Europe’s power brokers

Six power brokers who hold Europe’s fate in their hands The Deciders

insight 1 Europe’s power brokers The Deciders

THE EDITOR: NIKOLAS BLOME

ikolas Blome is one of the most around the world and prompted several powerful journalists in Europe. German politicians to demand Greece sell NChief political correspondent and public assets. deputy editor of Bild, continental Europe’s “We didn’t want to make fun of the most widely read daily newspaper, he com- Greeks with that story but we wanted to missions stories that attract some 12 mil- point out in a striking way what the prob- lion readers. lem is,” Blome said. “If you’re serious about Few newspapers have been as influential reducing debts, then start privatizing. Then in shaping German public opinion as the tab- you’ve got to sell off public assets, just like loid-style Bild, which has run inflammatory other countries are doing. But Greek politi- headlines and colourful front page articles cians felt that we were attacking their sov- about Greek waste and corruption that are ereignty. What nonsense!” deeply sceptical of Europe’s rescue attempts. Blome, whose earlier career took him to “Greece is one of the most important is- Brussels as a correspondent, said many politi- sues we’ve dealt with in the last couple of cal leaders in agree with Bild’s take. years and because it affects the euro it’s an “There are a lot of people (in the govern- issue that touches everyone,” said Blome, ment) who tell us privately that in the long 48, who defends his conservative political or short term Greece is going to have to views in a weekly TV talk show. leave the euro zone. The government’s of- He bristled at the suggestion that Bild has CAMPAIGNER: Blome, chief correspondent ficial policy is, of course, different.” tackled Greece harder than other newspa- and deputy editor of German newspaper Bild, Blome said he and Bild editors realise a pers in Germany. “It’s not just a topic for Bild believes Greece should leave the euro. REUTERS/ Greek exit from the euro zone could well newspaper. It’s a topic for every newspaper.” Bild/Handout lead to more turbulence – one of German Bild began reporting extensively about Chancellor ’s main argu- Greece early, running heavy coverage two ments against it - but believes the current years ago that some analysts say reinforced should probably leave the euro zone at least proposals won’t work. the German government’s initial reluctance for the time being. Greece needs a currency Bild, he said, is no more campaigning to intervene in the country’s meltdown. devaluation, a new currency, a new drach- than any other German newspaper. For Germans who have seen many of ma. That’s the fastest and best way to re- “I can’t really identify with that ‘campaign’ their social welfare benefits scrapped in a store the country’s competitiveness. That’s a accusation,” he said. “What’s true is that decade of belt-tightening, stories about view shared by everyone at the paper.” we’ve tackled this issue a lot and we have a Greek tax dodgers and pensions paid for Bild has given a lot of space to Hans clear opinion. If that’s a campaign, go ahead years to dead people were incendiary. Bild’s Werner Sinn, president of the Ifo institute and call it that. But also call the coverage of articles stoked public anger in Germany think tank and a leading economist who the (conservative) Frankfurter Allgemeine and fuelled taxpayer opposition to big bail- regularly calls for Greece to leave the euro Zeitung a campaign, and the same goes for out cheques. zone. Once isolated and viewed as some- the (liberal) Sueddeutsche Zeitung newspa- “We were sceptical from the very start. what absurd - Finance Minister Wolfgang per, and Der Spiegel magazine.” The essential problem is that new multi- Schaeuble criticized his opinions as non- Whatever else, Blome hopes Greece billion euro rescue packages are only short- sense - Sinn’s views are more mainstream gets back on its feet. term help. In my mind the problem won’t now, thanks in part to Bild. “I hope they get a government that be fixed with constant rescue programmes,” The paper’s coverage has also touched understands that there can’t be any more Blome said. on the comical. Stories demanding that money from other euro zone countries. The paper, he said, has a “clear editorial Greece sell its islands and its Acropolis to I hope Greece gets its act together. But I consensus that Greece is not going to be raise money made it into newspapers and don’t think they’re going to do it inside the rescued the way this is going and that it broadcasts in scores of different languages euro zone.”

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THE CRISIS MANAGER: JOERG ASMUSSEN

utting out fires is nothing new to you’ve done reasonably well, you get the European board next,” he said. Pmember Joerg Asmussen. His dad Asmussen’s first portfolio at the finance ran the local fire brigade when he was a ministry was the 1997 Asian financial cri- boy: a round-the-clock job that required a sis, which he says prepared him well. cool head. “The Asian crisis was a good learn- Now, the 45-year-old German official ing phase because of the cooperation with is considered one of the most efficient cri- people who had known this kind of thing sis managers in the euro zone, a veteran of for a long time,” he said. “Back then Juer- Europe’s sovereign debt and wider financial gen Stark and Klaus Regling headed the crises and a key government advisor on fu- finance ministry’s crisis team.” ture challenges facing the region. Personal contacts are crucial. Still, he told Reuters: “Hectic people “The chemistry among the key players is make me nervous.” extremely important. Independently of all His approach is to stay calm, gather data the empirical data that you can study, you and evaluate, to determine his goal and de- need to have a gut feeling for the people cide how to get there. you’re dealing with because sometimes “A good crisis manager is not hectic you’re operating all around the globe.” himself,” he said. Decisions must be made In his last years in the finance ministry, “calmly, even if you are under pressure.” there were few German crisis meetings “You’ve got to know in advance exactly without Asmussen - either in the second what your bosses want...and when you row or in the room next door - on topics reach a point where you touch the line, from Germany’s banking rescue fund to the you’ve got to pick up the phone,” Asmus- panel that decided carmaker Opel’s future. sen said. “You can’t shy away from getting “Every minister and head of state or gov- CRISIS MANAGER: Asmussen, ECB Executive someone out of bed at 2 a.m.” ernment has about five people he or she real- Board member, says decisions should be made That calm under fire is one reason why ly trusts. There are always a hundred people calmly. REUTERS/Alex Domanski Asmussen has enjoyed a meteoric rise who say they’ve spoken to the minister who through the ranks since joining the Ger- wants this or that and that’s why we have to man finance ministry as a junior advisor act. My experience is those who have really His job, Asmussen said, is not all that in 1996, and why he counts among his spoken to the minister don’t say it.” different from his father’s. patrons Chancellor Angela Merkel and Aside from the daily fire-fighting, As- “If there was a fire anywhere on Christ- Finance Minister Wolfgang Schaeuble mussen thinks Europe’s medium-term fu- mas Eve, the phone would ring and my dad despite his membership of the opposition ture poses more challenging questions. would go to work.” Social Democrats. “Further integration, fiscal union, bank- His own family is relaxed about his du- Asmussen was appointed German dep- ing union, democratically legitimate political ties, says Asmussen, even though he missed uty finance minister in mid-2009 and since union - we’ve got to achieve that and we have the birth of his second daughter because of January has worked at the ECB, where he to have an open public debate on that because the 2009 financial crisis, and interrupted is responsible for the bank’s international those are basic questions of our social order. his summer holiday last year to attend a and European relations - code for crisis You can’t do that in the back room.” crisis meeting in Brussels on Greece. management. And despite the pace, he finds it easy to So far he has shaped policy as a back- You get one task. If your switch off. room negotiator but is now becoming bosses think you’ve done “Whenever I have the opportunity to more visible. sleep, I sleep well. At most my two daugh- “You get one task. If your bosses think reasonably well, you get the next. ters keep me awake.”

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THE : ANTONIO JOSE CABRAL

rom his office on the 13th floor of analysing and trying to solve the spiralling of the Belgian boy reporter’s adventures. the European Commission, Anto- problems that have struck down Greece, Asked which moment during the crisis F nio Jose Cabral can look out over Ireland and Portugal and now threaten gave him most cause for concern, he paused the rooftops of Brussels’ ‘European quarter’ Spain and Italy. before replying: “So far I have been able to and the institutions tackling Europe’s debt It is a job that requires attention to de- sleep well”. But then he mentioned the crisis - if he finds the time. velopments in financial markets and the summit in Cannes in November 2011, As senior adviser to Commission Presi- mood in capitals across Europe, keeping when Greece looked on the brink of leav- dent Jose Manuel Barroso and his chief Barroso “permanently informed”, brief- ing the euro zone, and the turbulent weeks diplomatic envoy, or ‘sherpa’, to the G20 ing him ahead of meetings with heads of that followed. countries, Cabral is a critical behind-the- state and government, and liaising with his “The last two months of 2011, they were scenes player in Europe’s crisis-manage- global G20 counterparts, from Washington difficult,” he said, listing concerns about ment machinery. to Mexico City. the amount of debt Europe was due to is- A 24-year Brussels veteran who began “Days are long, and there is a conse- sue, new governments in Spain and Italy, his career in the Portuguese central bank quence to that,” he said wryly, adding after doubts about Greece’s debt restructuring and finance ministry, Cabral has spent a pause: “Nights are short.” deal and the euro zone’s financial ‘firewall’. the past two years as Barroso’s point-man This year alone he visited Mexico half a “The pressure was immense,” he said. “I dozen times to prepare for this week’s G20 advised President Barroso at the time that in Los Cabos, where the euro zone and the concerns were a bit overdone, and I Greece were central to the discussions. think reality showed that it was the case.” For Cabral, managing the crisis requires Asked whether he has ever been worried distilling a wealth of information down to that the euro might collapse, there was no its essence. It is about focusing sharply on hesitation: “Never. That I have never doubt- the immediate, while never losing sight of ed and I continue not to doubt. That’s not the longer-term vision of economic and only my conviction, but my determination.” political integration that some of Europe’s Cabral was already a senior official in leaders are trying to bring about. Brussels when the euro was introduced and At the same time, the role involves ex- regards economic and monetary union as plaining in detail the actions Europe is tak- part of his DNA. But he is careful to check ing, especially to G20 colleagues, and reas- the dreams of policymakers with the hard suring them that efforts are moving in the reality of integration. right direction. “Having a vision is okay, but if you do “It works with persuasion, patience... not blend vision with realism, you might be there are different levels,” he said, explain- adding to the problem rather than the solu- ing that he has just had a meeting with tion,” he said, explaining that steps needed his South Korean counterpart, then held to be carefully thought through before they another with his own staff on how to ne- are taken, even if they seem obvious. gotiate a better position for the EU in the “We must do it in a way that we are not G20 communique - which was intensively trapping ourselves.” haggled over. Barroso, he said, is a fast learner who has Paintings and photos of Lisbon hang immersed himself in the complexities of in- on the walls of Cabral’s quiet, orderly of- ternational finance. VETERAN: Antonio Cabral, senior adviser and fice. His desk is laden with blue A4 files. A “Sometimes I tell him he can get rid of chief diplomatic envoy to Commission President volume entitled “The Euro” sits on a cabinet me because he knows as much as I do at Jose Manuel Barroso, keeps track of a wealth of shelf among books on art and history. A fan this point,” said Cabral. “But I think my information. REUTERS/Laurent Dubrule of Tintin, Cabral owns several rare editions presence is useful.”

insight 4 Europe’s power brokers The Deciders

THE PROTESTOR: IVAN AYALA

t has no formal structure, no clear leaders cajoled banks into signing up to an ethical and no official spokesperson. Yet the “In- code intended to delay evictions by two years Idignados” movement remains a potent in cases of families with no income. force in Spain, where protests against the Ayala, who runs his own business in handling of the economic crisis continue. Madrid exporting ethical products such as In mid-2011, the Socialist government food and make-up, is sceptical that the euro of Jose Luis Rodriguez Zapatero began zone’s promised bailout of Spanish banks sinking billions of euros into Spain’s fail- will stem the crisis. Like many critics of the ing banks and imposing spending cuts, the euro project, he believes its foundations are likes of which had not been experienced for flawed because of the diverse nature of the at least a generation. economies it has sewn together. Tens of thousands of people reacted by “Independently of the financial crisis, camping out and rallying for weeks in town the euro crisis would have happened - it squares in spontaneous protest against the has just brought it forward,” he said. “The country’s economic and political system. That solution would have been to not have gone helped spark the global “Occupy” movement. into the euro.” Ivan Ayala, a 31-year-old university re- He likened Spain’s membership of the searcher in macroeconomics, joined the single currency to “sleeping with a gorilla”. Indignados (Indignants) movement, as it “The gorilla is Germany, which has a became known, soon after protests began. different income, a different economic Frustrated with Spain’s political par- structure, very strong industry. Spain enters ties, he started going every day after work in this context and loses all its economic to Madrid’s main square, Puerta del Sol, to tools like the exchange rate.” participate in the movement. Without giving the ECB the power to A year on, the Socialists have been voted buy sovereign debt on the primary market, out, but unemployment is still around 25 austerity measures in the region will fail to percent and the country has accepted a 100 stem the crisis and could lead to the break- billion-euro bailout for its banks. Ayala up of the euro zone, Ayala said. He views continues to meet at least twice a week in the prospects for Spain as grim. a public square to debate economic policy “As Europe is at the moment, the euro with the group, also called 15-M after its is impossible to maintain because Spain is May 15 beginning, which continues to condemned to two, three lost decades, as SCEPTIC: Protester Ivan Ayala, a 31-year-old organise regular demonstrations against Latin America was. I think they are going university researcher, does not believe the bailout banks and the government. to throw Spain out of the euro and in the of Spanish banks will stem the crisis. REUTERS/ While 15-M is not a political organisa- end it will be a relief.” Susana Vera tion, Ayala sees it as a social force hold- Without the ability to let its currency de- ing politicians to account, affecting public value, there is a risk Spain will have to force policy and giving a voice to hard-up tax- salaries down to levels intolerable for a coun- former Bankia chief Rodrigo Rato, who is payers and the unemployed. He likens it to try where one in four is already jobless. also a former Spanish economy minister social movements of the past, such as that Ayala and other Indignados are not pre- and former managing director of the IMF. demanding votes for women a century ago. pared to let that happen. “We need to go to politicians’ homes, to The group has achieved some concrete Most recently, 15-M raised money to shout, to bang pots and pans in front of all change. After months of 15-M protests file a legal case against Spain’s fourth largest those politicians we suspect of having fol- against evictions of poor families who had de- bank Bankia, being bailed out by 23.5 bil- lowed or following austerity policies that faulted on their mortgages, the government lion euros of public money. The case names remove doctors or education,” Ayala said.

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THE BANKER: DOUGLAS FLINT

f fixing the euro zone crisis requires an accountant’s precision and calmness, Ithe new head of the global banking lobby group is in a good position to help. Douglas Flint holds the chairmanship of the Institute of International Finance (IIF), which represents more than 450 fi- nancial firms and led creditors in the deal to restructure 206 billion euros of Greek debt this year. The 56-year-old Scot, also chairman of HSBC, is seen as a low-key networker with strong contacts across the banking industry and in governments after 17 years at Eu- rope’s biggest bank, which has operations in 85 countries. Far removed from the brash image of big-spending bankers, he was once report- ed by Britain’s Times newspaper as saying: “He who shouts loudest shouldn’t necessar- ily get noticed.” LOW-KEY: Head of global banking lobby group the Institute of International Finance, Douglas Flint, Flint took the IIF role from Josef Ack- says European leaders must restore confidence in their vision .REUTERS/Bo bby Yip ermann, the former boss of Deutsche Bank, who joked in his departing speech that his timing “might be perfect” as he handed of losses - the bank avoided government Bank USA Chairman Gerald Corrigan. over the reins. bailouts and emerged from the crisis in bet- It will serve him well in the current en- Ackermann was the key go-between as ter shape than rivals thanks to its prudent vironment. Regulatory changes are fast ap- German Chancellor Angela Merkel put approach to capital and liquidity. It is now proaching and euro zone governments are pressure on Greece’s creditors to take big- undergoing its own austerity programme, clamping down hard in an effort to make ger losses. cutting costs to boost profits. their lenders watertight in the event of any With no end in sight to the euro zone Flint is also regarded as an expert in further financial storms. crisis the IIF is likely to remain a central complex regulatory and accounting is- Flint has been a vocal critic when he player. Flint believes restoring confidence in sues. He has served on the International considers reforms to be going too far. But the euro zone project is crucial, and leaders Accounting Standards Board (IASB) and he also sees that there is work to do. need to get citizens to “buy into the vision.” in 2008 co-authored a report, “Contain- “The benefits of the single market and a “People want austerity and they want ing Systemic Risk”, with Goldman Sachs material economic union - to have a one- growth, so part of it is leading people to stop negotiation with the other significant the understanding it’s not a toggle switch unions like the United States, Asia, Latin between austerity and growth,” he told Re- People want austerity America and the Middle East - are so obvi- uters shortly after taking over as IIF chair- and they want growth, so part ously apparent,” he said. man, at a meeting in Copenhagen. of it is leading people to the “The challenge is to lead people to un- Though Flint was criticised for his role understanding it’s not a toggle derstanding there are difficult choices. We supporting HSBC’s disastrous 2003 pur- switch between austerity and want all the benefits of the single market chase of U.S. sub-prime lender Household and now we might have to address some of - saddling the bank with billions of dollars growth. the bits that haven’t been finished.”

insight 6 Europe’s power brokers The Deciders

THE NETWORKER: JENS WEIDMANN

he telephone in the office of Critics on the other side of the Bundesbank President Jens Weid- Atlantic are of the opinion the ECB Tmann rarely stops ringing. () should With two secretaries and a special advisor follow the example of the Federal on hand, he takes only the important callers Reserve and buy more government himself. But these days almost all the callers are important: German Chancellor Angela debt. But we are not a federal state Merkel, fellow central bank governors and and not even the Fed buys debt top foreign politicians all want Weidmann’s from California or Florida. views on the future of the euro zone. He hardly gets a chance to come up for air between talks with decision makers in Eu- Bundesbank and the ECB is less than five rope and central bankers in the United States kilometres – the two central banks some- wanting to know the latest developments. times seem worlds apart. Weidmann is Such calls can turn into heated debates. known as a hard-liner and often clashes “Critics on the other side of the Atlan- HOTLINE: The new German central bank with colleagues and politicians trying to tic are of the opinion the ECB (European (Bundesbank) president Jens Weidmann is push the ECB beyond its legal limits, such Central Bank) should follow the example regularly telephoned by European and U.S. as asking it to back-stop governments to of the Federal Reserve and buy more gov- decision makers. REUTERS/Kai Pfaffenbach ease pressure from financial markets. ernment debt. But we are not a federal state Short-term gains brought about by and not even the Fed buys debt from Cali- stretching the ECB’s mandate may come at fornia or Florida,” he said. This, I hope, is for some time at least over.” a high cost of lost credibility, he fears. Four years of uninterrupted turmoil has Weidmann has frequently said that he “Financial markets change their mind turned a rigid routine into spontaneous had no plans to follow in his colleagues’ every other week. One day they demand clusters of emergency conference calls and footsteps. more, the next day they complain about the rapidly-arranged get-togethers. Weekends With growing doubts whether the euro consequences,” Weidmann said. and late night calls have became part of the zone can survive in its present form, plan- routine, putting a strain on officials. ning for the worst case has become essential. Reporting by Erik Kirschbaum, Noah Barkin Weidmann’s predecessor, Axel Weber, The Bundesbank has reactivated the task and Annika Breidthardt in Berlin, Luke Baker and his compatriot Juergen Stark - the force it used in 2008 to manage the rescue in Brussels, Sarah Morris in Madrid, Eva ECB’s chief economist at the time - decid- of German banks IKB and Hypo Real Kuehnen, Andreas Framke and Paul Carrel in ed to quit last year in protest at the ECB’s Estate. Weidmann’s advisers gather infor- Frankfurt and Steve Slater in London. purchases of troubled euro zone debt. mation about German banks’ exposure to Editing by Sophie Walker and Richard Woods Others, like Weidmann’s former ECB Greece - and to Portugal, Spain and Italy, colleague, Jose Manuel Gonzalez-Paramo, the countries seen as most vulnerable if whose term on the Executive Board expired Greece left the euro zone. FOR MORE INFORMATION in May, look forward to re-adjusting their The Bundesbank president stays in close Sophie Walker work-life balance, which Gonzalez-Paramo contact with his ECB colleagues, including [email protected] said was tilted “in the wrong direction”. ECB President and execu- Simon Robinson, Enterprise Editor, “You really don’t know whether you tive board member Joerg Asmussen, who has Europe, Middle East and Africa have a weekend or not,” Gonzalez-Paramo known Weidmann since their university days. [email protected] said. “You go somewhere and you stay all Despite the personal connection – and Michael Williams, Global Enterprise Editor day long on the phone or on your laptop. even though the distance between the [email protected]

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