German economics minister quits in 'letterhead' scandal

THE GERMAN Economics Minister and Vice-Chancellor, Jurgen Mollemann, resigned yesterday, overwhelmed by revelations that he misused his office to promote a product manufactured by the company of a relative.

Mr Mollemann was one of the most outspoken free-marketeers in the German government. As a firm supporter of Gatt, his absence will be sharply felt by the British. The downfall of the highly ambitious Mr Mollemann eliminates one of the key contenders for the leadership of the Free Democratic Party (FDP) when Otto Graf Lambsdorff steps down in the summer.

Although the junior partner in the centre-right coalition headed by the Christian Democrats, the FDP has traditionally played the role of kingmaker. The FDP's decision on whether to stick with the ruling coalition or to switch sides to the Social Democrats could be decisive in shaping Germany's political future at the next general election at the end of 1994.

Mr Mollemann's main rival, the Foreign Minister, Klaus Kinkel, is now the strongest contender for the key political post of FDP leader. The combination of two such high offices would transform Mr Kinkel into a political heavyweight, restoring some of the discipline and influence lost by the FDP when Hans-Dietrich Genscher retired as foreign minister last spring.

The resulting power vacuum in the FDP and the undisguised manoeuvring between the main pretenders - particularly Mr Mollemann and Mr Kinkel - contributed to the overwhelming sense of debilitation pervading Chancellor Helmut Kohl's administration.

While paving the way for an eventual restoration of order within the FDP, the immediate effect of Mr Mollemann's undignified departure is to strengthen the impression of drift and disarray in the governing coalition. The Economics Minister is the fifth member of Mr Kohl's cabinet to depart in the past nine months.

Confidence in the government's handling of Germany's mounting economic difficulties is at a low point, while severe doubts persist among the population at the effectiveness of efforts to deal with the most pressing political issues, such as asylum. Chancellor Kohl had set great store by a planned mid-term cabinet reshuffle later this month to improve his team's lacklustre image.

The sudden departure of the Economics Minister - responsible for the hugely expensive 'Upswing East' subsidy programme for eastern Germany, which has failed to deliver the long-promised recovery - makes the reshuffle all the more important.

Mr Mollemann, while a tireless self-promoter and acknowledged political operator, was not regarded as an economic heavyweight. At a time when the household names of German industry are facing unexpected difficulties, there have been growing calls for an industrial leader, or some equivalent person of substance, to take control of Germany's economic policies.

Pressure grew on Mr Mollemann, 47, to resign following revelations before Christmas that official ministerial letters, bearing his signature, had been sent to leading supermarket chains recommending the product of a cousin's company.

After originally saying the letters were sent without his knowledge on pre-signed paper, Mr Mollemann admitted yesterday he had signed them, but blamed overwork for not realising what he was doing.

Maintaining his innocence of any wrongdoing, Mr Mollemann said he was stepping down to avoid further damage to the party and the government. As the so- called 'Letterhead Affair' developed, most of Mr Mollemann's ministerial and party colleagues were conspicuous by their lack of support for the beleaguered Economics Minister.

(Photograph omitted)