Cabinets First cabinet, 1998–2002 Following the
1998 national elections, Schröder became chancellor as head of an SPD-Green coalition. Throughout his campaign for chancellor, he portrayed himself as a pragmatic
new Social Democrat who would promote economic growth while strengthening Germany's generous social welfare system. After the resignation of
Oskar Lafontaine as
Leader of the Social Democratic Party in March 1999, in protest at Schröder's adoption of a number of what Lafontaine considered "
neo-liberal" policies, Schröder took over his rival's office as well. In April 1999, in Germany's first session in the restored Reichstag, to applause, he quoted Albanian writer
Ismail Kadare, saying: "The Balkans is the yard of the European house, and in no house can peace prevail so long as people kill each other in its yard." In a move meant to signal a deepening alliance between Schröder and Prime Minister
Tony Blair of the United Kingdom, the two leaders issued an eighteen-page manifesto for economic reform in June 1999. Titled "Europe: The Third Way", or in German, it called on Europe's centre-left governments to cut taxes, pursue labour and welfare reforms and encourage entrepreneurship. The joint paper said European governments needed to adopt a "supply-side agenda" to respond to globalisation, the demands of capital markets and technological change. Schröder's efforts backfired within his own party, where its left wing rejected the Schröder–Blair call for cutbacks to the welfare state and pro-business policies. Instead, the paper took part of the blame for a succession of six German state election losses in 1999 for the Social Democratic Party. Only by 2000, Schröder managed to capitalise on the
donations scandal of his Christian Democratic opposition to push through a landmark tax reform bill and re-establish his dominance of the German political scene. Schröder's tenure oversaw
the seat of government move from
Bonn to
Berlin. In May 2001, Schröder moved to his new official residence, the
Federal Chancellery in Berlin, almost two years after the city became the seat of the German Government. He had previously been working out of the building in
eastern Berlin used by the former leaders of
East Germany.
Second cabinet, 2002–2005 Throughout the build-up to the
2002 German election, the Social Democrats and the Green Party trailed the centre-right candidate
Edmund Stoiber until the catastrophe caused by
rising floodwater in Germany led to an improvement in his polling numbers. Furthermore, his popular opposition to a war in
Iraq dominated campaigning in the run-up to the polls. At the 22 September 2002 vote, he secured another four-year term, with a narrow nine-seat majority down from 21. In February 2004, Schröder resigned as chairman of the SPD amid growing criticism from across his own party of his reform agenda;
Franz Müntefering succeeded him as chairman. On 22 May 2005, after the SPD lost to the
Christian Democrats (CDU) in
North Rhine-Westphalia, Gerhard Schröder announced he would call federal elections "as soon as possible". A
motion of confidence was subsequently defeated in the
Bundestag on 1 July 2005 by 151 to 296 (with 148 abstaining), after Schröder urged members not to vote for his government in order to trigger new elections. In response, a grouping of left-wing SPD dissidents and the
Party of Democratic Socialism agreed to run on a joint ticket in the general election, with Schröder's rival
Oskar Lafontaine leading the new group. The 2005
German federal elections were held on 18 September. After the elections, neither Schröder's SPD-Green coalition nor the alliance between CDU/CSU and the FDP led by
Angela Merkel achieved a majority in parliament, but the CDU/CSU had a stronger popular electoral lead by one percentage point. On election night, both Schröder and Merkel claimed victory and chancellorship, but after initially ruling out a
grand coalition with Merkel, Schröder and Müntefering entered negotiations with her and the CSU's
Edmund Stoiber. On 10 October, it was announced that the parties had agreed to form a grand coalition. Schröder agreed to cede the chancellorship to Merkel, but the SPD would hold the majority of government posts and retain considerable control of government policy. Merkel was elected chancellor on 22 November. On 11 October 2005, Schröder announced that he would not take a post
in the new cabinet and, in November, he confirmed that he would leave politics as soon as Merkel took office. On 23 November 2005, he resigned his
Bundestag seat. On 14 November 2005, at an SPD conference in
Karlsruhe, Schröder urged members of the SPD to support the proposed coalition, saying it "carries unmistakably, perhaps primarily, the imprint of the Social Democrats". Many SPD members had previously indicated that they supported the coalition, which would have continued the policies of Schröder's government, but had objected to
Angela Merkel replacing him as chancellor. The conference voted overwhelmingly to approve the deal.
Domestic policies In his first term, Schröder's government decided to phase out
nuclear power, fund
renewable energies, institute
civil unions for same-sex partners, and liberalise the
naturalization law. During Schröder's time in office, economic growth slowed to only 0.2% in 2002 and Gross Domestic Product shrank in 2003, while German unemployment was over the 10% mark. Most voters soon associated Schröder with the
Agenda 2010 reform program, which included cuts in the
social welfare system (
national health insurance,
unemployment payments, pensions), lower taxes, and reformed regulations on employment and payment. He also eliminated capital gains tax on the sale of corporate stocks in an attempt to make the country more attractive to foreign investors. After the 2002 election, the SPD steadily lost support in opinion polls. Many increasingly perceived Schröder's
Third Way program to be a dismantling of the German
welfare state. Moreover, Germany's high unemployment rate remained a serious problem for the government. Schröder's tax policies were also unpopular; when the satirical radio show
The Gerd Show released
The Tax Song (), featuring Schröder's voice (by impressionist
Elmar Brandt) lampooning Germany's
indirect taxation, it became Germany's 2002 Christmas #1 hit and sold over a million copies. The fact that Schröder served on the
Volkswagen board (a position that came with his position as
minister-president of Lower Saxony) and tended to prefer pro-car policies led to him being nicknamed the car chancellor ().
European integration In 1997, Schröder joined the minister-presidents of two other German states,
Kurt Biedenkopf and
Edmund Stoiber, in making the case for a five-year delay in Europe's currency union. After taking office, he made his first official trip abroad to France for meetings with President
Jacques Chirac and Prime Minister
Lionel Jospin in October 1998. A 2001 meeting held by both leaders in
Blaesheim later gave the name to a regular series of informal meetings between the French president, the German chancellor, and their foreign ministers. The meetings were held alternately in France and Germany. At the fortieth anniversary of the
Elysée Treaty, both sides agreed that rather than summits being held twice a year, there would now be regular meetings of a council of French and German ministers overseen by their respective foreign affairs ministers. In an unprecedented move, Chirac formally agreed to represent Schröder in his absence at a
European Council meeting in October 2003. In his first months in office, Schröder vigorously demanded that Germany's net annual contribution of about $12,000,000,000 to the
budget of the European Union be cut, saying his country was paying most for European "waste." He later moderated his views when his government held the rotating
Presidency of the Council of the European Union in 1999. In 2003, Schröder and Chirac agreed to share power in the
institutions of the European Union between a
president of the European Commission, elected by the
European Parliament, and a full-time
President of the European Council, chosen by heads of state and government; their agreement later formed the basis of discussions at the
Convention on the Future of Europe and became law with the entry into force of the
Treaty of Lisbon. Ahead of the
French referendum on a European Constitution, Schröder joined Chirac in urging French voters to back the new treaty, which would have enshrined new rules for the expanded EU of 25 member states and widened the areas of collective action. Also in 2003, both Schröder and Chirac forced a suspension of sanctions both faced for breaching the European Union's fiscal rules that underpin the
euro – the
Stability and Growth Pact – for three years in a row. Schröder later called for a revision of the
Lisbon Strategy and thereby a retreat from Europe's goal of overtaking the United States as the world's most competitive economy by 2010. Instead, he urged the EU to reform the Pact to encourage growth and to seek the reorientation of the €100,000,000,000 annual
EU budget towards research and innovation. By 2005, he had successfully pushed for an agreement on sweeping plans to rewrite the Pact, which now allowed EU members with deficits above the original 3% of GDP limit to cite the costs of "the reunification of Europe" as a mitigating factor. Schröder was regarded a strong ally of Prime Minister
Leszek Miller of
Poland and supporter of the
2004 enlargement of the European Union. On 1 August 2004, the sixtieth anniversary of the 1944
Warsaw Uprising, he apologised to Poland for "the immeasurable suffering" of its people during the conflict; he was the first German chancellor to be invited to an anniversary of the uprising. Both Schröder and Foreign Minister Joschka Fischer also supported the
accession of Turkey to the European Union.
Foreign policy on 6 December 2000 in
Washington on 9 October 2001 Marking a clear break with the caution of German foreign policy since World War II, Schröder laid out in 1999 his vision of the country's international role, describing Germany as "a
great power in Europe" that would not hesitate to pursue its national interests. Schröder also continued the established Social Democratic political tradition of
Wandel durch Handel. Schröder also began seeking a resolution and ways to compensate Nazi-era slave labourers almost as soon as he was elected chancellor. Reversing the hard-line stance of his predecessor,
Helmut Kohl, he agreed to the government contributing alongside industry to a
fund that would compensate people forced to work in German factories by the Nazi regime and appointed
Otto Graf Lambsdorff to represent German industry in the negotiations with survivors' organisations, American lawyers and the US government. Schröder sent forces to
Kosovo and to
Afghanistan as part of
NATO operations. Until Schröder's chancellorship, German troops had not taken part in combat actions since
World War II. At the beginning of the
Iraq crisis, Schröder declared in March 2002 that Germany would not take part in the Iraq war without a UN mandate. In the summer of 2002, during the federal election campaign, he proclaimed the "German Way" as an alternative to the "American warmongering" in Iraq and presented Germany as a peace power. In May 2019 at
WORLD.MINDS in Belgrade, 20 years to the day after the
bombing of Belgrade by
NATO troops, Schröder stated unequivocally that in retrospect, if he had to make the decision again, he would authorize the
aerial bombardment of the former Yugoslavia again. Schröder said that "the easiest solution would be to first accept Serbia into the European Union and then within, as an integral part the EU, find a solution [to the Kosovo issue]." With Germany having a long experience with
terrorism itself, Schröder declared solidarity with the United States after the
September 11 attacks in 2001. When Schröder left office, Germany had 2,000 troops in Afghanistan, the largest contingent from any nation other than the United States, UK, France, Canada and after two years Afghanistan.
China During his time in office, Schröder visited
China six times. He was the first Western politician to travel to
Beijing and apologise after NATO jets had
mistakenly bombed the Chinese Embassy in Belgrade in 1999. In 2004, he and Chinese premier
Wen Jiabao established a secure, direct telephone line. He also pressed for the lifting of the EU
arms embargo on China.
Middle East During their time in government, both Schröder and his foreign minister
Joschka Fischer were widely considered sincerely, if not uncritically, pro-
Israel. In 2004, he declared that "the existence of a state of Israel within secure borders was an historic and political responsibility that is a pillar of our foreign policy." Schröder represented the German government at the funeral service for
King Hussein of Jordan in
Amman on 9 February 1999. When British planes joined United States forces
bombing Iraq without consulting the
United Nations Security Council in December 1998, Schröder pledged "unlimited solidarity". But, along with French president
Jacques Chirac and many other world leaders, Schröder later spoke out strongly against the
2003 invasion of Iraq and refused any military assistance in that invasion. Schröder's stance caused political friction between the US and Germany, in particular because he used this topic for his 2002 election campaign. Schröder's stance set the stage for alleged anti-American statements by members of the SPD. The parliamentary leader of the SPD,
Ludwig Stiegler, compared US president
George W. Bush to
Julius Caesar while Schröder's minister of justice,
Herta Däubler-Gmelin, likened Bush's foreign policy to that of
Adolf Hitler. Schröder's critics accused him of enhancing and campaigning on anti-American sentiments in Germany. After his 2002 re-election, Schröder and Bush rarely met, and their animosity was seen as a widening political gap between the US and Europe. Bush stated in his memoirs that Schröder initially promised to support the Iraq war but changed his mind with the upcoming German elections and public opinion strongly against the invasion, to which Schröder responded saying that Bush was "not telling the truth". When asked in March 2003 if he was self-critical about his position on Iraq, Schröder replied, "I very much regret there were excessive statements" from himself and former members of his government (which capitalised on the war's unpopularity).
Russia at a dinner in Weimar, Germany, on 9 April 2002 during the
Victory Day Parade in Moscow, on 9 May 2005 On his first official trip to Russia in late 1998, Schröder suggested that Germany was not likely to come up with more aid for the country. He also sought to detach himself from the close personal relationship that his predecessor,
Helmut Kohl, had with Russian president
Boris Yeltsin, saying that German-Russian relations should "develop independently of concrete political figures." Soon after, however, he cultivated close ties with Yeltsin's successor, President
Vladimir Putin, in an attempt to strengthen the "strategic partnership" between Berlin and Moscow, including the opening of a gas pipeline over the
Baltic Sea exclusively between Russia and Germany (see
"Gazprom controversy" below). During his time in office, he visited the country five times. Schröder was criticised in the media, and subsequently by Angela Merkel, for calling Putin a "flawless democrat" on 22 November 2004, only days before Putin prematurely congratulated
Viktor Yanukovich during the
Orange Revolution. In 2005, Schröder suggested at the ceremonial introduction of the
Airbus A380 in Toulouse that there was still "room in the boat" of
EADS for Russia. In his last days in office in 2005, he signed a deal between Germany and Russian state-owned
Gazprom to build
Nord Stream 1 before leaving office and almost immediately joining the pipeline company's board. He rejected criticism of the move and announced legal action over reports he would be paid between €200,000 (£134,000) and €1m a year. In 2022, he was reportedly paid about $270,000 a year as chairman of the shareholder committee. Only a few days after his chancellorship, Schröder joined the board of directors of the Nord Stream joint venture, thus bringing about new speculations about his prior objectivity. In his memoirs
Decisions: My Life in Politics, Schröder still defends his friend and political ally and states that "it would be wrong to place excessive demands on Russia when it comes to the rate of domestic political reform and democratic development, or to judge it solely on the basis of the Chechnya conflict." Schröder's continued close connection to Vladimir Putin and his government after his chancellorship has been widely criticised in
Germany. == After chancellorship ==