This "Super Minister" Is Gunning for Reform

To hear Wolfgang Clement tell it, all will soon be right with the world. Sputtering growth? "Don't underestimate the strength of the German economy," he says. Tension in relations with the U.S.? "I love America. What can I do for America?" says the newly appointed Economics & Labor Minister, spreading his arms and smiling.

Indeed, Clement, a 62-year-old former newspaper editor, is about the only member of Chancellor Gerhard Schröder's embattled Cabinet who can still manage a smile. That may be because Clement hasn't been in Berlin very long. He arrived in October, after Schröder stole an idea from the opposition Christian Democratic Union and combined labor and economics into a powerful new "Super Ministry." Clement resigned as Prime Minister of North Rhine-Westphalia, Germany's most populous state, to take the job.

Almost immediately, Clement emerged as the leading voice for change in a government that had lost its momentum. He violated a Social Democratic Party taboo by suggesting that Germany reform its 50-year-old job-protection law, which shields employees but discourages companies from hiring new workers. Such proposals have made Clement the vessel for Germany Inc.'s hopes that something will finally shake the nation from its economic torpor.

Clement has set out an ambitious agenda. He promises to cut bureaucracy, lower nonwage costs that discourage hiring, and help German municipalities get their dismal finances in order. And he vows to do it all fast, taking advantage of a respite from regional elections. "The most important reforms must be realized in the next one to one-and-a-half years," he says.

Clement sought common ground with the Christian Democratic Union even before the opposition party slaughtered the Social Democrats in state elections. With Schröder now badly weakened and desperate to restart the economy, prospects for the two parties to work together on reform--and share the blame for the pain--may be better than ever.

Don't expect a revolution, though. Back in Clement's home state, businesspeople say they didn't notice a radical reduction in red tape of the kind Clement promises to implement nationwide. In addition, Clement's government continued to pour subsidies into dying industries like coal mining. "In North Rhine-Westphalia we have seen more ideas than facts," says Hans-Dietrich Winkhaus, former CEO of chemical maker Henkel, which is based in the state's capital city of Dusseldorf.

Schröder thus far has also let Clement float the controversial proposals and assume the political risks, hardly a sign of commitment. Moreover, what passes for radical reform here is tepid by international standards. Clement's revamp of the job-protection law, for example, would slightly widen exemptions to the law for small companies. "It's all very half-hearted," says Karl-Heinz Paqué, finance minister of the state of Saxony Anhalt.

Such talk is helping keep expectations low. "I think Clement really wants to do something," says Diether Klingelnberg, chairman of a family-owned company that bears his name and produces gearmaking machinery in North Rhine-Westphalia. "Whether he can or not, I don't know." If Clement defies skeptics and helps turn the economy around, he could even succeed Schröder as Chancellor in 2006. If he fails, he will just be the latest in a long line of frustrated reformers.

By Jack Ewing in Berlin

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