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New German Finance Chief Named

A day after German Finance Minister Oskar Lafontaine quit, Chancellor Gerhard Schroeder moved quickly to name his replacement.

The choice of Hesse state governor Hans Eichel to fill the post was backed by the governing Social Democrats' executive committee.
Also Friday, Schroeder was nominated to head the Social Democratic party. Lafontaine, who stepped down Thursday in an apparent power struggle with Schroeder over Lafontaine's liberal economic policy, had also held that post.

The moves consolidates Schroeder's grip on power and gives him the chance to reshape his 4-month-old government after a shaky start.

Choosing Schroeder to head the party concentrates critical decision-making procedures. His nomination must be confirmed by a vote of the full party at a congress. No date has been set.

How quickly Schroeder could assert authority over a party whose left wing views him with suspicion was unclear.

"He does not represent the breadth of the party," Andrea Nahles, head of the Social Democrats' youth wing, said on ZDF television Friday.

Lafontaine, on the other hand, enjoyed strong party loyalty, which he used to quash infighting after taking over the Social Democrats in 1995. He was credited with a large share of the party's victory over conservative Helmut Kohl in elections last September.

Lafontaine's exit amid reports of a clash with Schroeder over the finance minister's controversial tax reform also serves as a warning to the environmentalist Greens. They have strained the coalition by pushing for immediate closure of nuclear power plants and other projects that reflect their ideology.

The Greens had some sympathies for Lafontaine, and leaders of the party appeared shaken Thursday night. But they said they were confident the coalition would hold.

To back that up, coalition leaders announced agreement late Thursday on a proposed new citizenship law after weeks of squabbling between the two parties.

Lafontaine did not give a reason for his resignation, but he unsettled financial markets with persistent calls for Europe's central bank to lower interest rates to create jobs.

Many economists blamed his attempt to exert political influence over monetary policy for the weak start of the new European single currency, the euro, which has lost 7 percent of its value since its Jan. 1 launch.

Business leaders welcomed Lafontaine's exit. Dieter Hundt, head of the German Employers' Association, said it "cleared the way for a new beginning."

Mathias Joerrs, an analyst at BHF Bank, said Schroeder now had the chance to put his stamp on economic policy.

"One approach has been tried now, and that has failed," he said on N-TV television.

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