[A-List] Germany: monopoly capital lobby

[Michael Keaney]

No one to talk shop
German industry needs a representative to talk to a government unwilling to
listen
Daniel Bogler
Financial Times, December 6 2002

German business needs a proper spokesman -- and more urgently, perhaps, than
at any time since the second world war. At a time of unprecedented anger in
the business community at the government's planned tax increases, falling
profitability and lacklustre economic growth, there is a crying need for a
mediator: someone behind whom German managers can unite, who can channel
their frustrations and who is well enough regarded in Berlin to carry on a
dialogue at eye level with Chancellor Gerhard Schröder.

Traditionally, of course, this role has been fulfilled by the country's
numerous trade organisations, led by the BDA employers' federation and the
Bundesverband der Deutschen Industrie (BDI) -- the industry confederation.
But following their outspoken support for  the conservative CDU party during
the election campaign, the BDA and BDI have lost much of their standing with
the victorious -- and furious -- Red-Green coalition.

Michael Rogowski, the BDI's president, has been dropped from Mr Schröder's
inner circle and although the two men met and even shook hands at an
official function this week, it is noteworthy that Mr Rogowski has not
succeeded in tabling a single meeting with the chancellor since the
election.

As a result, the government seems to be leaning closer and closer towards
the trade unions and has, for example, ended up diluting its plans to reform
the unemployment system. Meanwhile increasingly angry outbursts from German
chief executives about the government's chaotic economic policies have met a
wall of silence in Berlin.

If the trade bodies, under present circumstances, can no longer do an
effective job, it would seem logical to bypass them. There is no shortage of
respected chief executives in Germany, such as Jürgen Schrempp at
DaimlerChrysler, Ulrich Hartman at Eon, Heinrich von Pierer at Siemens, and
Henning Schulte-Noelle at Allianz. They are all, however, tied up with
running their companies.

A plausible alternative might be Rolf Breuer, the former boss and current
supervisory board chairman of Deutsche Bank. His position, right at the
heart of the financial system, is still one of the most powerful in German
business.

Mr Breuer did a respectable job as chief executive, though he failed to pull
off a merger with Dresdner Bank. And he did a very good one as the
supervisory board chairman of Deutsche Börse, helping to lead the stock
exchange's European expansion and successful public listing. He has plenty
of real world experience and is consequently respected by politicians and
fellow businessmen. He has good contacts and is a gifted speaker. Moreover,
as the newly re-elected head of the Bankenverband, Germany's banking
association, he has a natural platform that is not associated with a
narrowly party political (conservative CDU) point of view.

Best of all, Mr Breuer is not afraid to challenge sacred cows. Last week he
launched a well argued attack on the German system of co-determination
(which allows employee representatives to sit on supervisory boards),
calling it antiquated and a block to proper decision-making on corporate
boards.

This week, somewhat closer to home, he strongly criticised the country's
public banking organisations (the Sparkassen and mutual banks) blaming
them -- at least in part -- for the inadequate returns of the private banks.
He has long been a proponent of paying managers properly for good results
and a defender of Germany as a business and financial location.

This flurry of public pronouncements has certainly raised Mr Breuer's
profile. Whether his frontal assaults on such hallowed institutions as
co-determination will endear him to other, more cautious, top managers or
politicians remains to be seen -- but many of the former group secretly
sympathise with his point of view. It also remains true that the German
political and business elite is more comfortable with deals hammered out
behind closed doors than with a public debate. Indeed, just two years ago,
Mr von Pierer of Siemens warned in the Financial Times that the business
community should not seek too direct a confrontation with the government,
since it would only push Mr Schröder further into the arms of the unions.
However, during uncertain times like these there is much to be said for
someone's putting forward the corporate world's position clearly and
succinctly.

This gets to the nub of the problem: the chaotic nature of policymaking
under the current government. Since his re-election in September, Mr
Schröder and his Green coalition partners have initiated a bewildering
series of tax, pension and labour reform proposals. Most have been poorly
conceived drafts that have already been revised in the face of loud
criticism from different interest groups and the opposition.

At present there appears to be little or no co-ordination between different
ministries or even different departments within, say, the economics
ministry, let alone any attempt to talk over policy with industry. While the
business community is hardly to blame for any of this, it makes it doubly
important to have a trusted and respected representative to lobby for its
interests in Berlin. Mr Breuer may or may not have the stomach for this job.
But someone will have to step forward.