,
Gerald Ford and
Bruno Kreisky in 1975 in
Helsinki and Schmidt in July 1977 and Schmidt in July 1977 Schmidt became
Chancellor of West Germany on 16 May 1974, after Brandt's resignation in the wake of an
espionage scandal. The worldwide economic recession was the main problem his administration faced, and Schmidt took a tough and disciplined line in the reduction of public spending. Schmidt was also active in improving relations with France. Together with the French President
Valéry Giscard d'Estaing, he was one of the fathers of the
world economic summits, the first of which assembled in 1975. In 1975, he was a signatory of the
Helsinki Accords to create the
Conference for Security and Co-operation in Europe, the precursor of today's
OSCE. In 1978, he helped set up the
European Monetary System (EMS). He remained as Chancellor after the
1976 federal election, in coalition with the liberal
Free Democratic Party (FDP). He adopted a tough, uncompromising line with the indigenous
Red Army Faction (RAF) extremists. In October 1977, he ordered an anti-terrorist unit of
Bundesgrenzschutz policemen to end the
Palestinian terrorist
hijacking of a
Lufthansa aircraft named
Landshut, staged to secure the release of imprisoned RAF leaders, after it landed in
Mogadishu,
Somalia. Three of the four kidnappers were killed during the assault on the plane, but all 86 passengers were rescued unharmed. Schmidt was
re-elected as Chancellor in November 1980. Concerned about the
Soviet invasion of Afghanistan, and the Soviet superiority regarding missiles in
Central Europe, Schmidt issued proposals resulting in the
NATO Double-Track Decision, concerning the deployment of medium-range nuclear missiles in
Western Europe, should the Soviets not disarm. This decision was unpopular with the German public. A mass demonstration against the deployment mobilised 400,000 people in October 1981. At the beginning of his period as chancellor, Schmidt was a proponent of
Keynesian economics, and pursued expansionary monetary and fiscal policies during his tenure. Between 1979 and 1982, the Schmidt administration pursued such policies in an effort to reduce unemployment. These were moderately successful, as the fiscal measures introduced after 1977, with reductions in income and wealth taxes and an increase in the medium-term public investment programme, were estimated to have created 160,000 additional jobs in 1978–1979 or 300,000 if additional public sector employment was included in the figure. The small reduction in the unemployment rate, however, was achieved at the cost of a larger budget deficit (which rose from 31.2 billion
DM to 75.7 billion DM in 1981), brought about by fiscal expansion. During the 1970s,
West Germany was able to weather the
global financial storm far better than almost all the other developed countries, with unemployment and inflation kept at comparatively low levels. During the 1976 election campaign, the SPD/FDP coalition was able to win the battle of statistics, whether the figures related to employees' incomes, strikes, unemployment, growth, or public sector debts. Amongst other social improvements, old age pensions had been doubled between 1969 and 1976, and unemployment benefits increased to 68% of previous earnings. Whilst visiting
Saudi Arabia in April 1981, Schmidt made some unguarded remarks about the
Israeli–Palestinian conflict that succeeded in aggravating the delicate relations between
Israel and West Germany. Asked by a reporter about the moral aspect of German-Israeli relations, he stated that Israel was not in a position to criticise Germany due to its handling of Palestinians, and "That won't do. And in particular, it won't do for a German living in a divided nation and laying moral claim to the right of self-determination for the German people. One must then recognise the moral claim of the Palestinian people to the right of self-determination." On 3 May, Israeli Prime Minister
Menachem Begin denounced Schmidt as "unprincipled, avaricious, heartless, and lacking in human feeling", and stated that he had "willingly served in the German armies that murdered millions." Begin was also upset over remarks that Schmidt had made on West German television the previous week, in which he spoke apologetically about the suffering Germany inflicted on various nations during
World War II; but made no mention of the
Jews. On his flight home from
Riyadh, Schmidt told his advisers that war guilt could not continue to affect Germany's foreign relations. Schmidt was the first world leader to call upon newly elected French president
François Mitterrand, who visited
Bonn in July 1981. The two found themselves in "complete agreement" on foreign policy matters and relations with the United States and the
Soviet Union, but differed on trade and economic issues. By the end of his term, however, Schmidt had turned away from
deficit spending, due to a deteriorating economic situation, and a number of welfare cuts were carried out,
Domestic reforms Although Schmidt did not feel that he was in a position to substantially extend the social reforms of the
Brandt Administration, due to the economic problems he encountered during his time as chancellor, a wide range of reforms were nevertheless carried out under his administration. Increases were made to
pensions, which went up in numerical terms. Adjusted for changes in the annual price index, pensions went up in real terms. However, the rate of pension was not changed in 1978 (even though prices increased by 2.7%), and in 1980 and 1981 the real value of pensions fell by 1.5% and 2.3%, respectively. Improvements were made in family allowances, with monthly subsidies for children increased by over 100% in 1975. Improvements were made to invalidity and old-age pension provision for the unemployed, who (from 1977 onwards) were technically insured free of charge under the old-age pension and invalidity scheme. Previously, there had only existed partial and restricted coverage for the unemployed. The Law to Improve Occupational Old Age Pensions (1974) extended coverage of occupational pensions, whilst also "co-ordinating them more closely with state pensions and setting minimum standards as regards benefit levels and the preservation of pension rights". By 1976, as a result of this legislation, 65% of private sector employees were covered by occupational schemes, and over two-thirds of these workers were eligible for benefits equal to more than 15% of their earnings at retirement. and in 1979, an Act was passed which lowered the pensionable age for severely disabled persons to 61 years, and to 60 years as from 1980. In October 1974, the Rehabilitation Benefits Alignment Act was passed, with the intention of promoting the rehabilitation of the disabled by extending certain benefits to them. To meet the need for more uniform medical treatment in rural areas and on the peripheral of cities due to a lack of panel doctors in those areas, a bill was passed in December 1976 which improved the possibilities of panel doctors' associations by ensuring that panel doctors were available to provide treatment, while also providing for planning according to need and the participation of the sickness insurances. An Act of August 1975 on criminal law reform introduced "other forms of assistance" such as medical advice on contraception, together with assistance pertaining to sterilisation and abortion. New assistance benefits were created in 1975 for family planning and maternity consultations, whilst a constant attendance allowance was increased. Housing renovation and energy savings legislation was introduced in 1977, while a constitutional reform of 1981 increased federal powers in health and education. In July 1974, special benefits were introduced to compensate for wages not paid as a result of bankruptcy for a maximum of up to three months. Increases in income limits for housing allowances were carried out, together with housing allowance rates, while major improvements were made in welfare provision for the elderly. By 1982, the purchasing power of the average pension was 2.5% better than in 1975. Under the law of June 1974, the residents could participate in the management of the establishment through a consultative committee. Additional tax reforms were introduced that lowered the tax burden on low-income households, and which played an important role "in pre-empting a real decline in the income and purchasing power of workers". while 250 million marks was provided in 1978 for the promotion of sports and physical education. That same year, entitlement to educational allowances was extended to all tenth-grade pupils in vocational education. Several policy changes were carried out between 1976 and 1982, such as tax credits and family allowances, which compensated unions for
wage restraint and "guaranteed the maintenance of a constant income level for employed persons and their families". The Students' Sickness Insurance Law (1975) extended compulsory coverage to students (medical benefits only), while the Artists' Social Insurance Law (1981) introduced compulsory insurance for artists below a certain income-limit. In 1975, the allowable duration of unemployment benefit payment was extended to twenty-four months during periods of general recession. The Higher Education Framework Act of 1976 pronounced that scientific continuing education was a task to be implemented by the institutions of the system of higher education, thus exceeding their traditional tasks of research and lecturing. In 1977, an "investment programme for the future" was decided upon by the Schmidt Administration, which provided DM 16 thousand million for the improvement of the transport system, an efficient and ecological energy supply, provisions for water supply, vocational training, and the safeguarding of the environment. Under a regulation of December 1976, four new occupational diseases were recognised. The social protection of civil servants and judges ( and ) was standardised and improved by a law of August 1974. Under a law of May 1976, victims of acts of violence and their survivors would in future have the right to compensation in respect of the physical and economic consequences in the same manner as protection for war victims. limited sentences in all but the gravest cases to 15 years, and proclaimed rehabilitation to be the objective of incarceration. In 1977, a Sex Discrimination Act was passed. == Life after politics ==