Schroder pulls the rip cord

Observations on Germany

European politicians used to be pilots. Think of Robert Schuman and Jean Monnet. Today, a friend in the German foreign ministry told me, they are mere stewardesses telling you how to inflate your life jacket. "They pretend to lead and you pretend to listen." The Brussels summit, even the Luxemburgers agree, cannot do more than find the black box and the flight recorder. Continental Europe, and Germany in particular, is in a post-traumatic daze.

This should have been Germany's shining moment - Frere Jacques paralysed and Germany with a fully ratified European constitution, free to dominate the feeble transpontine relationship. But no: the German federal budget is a gaping hole, Gerhard Schroder is struggling to stay in power, and Germans have lost faith in the ability of the government, and the European political class, to create jobs.

Hans Eichel, the finance minister, kicking around ideas with the Bundesbankers, tells them: we could have done so much better without the euro. He lets the comments leak - why should he be the fall guy for an arthritic economy? Why should he take the blame for the failure of the Red-Green experiment, Germany's attempt at a Third Way utopia? You can see his point. It was the euro wot done it.

Schroder cannot reinvent himself as a European statesman. It is too late for that. But he could just tug a few German voters out of the wreckage. He has been in tight corners before: three months before the 2002 election, he was 15 points behind the Christian Democrats. He saved himself by rekindling the anti-Americanism of the Social Democrats, above all those of his 1968 generation. There followed a summer of Bush-bashing. The justice minister compared Bush with Hitler and stayed in office. The White House hated it; the voters loved it. Then a flood in the east had Schroder in green wellingtons promising victims pots of cash. Result: victory against the odds at the ballot box.

Now the chancellor's advisers see a similar opportunity. For Bush read Blair. Schroder is using the issue of the British budget rebate to make a punchbag for frustrated Germans. The British are already at the wrong end of a Social Democrat campaign against hedge-fund managers ("locusts") and predatory capitalists. It began with Vodafone's takeover of Mannesmann; a British capitalist, Chris Gent; and fat-cat pay-offs for German managers. Resentment bubbled over - audiences cheered wildly when a character in a stage play declared his intention to kill the head of Deutsche Bank - and the Social Democrats took note. They rediscovered class warfare. "It's like an ageing brothel madam suddenly preaching the virtues of chastity and self-denial," says the commentator Henryk Broder.

German officials are briefing against the British. Blair, reporters are told, is trying to accelerate the break-up of Europe. One German diplomat described Blair as a "gravedigger". But whose grave? Schro- der's? Britain is showing its true colours, say the Germans, by clinging on to the rebate at a time of crisis for the European economy. Germany, by contrast, is ready to make sacrifices. That is the choice offered to German voters. Schroder - good European; Blair - bad. Schroder - defender of a more efficient social welfare state. Angela "Maggie" Merkel - Trojan horse for evil Anglo-Saxon capitalism.

It is late in the day for Schroder to try chequebook politics, especially as the coffers are so plainly empty. But the chancellor is a smoke-and-mirrors man. He knows that the Germans are seething. They didn't get to vote on the euro and now the euro is turning against them. They didn't vote on eastern enlargement and are grumbling about Poles stealing German jobs. Again, no popular vote on the European constitution. Almost 97 per cent of 300,000 readers quizzed by Bild said they would, if asked, vote against the constitution. Their reasons were mainly hostility to the euro, Poles and Turks: stored-up wrath. Schroder's aim is to turn this passion against an outside enemy - Britain will do fine - and present himself as the least-worst option for Germany.