Yes, he is the father of the euro, the European currency. Not only did Dr. Theodor Waigel propose the name of the currency in 1995 while serving as German finance minister (1989-1998), but he also played a vital role in its introduction.
In this interview with The Majalla, Dr. Theodor Waigel, former German finance minister, and the man widely regarded as the “father of the euro,” asserts his continuing faith in the European currency, despite the damage inflicted upon it by the global economic crisis. Created as a response to the problem of world currencies, the euro can serve as a model from which to establish a global financial system with tighter controls, which Dr. Waigel says is an imperative step to preventing another global economic crisis. Predicting that it will take from 10 to 15 years for a full economic recovery, Weigel warns that we must prepare from now.
Having studied law and political science, Waigel began his career as a lawyer. He then moved to the economics ministry in the Bavarian State Government, where he took a seat as a member of the German parliament in 1972, which he held until 2002.
With an economics-related career spanning over 40 years, Mr. Waigel has held a number of other key positions, including spokesman for the Christian Social Union in Bavaria (CSU) on economic affairs and member of the Committee on Foreign Affairs. After the death of Franz-Josef Srrauss, he was elected with a large majority as chairman of the CSU.
The Majalla met with Dr. Waigel in Cairo where he is heading a delegation hired by the Department of Justice, Security Exchange Committee (DOJ/SEC) to audit Siemens.
The Majalla : What is the purpose of your visit to Egypt?
I am not here as a former finance minister, but as an independent auditor of Siemens, hired by the Department of Justice, Security Exchange Committee DOJ/SEC. I was appointed as an observer at the request of US and German authorities. I am the first non-American to be appointed to this position, and so far I'm the only non-American observer.
The objective of my work is to ensure that internal controls at Siemens are excellent and free from corruption. I am heading a delegation of several lawyers and this is the second year of their audit in different countries. I have visited Austria, Russia, Brazil, China, Saudi Arabia and the United States of America, and am now visiting Egypt. We have done 500 interviews and checked 10,000 documents.
Q: What do you think of the reforms undertaken by Siemens in general and in Egypt in particular?
Siemens has made very important structural decisions. This happened under the new leadership of Peter Loescher, Siemens’ chief executive, who is a successful leader with international experience. I believe that the success and great advantage that characterizes Siemens is its ability to combine its international experience with the local spirit of the territory.
The representatives of Siemens are more in number than the representatives of the United Nations. As a German politician, I have never seen such a large number of representatives in any country. I am impressed with the work they have done in Egypt.
As an independent observer, I see that there is a need for collective action to promote fair competition (not just for the pricing of products), since such collective action will seek to reach the highest level of product quality, price and services, which would seriously challenge corruption throughout the world.
Q: As a formal finance minister of Germany, how did the world crisis, in your opinion, affect developing countries?
We all know that the global financial crisis started with the United States. They were giving loans without paying any attention to the importance of making sure that people could pay them back. The value did not rise as they had expected and a crisis ensued.
The United States and Europe were hit strongest by the financial crisis. Fortunately, developing countries were not hit as hard as they didn't have such elements in their portfolios. Thus, they were lucky to walk away from the crisis quicker than the others. Not only was this in their interest, but also in the interest of the global economy.
I do believe that the solution to the problem that has been implemented on an international scale was successful. Contrary to the financial crisis of 1929, everyone has cooperated in facing the crisis together. They worked on providing the necessary cash flow through the implementation of stimulation economic reform and financial programs, which account for 3 percent of the GDP in Germany, for example.
Returning things to what was before the crises will take between 10 to 15 years. This crisis, which severely affected Europe, America and Japan, revealed the need to develop a credible strategy to cover the huge deficit. When we succeed, the problem will be solved permanently. If not, problems will continue to appear from time to time.
Q: Do you see a way out?
There is an absolute necessity for a standard global financial system organized by tight control. Not only to audit the markets in which the elements of control are clear, but also to identify markets with no control in order to know it and its strategy. Due to globalization, the world has become a small village, but it does not have a global system. This is extremely important and should be a priority for the coming years.
Q: How do you analyze Greece’s financial crisis and its impact on EU countries and the exchange markets?
Greece itself is not a problem since its share in the total GDP for the European Union is 2.6 percent, but it created a problem by constantly disbursing more than its income. Unfortunately, Greece did not provide accurate figures when it entered the European Monetary Union (EMU). It wasn't at the level of maturity to join the EMU for the euro. Moreover, there is an agreement linked to the Treaty of Maastricht (1992). Its purpose was to deter countries from violating the established standards of the union through the use of warnings and fines.
Greece, like other countries, has benefited greatly from the introduction of the euro and should have used this to reduce its debt. Now, it has low interest rates, but with more debt than before. Greece must implement the reform programs in order to come out of this crisis. Europe is helping and has given assurances, but Greece must solve its own problems, first and foremost, its huge debt.
This raises a question relating to the global financial crisis. How can a country deal with such a significant increase in debt, caused by this crisis? Countries hit hardest will not recuperate in a year or two, but will require a period ranging between 10-15 years. Frankly, Greece won't cause problems for the euro, but if other euro area countries such as Germany, France and Italy solve their problems too, this will lead to a calm in financial markets.
EMU standards require that the deficit in the budget of any country not exceed 3 percent and debt not exceed 60 percent, but now almost all of the countries are no longer committed to this. Therefore, they need to work towards reaching these standards once again. This will also take time; it will be 10 years before we are able to create balanced financial relationships.
Q: In your opinion, which countries were more effective in confronting the financial crisis? And are we ready to face another crisis?
Developing countries, for various reasons, have dealt better with the financial crisis. For example, Egypt is expecting a growth rate between 7 to 8 percent. The Europeans could never dream of this, although of course we know that higher inflation is in Egypt. Countries such as Egypt, India, China and others are already acting as a balance within the global financial system.
Though we now understand some of the reasons for the problems we have faced, we are still lacking in solutions. The G20 Summit is an ideal platform from which to discuss the global system. This is very important in order to avoid a crisis that arises for the same reasons. Because every new crisis is by nature different, we have no established mechanism to confront each one. It is no longer possible to solve these problems at the national level only; we must approach them globally.
Q: How can this be applied to the euro?
The euro contains from 27 to 30 different European currencies. I would say that now it is not on the same level as the American dollar and the Japanese yen and other currencies. However, even though the euro is now experiencing some pressure, it remains an important currency, and the decision to establish this currency was an important one for the Europeans. It came as a necessary response to overcome the crises of world currencies.
Q: What are your expectations regarding the global economy?
There is no alternative to globalization. From time to time, there will be strikes directed at globalization, but it will continue on its path. Globalization must be equitable. In other words, people's roots and identity should be sustained.
There is famous saying: We must think on a global level, but when we work, we do it on a local level. I believe this is the correct method with which to meet the challenges of the next century.
Abeer Saady - Egyptian Journalist and writer.
