Red-Green" vs. Christian coalitions
In the 1998 election the SPD emphasized commitment to reducing persistently high unemployment and appealed to voters' desire for new faces after 16 years of Helmut Kohl's government. Gerhard Schröder positioned himself as a centrist "Third Way" candidate in the mold of Britain's Tony Blair and America's Bill Clinton--he was critiqued as "Clintonblair" by some newspaper sources throughout his election campaign. The CDU/CSU stood on its record of economic performance and experience in foreign policy. The Kohl government was hurt at the polls by slower growth in the east in the past two years, widening the economic gap between east and west. The final margin of victory was sufficiently high to permit a "red-green" coalition of the SPD with Alliance '90/The Greens (Bündnis '90/Die Grünen), bringing the Greens into a national government for the first time. The first months of the new government were marked by policy disputes between the moderate and traditional left wings of the SPD, resulting in some voter disaffection. The first state election after the federal election was held in Hessen in February, 1999. The CDU increased its vote by 3.5 % to emerge as the largest party, and was able to replace a SPD/Green coalition with a CDU/FDP coalition. The result was interpreted in part as a referendum on the federal government's proposed new citizenship law, which would have eased requirements for long-time foreign residents to obtain citizenship, and permitted them to retain their original citizenship as well.
In March 1999, SPD chairman and Minister of Finance Oskar Lafontaine, who represented a more traditional social democratic position, resigned from all offices after losing a party-internal power struggle against Schröder.
In state elections in 2000 and 2001, the respective SPD- or CDU-led coalition governments were re-elected into power.
The next election for the Bundestag was September 22, 2002. Gerhard Schröder led the coalition of SPD and Greens to an 11 seat victory over the conservative challengers headed by Edmund Stoiber (CSU). Two factors are generally cited that enabled Schröder to win the elections despite poor approval ratings a few months before: good handling of the floods in the summer of 2002 and firm opposition to the USA's plans to invade Iraq.
The coalition treaty for the second red-green coalition was signed October 16, 2002. With a significantly changed cabinet (see below), Schröder and Fischer began their second term.