Economic Campaign
February 24, 2009
In an interview with the London-based Financial Times this week, Steinmeier said he would push for tough new regulations for investors, shareholders and managers if elected to Germany's top post in the fall.
"To recover from this will require more than crisis management ... It will take many years of work to restore people's confidence in this economic system and its rules," Steinmeier told the newspaper in an interview published on Monday, Feb 23.
His comments come as Europe's largest economy grapples with its worst recession in decades and struggles to prop up tottering banks and rescue ailing companies in an attempt to avoid large-scale layoffs.
Steinmeier, currently the country's foreign minister and vice chancellor, is leading the Social Democrats to challenge current Chancellor Angela Merkel's conservative bloc in national elections scheduled for September this year.
The interview with the London Financial Times is seen to be an attempt by Steinmeier to raise his profile ahead of elections, according to the dpa news agency.
Steinmeier facing uphill battle
It's been a difficult few years for Steinmeier's Social Democratic Party (SPD), which has seen its popularity fall to historic lows. The latest polls show that only 22 percent of Germans would vote for the SPD if elections were held today. That's far short of the majority Steinmeier would need to become chancellor.
So far, the party has been unable to capitalize on voters' worries about slowing economic growth and impending layoffs. And the party has until now been unable to stop a surge in popularity for the opposition business-friendly Free Democrats (FDP).
Steinmeier offered an indirect criticism of the FDP during the interview by criticizing the policies that led to the recent economic boom and bust.
"The turbo-capitalism of the past few years is dead, irrevocably so," Steinmeier told the Financial Times. "We must now create a new order for the future," he said.
Making the case for intervention
Steinmeier stressed the need for aggressive government intervention when necessary to help the economy. Boosting consumption or offering tax cuts simply isn't enough when it comes to protecting Germany's industrial base during a global recession, he said.
Steinmeier said he does not favor protectionism but he did say he believed the government should intervene to protect key German industries, instead of relying on stimulus measures, according to the FT. He also hinted that bailouts could be acceptable in rare cases.
In the interview, Steinmeier proposed increasing the minimum amount of time investors must hold shares to avoid paying capital gains tax. He also criticized fair-value accounting for encouraging risk-taking. And he suggested the government set limits on the amount of debt private-equity investors should be allowed to use when taking over a business.
Steinmeier also warned that Germany's business culture was changing. "Many shareholders became interested primarily in short-term success," he said.
Focus on reform
Merkel, Steinmeier's rival for the upcoming elections, has made it clear that she also wants economic reform.
This past weekend, Merkel chaired a meeting of the European Union's biggest economies. There, leaders drew up an action plan for overhauling the global financial system and combating the economic crisis.
The proposals will be presented in April to leaders of the Group of 20 (G20) leading industrial and emerging economies. Merkel used the meeting in Berlin to signal that she is keen to play a leading role in drawing up a new regulatory framework for tackling the global financial crisis.
Merkel has proposed cracking down on hedge funds and has endorsed a charter aimed at encouraging sustainable economic growth.
Author: Trinity Hartman (dpa/ft)
Editor: Sonia Phalnikar