THE GERMAN Chancellor, Dr Helmut Kohl, held a crisis meeting with his coalition partners last night in an effort to hold his beleaguered centreright coalition together.
The talks with the leaders of the Liberal Free Democrats (FDP) and the Bavarian Christian Social Union (CSU) were aimed at stopping a DM25 billion (£9.2 billion) gap in next year's federal budget. But the meeting broke up after midnight with no agreement on what measures should be taken. The only issue all three parties were united on was their support for a controversial plan to revalue Germany's gold reserves.
The Finance Minister, Mr Theo Waigel, wants to increase fuel tax and postpone a promised cut in the unpopular "solidarity tax" levied after reunification to help the economy in eastern Germany.
But the FDP, which campaigns on a platform of cutting taxes, has threatened to walk out of the coalition rather than agreeing to any tax rises. The party's economic spokesman, Mr Paul Friedhoff, insisted yesterday that the FDP was not afraid to precipitate fresh elections on the tax issue.
"I see no chance that the FDP will agree to stop gaps in the budget by increasing taxes. That also applies to the solidarity tax. The Christian Democrats (CDU) and the CSU will need a new coalition partner to make such a decision. It would be clear too in those circumstances that the CDU and the CSU bore all the blame for the breakup of the coalition," he said.
Mr Waigel, who incurred the wrath of the Bundesbank last week with a plan to meet the Maastricht criteria by revaluing Germany's gold reserves, argues that the government has no alternative to raising taxes. He has drawn up a list of possible public spending cuts - including cuts in child allowances and subsidies to coal mining and agriculture - but none of these would be politically acceptable.
The leader of the opposition Social Democrats, Dr Oskar Lafontaine, has called on Dr Kohl to declare a general election, saying that the row with the Bundesbank had irreparably damaged the government's credibility.
"The economic and finance policies of the Kohl government have failed. The coalition is so divided that it is incapable of taking action. It would be good for Germany if it cleared the way for fresh elections," he said in an interview with the magazine Der Spiegel.
Some analysts believe the FDP would welcome elections in the hope that its taxcutting stance could prove a votewinner. But Dr Kohl's allies say that, as the smallest party in the coalition, the FDP is in danger of polling less than the 5 per cent of votes needed to win seats in the Bundestag if it brings down the government.
