and as recently as two years ago, he was arguing for postponement, because he felt the project was threatening jobs. Baroness Thatcher would have approved.

And now, Mr Lafontaine is finding himself, unwittingly, allied to British Eurosceptics once more. In his brief tenure, he has already succeeded in shaking bankers' confidence in monetary union, creating the myth of the "red euro". To top it all, he goes all around Europe telling everyone to bring their taxes and wages in line with Germany's. Is there no stopping this man?

The answer is probably "no". Oskar Lafontaine's life is a tapestry of immense certitude, punctuated by moments of self-doubt brought on by crushing defeats. Born 55 years ago in the mining town of Saarlouis near the French border, Mr Lafontaine lost his father in the war and was educated by Jesuits. His dogmatic outlook on life is said to be the result of this upbringing; a childhood of privations in French-occupied Saarland.

His family were working class. The Jesuits instilled in Oskar a code of ethics that is still with him today. His vision is almost Utopian socialist. Fairness and social justice are, for him, a question of morality, not of economics. Indeed, economics did not interest him at all in his younger years. At university Mr Lafontaine studied physics.

He discovered politics at a relatively late stage of his life, joining the Social Democrat party at the age of 23, but quickly made up for lost time. A brilliant orator, Mr Lafontaine dazzled audiences with his charm and wit, and eventually caught the eye of Willy Brandt, arguably the Social Democrats' greatest Chancellor.

The combination of his own rising popularity, and help from head office in Bonn, propelled Mr Lafontaine quickly up the career ladder. In 1974, at the age of 31, he was elected deputy mayor of Saarbrucken, capital of his home region. He was mayor two years later, and a year after that he became leader of the SPD in Saarland.

The chances of a local politician from one of the the least significant Lander of Germany being noticed were minimal. Yet, in 1982, Mr Lafontaine achieved national fame when he made a stand against the deployment of US nuclear weapons on German soil. Then still only mayor, he took part in sit-ins, opposing the policies of the Social Democrat Chancellor of the day, Helmut Schmidt.

The party was splitting down the middle, and Mr Lafontaine was lining up with the wing led by Brandt, who was then SPD chairman. Even by the sectarian standards of the day, Mr Lafontaine was something of an extremist. He advocated not only nuclear disarmament, but also the removal of Allied troops from the soil of West Germany, and Germany's withdrawal from Nato's military structure.

Despite his growing notoriety nation-wide, on his home turf Mr Lafontaine was unstoppable. In 1985, he scored an electoral triumph in Saarland, sweeping the SPD into power for the first time with an absolute majority. He inherited a rust-belt saddled with massive debts, and proceeded to restructure the bankrupt steel mills and coal mines. Already, at this time, it was becoming clear that Mr Lafontaine would not easily be pigeon- holed into traditional socialist slots. His answer to the problems of a region crying out for modernisation was unconventional for the times. Always on the look-out for a big idea, the new Prime Minister of Saarland struck upon "eco-socialism", a creed that eschews growth and, naturally, nuclear power, in favour of environmental concerns.

His government borrowed and borrowed, pumping vast resources into cleaning up industry. The mines and the steel mills were kept, but their chimneys were no longer belching. Jobs were preserved, too, owing to heavy public investment. The greatest legacy of Oskar Lafontaine's 13 years in charge of Saarland is a bankrupt foundry which now makes a profit as a theme park. Or the fact that unemployment stands where it stood in 1985, whereas in most of western Germany, it has doubled in that time. Or the regional government's debt burden: nearly twice what it was 13 years ago.

In a candid moment, Mr Lafontaine might now concede that not everything went according to plan in Saarbrucken. He had counted on more help from the private sector, but companies looking for green field sites were often enticed by more favourable tax regimes across the border in Lorraine or Luxembourg.

There are two ways to look at this situation: either the German system or the neighbours were at fault. In Mr Lafontaine's eyes, it is the foreign tax regime that is wrong. Many of Saarland's, and Germany's, economic problems could be solved if other countries could be prevented from practising "beggar-your-neighbour" policies. In other words: harmonise taxes across the EU, and wages too, because they are also unfair.

But we are rushing ahead. For parallel to his administrative career in Saarland, Mr Lafontaine was making his mark on national politics. In 1987, after another SPD defeat, Mr Lafontaine was elected deputy leader under Hans-Jochen Vogel and took charge of a committee which drafted the party's first new national programme in 30 years. The programme's key element, in response to the rising threat from the Greens, was eco-socialism.

Mr Lafontaine could have had the party chairmanship, but he declined, opting instead for a run against Helmut Kohl in the 1990 elections as the SPD's Chancellor candidate. Characteristically, he was very sure of himself. The polls put him way ahead of Mr Kohl, and Mr Lafontaine had added up the cost of German re-unification, and had discovered that the Chancellor had done his sums wrong. He was also certain that the (West) German people were not very enthusiastic about the project.

Both were miscalculations. Mr Kohl had, it was to emerge later, under- estimated the true price tag, but Germans, especially the new voters in the east, had been put off by Mr Lafontaine's unpatriotic and divisive rhetoric. While on the campaign trail, Mr Lafontaine also fell victim to an assassination attempt, when a deranged woman bearing two bouquets of flowers stabbed him in the neck.

He is lucky to be alive now, and even today, the Finance Minister looks extremely nervous in crowds. He made a full recovery, but his annus horribilis was sealed with the SPD's worst electoral result since 1957. The old certainties gone, Mr Lafontaine beat a retreat to Saarland and fell into a deep depression.

He weathered two corruption scandals at home, divorced and married for the third time, and three years ago, he bounced back. His moment came at an SPD conference in Mannheim, convened as the party stood at its lowest in the polls following a year of infighting. Rudolf Scharping, the SPD chairman, asked for "clarity" in his position. Mr Lafontaine stood up and delivered the best speech of his life to thunderous applause. Next morning, he put his name forward and won in an instant ballot.

The question of who would stand against Mr Kohl was deliberately left open. For once, Mr Lafontaine was not so sure of his own chances, but seemed deeply impressed by the vote-pulling power of Gerhard Schroder. No formal agreement was ever struck, but the two men, a bit like Tony Blair and Gordon Brown, reached an informal understanding that if Mr Schroder were to prove himself as the candidate with the best chance, Mr Lafontaine would not oppose him.

Mr Schroder delivered the votes earlier this year in his home turf in Lower Saxony. Mr Lafontaine, meanwhile, settled the nerves of the party's ranks. In September, the "nightmare ticket" of Mr Lafontaine at the helm of the party, and Mr Schroder as its candidate for Chancellor, brought the Social Democrats back into power after 16 years in the wilderness.

While Mr Lafontaine was busy reshaping his party, he was also fine-tuning his views with the help of his latest wife, Christa Muller, an economist who used to work for the Social Democrats. Now the search for a new dogma is over. In the age of globalisation, Mr Lafontaine thinks the "global casino" of the currency markets poses the greatest threat to social equilibrium. The euro is thus a Good Thing, provided its exchange rate can be harmonised with the dollar and the yen.

Wages and taxes, meanwhile, should be brought in line in the rest of Europe, and industry boosted, Saarland-style, by the injection of vast public funds. The central banks would keep the cost of state borrowing low by reducing interest rates.

There is no evidence to suggest that Chancellor Schroder believes in any of this. But Mr Lafontaine is chairman of the party, and as Willy Brandt has shown with the help of his Saarland protege, the party can destroy the Chancellor. The Finance Minister has already built up a formidable power base within the government, and no policy area seems beyond his ambitious grasp. At home, his tax policies are heading for spectacular failure, but Mr Lafontaine is convinced he is right and everyone else wrong. He will not budge, at least until the next big idea comes along.

Imre Karacs

Life Story

Origins: Age: 55. Working class parents, father died on the front.

Education: From age nine at the Catholic boarding school of Prum. Studied physics at universities of Saarbrucken and Bonn.

Vital statistics: Married three times, currently to economist Christa Muller. Children: Frederic, aged 16; Carl Maurice, 19 months.

Lifestyle: The proud owner of a house in Chianti country, which boasts a wine cellar with an impressive range of Burgundy.

Scandals: Forced to pay back DM110,000 he received when he "retired" from job of Saarbrucken mayor. Implicated in the "Red Light District affair", when he was found to have cultivated dubious contacts with members of the local underworld.

Image: Bonaparte of the Saar, Schroder's red shadow, and a garden gnome (right).

Prizes: "Golden Microphone" awarded by the German Society of Political Rhetoric.

Coveted jobs: President of the European Commission (alleged), Pope (admitted).