Schroder's spin-doctor pushed out

GERHARD SCHRoDER'S meandering course through the German political landscape took an astonishing turn yesterday when the Chancellor eased Bodo Hombach, the Teutonic answer to Peter Mandelson, out of government.

Mr Hombach, Mr Schroder's powerful guru, is to be recommended for the job of EU co-ordinator for the Balkan Stability Pact.

The scheme is a German idea, and Bonn therefore expects its nominee to be approved by other EU states.

In a curt statement, Mr Schroder spoke of his "best man" in glowing terms, saying that he was sacrificed with reluctance for such an important task.

Since this same Chancellor is proposing an inexperienced lightweight to the equally substantial job of EU commissioner, this explanation appeared far from complete.

Rather, Mr Hombach's removal seemed to be an attempt to mend fences with the left wing of the Social Democrat party, just as the government is pushing through right-wing economic policies. This, at least, is how Mr Schroder has operated in the past; playing factions against each other as he consolidated his own position in the middle.

Until recently, Mr Hombach was extremely useful.

His was the election strategy which propelled the Social Democrats to power last September. It was he who had articulated the ideology of the "New Centre" - German for "Third Way".

As chancellery minister, Mr Hombach built an alternative administration which sought to bypass the government that was run in the first months by Oskar Lafontaine. He was behind the dirty tricks campaign which drove Mr Lafontaine, the darling of the left, into the wilderness.

After that triumph, though, the corpulent fixer was a marked man.

The left plotted revenge, the parliamentary party openly demanded Mr Hombach's head. Despite being seen as probably the most competent member of the administration, he was blamed for the chaotic presentation of policies.

A scandal over private affairs was also refusing to go away. Strangely mirroring the fate of his British alter ego, Mr Hombach has been dogged by allegations that he did not pay for his rather splendid house entirely out of his own pocket.

Mr Hombach's departure does not signal a return to leftist policies, only weeks after the launch of the joint Blair-Schroder paper. That much was made clear yesterday, when the government presented to parliament the most austere budget in Germany's post-war history.

It was an occasion for role reversals, with the Social Democrats promising to fill corporate coffers, and the Christian Democrats pleading on behalf of the poor.

"We can no longer continue to live beyond our means," exhorted the Finance Minister, Hans Eichel. "That would be irresponsible towards our children and Germany's future."

Mr Eichel, the rising star of the moment, is proposing to shave DM30bn (pounds 10bn) off next year's budget, while cutting corporate taxes at the same time. Breaking a direct electoral pledge, pensions will not rise in line with wages for the next two years. Petrol prices will soar and social expenditure will be pruned back.

The opposition Christian Democrats, who had always wanted to pursue these kind of policies but never had enough strength to implement them under Helmut Kohl, reacted glumly. Friedrich Merz, the CDU's finance expert, was especially appalled by the government's "arbitrary intervention in the social welfare system".

After blowing a kiss to the left, Mr Schroder's logical next step is towards the right.

A reshuffle is in the air, one in which Jurgen Trittin, the Greens' quarrelsome Environment Minister, and Walter Riester, the Labour Minister, are likely to be shown the door.