perational forces. The commission recommended that the size of the conscript pool be reduced and that the Bundeswehr be reduced in size over a 10-year period from a peacetime force of about 320,000 to 240,000.
Defense Minister Rudolf Scharping disagreed with some aspects of the report, including the overall target size of the force and the reduction in the number of conscripts. Proponents of universal military service argued that democracy depended on the armed forces’ representing a broad cross section of German society. In addition, they pointed out, approximately 50% of the professional military found its way into the Bundeswehr through conscription. Scharping’s proposal to maintain a peacetime armed force of 255,000 was accepted by the cabinet in June, with the Greens, who favoured abolishing conscription altogether, dissenting. At a conference of business leaders on May 4, Schröder and Scharping proposed partial privatization of the military. They stressed the importance of modern management methods and said that projected savings would be reinvested in the Bundeswehr to ensure its readiness to meet NATO responsibilities.
Another issue closely related to belt-tightening was the question of continuing subsidies for the development of eastern Germany. A report by the Ifo Institute, a prominent think tank for political and economic research, argued that unification had not yielded economic reunification of the two Germanies, even 10 years and many billions of Deutsche Marks later. Growth in the east had been stagnant since 1996. On the eve of the 10th-anniversary celebrations, in a paid advertisement in a major newspaper, the rhetoric of a 1996 speech by ex-communist politicians from the former East Germany was replayed with heavy irony: “German unity will be completed when the special judicial treatment of the east Germans ends, when wages in the east and west are the same, when there are as many east German homeowners on the island of Sylt as west Germans on the island of Rügen [popular vacation resorts], when an east German can be elected premier of a west German state—and no one in east or west finds this the least bit remarkable.”
Economic imbalance was also a factor in the higher incidence of right-wing extremism in eastern Germany than in the west. To cope with the backlash against the presence of foreigners in Germany, Interior Minister Otto Schily announced the creation of a national commission to root out the causes of xenophobia. Schröder made far-right extremism a top theme during a 40-stop tour he made in eastern Germany in late August and early September, although he was careful not to single out easterners as the sole perpetrators—anti-Semitic attacks in Düsseldorf in July and October were just two examples of right-wing violence in western Germany.
Likewise, efforts continued in Germany to cope with the country’s Nazi past. A joint public and private foundation called Remembrance, Responsibility and the Future was created in July to supplement existing restitution arrangements for forced labourers and other victims of Nazism with up to $5 billion in funds. Many forced labourers had been impressed into service in Eastern Europe and were not Jewish, factors that had excluded them from sharing in about $100 billion in compensation that Germany had already paid out since World War II. The creation of Remembrance, Responsibility and the Future capped nearly two years of international negotiations under pressure from the U.S. that class-action suits might be filed on behalf of victims of Nazism.
Following the passage of a landmark tax-reform bill in July, Schröder exclaimed, “The term German disease now belongs to the past. This is a good day for Germany’s reputation in the world.” Efforts to change the tax system had been under way since 1990. The victory was all the sweeter considering that the chamber in which the coalition received the majority of votes, the Bundesrat, was the one in which it had lost its majority in 1999. Furthermore, it was the same body in which the SPD had used its majority in previou