TONY BLAIR, apparently liberated by his decision not to run again after these elections, is giving barely an inch on the more “Conservative” parts of his agenda.

Not so Gerhard Schröder, the German Chancellor, and Blair’s former partner in the “Third Way”. Just weeks before a landmark state election in Germany’s industrial heartland, he and his Social Democrats are scrambling to revive their left-wing credentials.

The result may reverse some of the reforms that Schröder had painfully begun to push through, to Germany’s cost, and Europe’s.

It is six years since Blair, Schröder and Bill Clinton gathered in Florence to reaffirm their commitment to the Third Way, and the obsolescence of the old divisions of “Right” and “Left”. Each attributed his electoral victory to his success in dragging his party back towards the centre. That is not a tactic of which Schröder would now boast, after five years of economic paralysis. He has succeeded pushing through some reforms, it is true. He has trimmed some of the social welfare system, among Europe’s most lavish.

He has tweaked employment rules which make it difficult to fire workers. He has cut corporate income tax.

A sharp rise in unemployment is partly the effect of one of Schröder’s Clinton-style reforms: insisting that unemployed people who are capable of working must register for job searches or lose benefits.

But with unemployment now above the sensitive five-million mark, the highest since the 1930s, his Social Democratic party is under new threat.

Latest polls put the SDP well behind the main Opposition, the Christian Democrats and its sister party, the Christian Social Union, if federal elections were held tomorrow.

The threat is particularly visible even in North Rhine- Westphalia, one of the party’s traditional strongholds, which includes the industrial heartland of the Ruhr.

But the heavy manufacturing which was the base of the state’s prosperity and political power has been in decline. It is conceivable that the SPD could lose the election on May 22.

In response to this threat, Schröder has been keen to show himself riding to the defence of industry. In the past week, he has suggested outlawing “short-term” investment tactics — people “making quick money and moving on”, in the words of his Finance Minister, Hans Eichel. He argues that trading by hedge funds was a threat to big companies and their employees.

Franz Müntefering, the SPD chairman, joined in the chorus, calling these investors “swarms of locusts”, and saying that “profit-maximising strategies inspired by international competition (posed) a danger to our democracy”.

Schröder has also attacked the Opposition for its plan to cut subsidies to Germany’s coal industry more aggressively.

Perhaps most eye-catching is the SPD’s sudden passion for a national minimum wage, to prevent “German” workers being priced out of their jobs by new arrivals from Central and Eastern Europe.

Germany has no general minimum wage, although the construction industry has one of its own. Party leaders have generally shunned the notion as too restrictive for business.

But construction and meatpacking have been particularly affected by a flood of new workers from the East.

The SPD’s leftwards reflexes have attracted fierce criticism from the more modern parts of German business.

Dieter Hundt, the president of Germany’s federal employer’s association, has called this rhetoric “extraordinarily damaging” for Germany’s ability to attract outside investment.

Others point out that the anti-immigration sentiments in this election campaign risk depriving Germany of the new workers which have made London, for one, so culturally diverse and so competitive.

But in the SPD’s current predicament, that cuts no ice.

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