Family Feud

Schmidt's luck turns sour

Chancellor Helmut Schmidt's re-election last October reaffirmed his political strength in West Germany and his stature as one of the leaders of the Western alliance. Recently, however, Schmidt has been faced by mounting problems that could pose the most serious challenge to his leadership in nearly seven years as Chancellor. Last week, amid flaring controversies within his own Social Democratic Party (S.P.D.), he hastily called an emergency meeting of party leaders. "We've got to get this mess under control fast," Schmidt told aides. "Too much is at stake."

The Chancellor's quandary is how to discipline the increasingly restive left wing of his party. Leftist protests have increased ever since Schmidt reacted to a weakening economy by slashing $8 billion from the 1981 federal budget last November. At the same time, under pressure from the U.S., Schmidt also announced a 1.75% increase in defense spending. Suddenly faced with the prospect of frozen welfare spending and cuts in foreign aid and environmental programs, some 50 leftist deputies in the normally well-disciplined 218-member Social Democratic faction in the Bundestag broke ranks. Their rebellion threatened to undermine Schmidt's 45-seat parliamentary majority.

West Germany's economic performance, long the envy of the rest of the Continent, has fallen victim to rising oil prices and global inflation. Forecasts are the gloomiest in 30 years. The nation's growth rate is expected to fall from a positive 1.5% last year to minus 1.5% in 1981. The unemployment rate, 4.8% last year, may reach 6% or more, and inflation is expected to rise from 5.5% to 7%. West Germany's national debt is currently $232 billion. Nor are there any quick fixes on the horizon. "The Chancellor is depressed," confides an aide.

"He fears there is global economic disaster ahead, for which not even he seems to have a solution."

The S.P.D.'s left was also incensed by a proposed $3 billion arms sale to Saudi Arabia, which would include 300 West German-made Leopard 2 tanks. In return, the Saudis promised to stabilize West German oil prices. Together with some party moderates, the leftists objected that the Saudi sale would violate West Germany's longstanding policy against supplying arms to "areas of tension" outside NATO. Schmidt stood firm. Karl-Heinz Hansen, an S.P.D. left-winger from Duesseldorf, went so far as to denounce Schmidt's policies as "filth."

The Social Democrats' divisions were not confined to the Bundestag. After an attempted Cabinet reshuffle following a local construction scandal, rebel party members last month forced the resignation of West Berlin Mayor Dietrich Stobbe. Riot police in Hamburg chased thousands of demonstrators who had been marching in protest against a proposed new nuclear power plant 70 miles away at Brokdorf. The government-backed project was dealt a substantial blow when Hamburg Mayor Hans-Ulrich Klose, a prominent S.P.D. member, threw his support to the antinuke environmentalists.

Nervous about the Reagan Administration's commitment to arms control, the S.P.D.'s left wing is demanding that Bonn cancel a 1979 NATO agreement calling for deployment of 572 Pershing II and cruise missiles in Western Europe by the mid-1980s. Predictably, Defense Secretary Caspar Weinberger's suggestion that the U.S. might be prepared to deploy neutron warheads only intensified the anxieties. Said Erhard Eppler, a left-wing S.P.D. leader: "Western Europe must make it clear to the U.S. that we won't go along with an arms race."

While looking for ways to placate the left, Schmidt is still mainly concerned about Washington and Moscow.

His fear: the Soviets might think the protests of the Social Democratic left meant a weakening of Bonn's commitment to Western defense. Warned Schmidt: "That could be a dangerous miscalculation.

These foggy minds [on the left] don't seem to realize this." A stormy closed-door meeting of the S.P.D.'s 40-member national executive committee last week grudgingly endorsed most of Schmidt's policies. Afterward, a Schmidt ally called the meeting "an exercise in patching up and papering over." Said a Western European diplomat: "Schmidt's great strengths have been his skill and his luck. There is still widespread confidence in him. But the past month has been unlucky."

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