With yet another election defeat to haunt him and the economy disintegrating around him, Chancellor Schröder is on his way to announce a major economic package in a few days' time. In his first four years in office he invented a forum called the Bündnis für Arbeit, the Job Alliance. It was a get-together of labor unions, employers and the government, and never really amounted to very much. Last week he tried to revive the Alliance, but the attempt ended in failure. The curious thing is that his reaction was to drop heavy hints that he would be introducing a reform package. It's not new to be hearing reformist rhetoric from Schröder, but this time the labor unions seem to be laden with a sense of foreboding. There's little chance Schröder will turn into a raving free-marketeer overnight, but many of the reforms that he might be considering (and which the unions have been training their guns on) would be at least pointing in the right direction. It's quite a gamble, because he risks alienating the members of parliament of his SPD party, three-quarters of whom are union members. And with a very precarious majority in the Bundestag, it would not take many defectors to bring down his plans, and possibly his government. While the opposition of CDU/CSU and FDP might in principle agree with more market-oriented reforms, they would not hesitate to vote against such proposals if they saw a chance to topple Schröder as a result.

Perhaps he's realized that he won't be able to survive without reforms to resuscitate the German economy. With his party potentially turning against him on the issue, he's taking a gamble. What are the odds that the SPD parliamentarians would risk a new election right now? They would suffer massive defeats at the polls, so they may just go along with the plans. The position of the unions has come under unprecedented attack in Germany, with both the FDP and now also the CDU taking aim at the strangehold the unions have over the German economy. The CDU does not speak with a single voice on this issue though.

It could be the last desperate gamble of a man who has little to lose anyway.