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Hans Eichel

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Hans Eichel
Federal Minister of Finance
In office
12 April 1999 – 22 November 2005
ChancellorGerhard Schröder
Preceded byOskar Lafontaine
Succeeded byPeer Steinbrück
Minister President of Hesse
In office
1 April 1991 – 7 April 1999
DeputyJoschka Fischer
Rupert von Plottnitz
Preceded byWalter Wallmann
Succeeded byRoland Koch
President of the Federal Council
In office
1 November 1998 – 23 April 1999
PresidentRoman Herzog
ChancellorGerhard Schröder
Preceded byGerhard Schröder
Succeeded byRoland Koch
Personal details
Born (1941-12-24) 24 December 1941 (age 82)[1]
Kassel, Germany
Signature

Hans Eichel (born 24 December 1941) is a German politician (SPD) and the co-founder of the G20, or "Group of Twenty", an international forum for the governments and central bank governors of twenty developed and developing nations to discuss policy issues pertaining to the promotion of international financial stability.

He was Germany's Minister of Finance between 1999 and 2005. Eichel was chairman of the G7 in 1999 and chairman of the G20 in 2004.[2] Before that, Eichel served as the 6th Minister President of Hesse from 1991 to 1999 and as the 52nd President of the Bundesrat in 1998/99.

During his time in office, Eichel played a very important role in two landmark reforms – the far reaching reform of German society and economy (also known as Agenda 2010) and the creation of the G-20 to reflect the rebalancing of world power. Some argue that Agenda 2010 helped turn Germany from the 'sick man of Europe' into the best performing major Western economy in the aftermath of the global financial crisis. While some parties regarded it as the most successful economic reforms in Germany in over half a century, as well as in any G7 country in 30 years, it also created massive controversy and protests.[3][4][5][6] The effects of the Agenda 2010 on German economic development remain disputed.[7]

As chairman of the G7, Eichel initiated the creation of the G20 together with then US Treasury Secretary Larry Summers and hosted its inaugural meeting in Berlin. The G20 rapidly grew to become the most influential economic body in the world.[8] Eichel went on to serve as chairman of the G20 in 2004, when he pressed for the reforming of the international financial architecture and establishing a code of conduct on preventing financial crises.

Early life and education

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Eichel was brought up in Kassel where he did his Abitur in 1961. He then completed a degree in German, philosophy, political science, history and education at the universities of Marburg and Berlin, graduating in 1970.[9] After that, he worked as a teacher for five years in a Kassel Gymnasium, the Wilhelmsgymnasium, before winning election as the mayor of Kassel at age 33.

Political career

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Career in local politics

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In his early days, Eichel was known for his campaigns for green causes and against nuclear weapons but for most of his political career, he became associated with stimulating investment and creating jobs. He was noted for his consensus building skills and an ability to mix pragmatism with a mastery of detail. Eichel believed strongly in European federation and on merging Europe's armies and foreign services, and on giving them a single foreign minister. He argued that Europe would be very much stronger if it spoke to the outside world with one voice.[10]

From 1975 to 1991, Eichel served as mayor of Kassel, initially gaining the office at the age of only 33.

Minister-President of Hesse, 1991–1999

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From 1991 to 1999, Eichel was the Minister-President of Hesse in a coalition government with the Green Party. The coalition won again four years later and was the first red-green coalition to serve two consecutive terms. Eichel also served as President of the Bundesrat from November 1998 to April 1999. However, he unexpectedly lost the 1999 state elections to Roland Koch's CDU and lost his office.

Minister of Finance, 1999–2005

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In March 1999, Oskar Lafontaine resigned as Minister of Finance in the government of Chancellor Gerhard Schröder, and Eichel replaced him a month later. He served as a member of the Bundestag from 2002 to 2009.

Eichel in 2001

At the beginning of his term, Eichel tried to decrease the German federal deficit and wanted a balanced budget until 2006.[11] Initially he was successful and earned the nickname Iron Hans[12] or Iron Minister[13] because of his ability to exercise strict budget discipline. The Economist magazine's description of him:

It was Mr Eichel who achieved Germany's biggest tax cuts in half a century, preached a fierce austerity, and stuck rigidly to a policy of squeezing the budget. For two years after taking over as finance minister in 1999 from the left-wing, fiscally extravagant Oskar Lafontaine, Mr Eichel was the government's star. Despite his penchant for spending cuts, he was widely admired for his integrity, courage, and unwavering loyalty to Chancellor Gerhard Schröder[14]

Despite initial success, due to constraints by the cabinet and by the worsening economic situation after the short boom in 1999/2000, he had to abandon those plans. After the election Eichel had to recalculate the budget due to the deteriorating economy and found that he would have $18 billion[15] less in tax revenue than was anticipated. The German budget deficit was 3.8%, exceeding the 3% ceiling set by the EU's Stability Pact. Until 2005, when he stepped down, Eichel did not reduce the deficit to under the 3% stability threshold, mainly due to the decision from Chancellor Schroder to not force excessive austerity on the German people on top of the deep economic reforms taking place.

Toward the end of his term, in late 2004, Eichel and U.S. Treasury Secretary John W. Snow worked out a proposal to cancel 80 percent, or about $33 billion, of the debt owed by Iraq to a group of creditor nations known as the Paris Club, capping an American effort for debt forgiveness.[16]

Controversy

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Eichel had a public spat in 2003 with then International Monetary Fund (IMF) chief Horst Köhler, accusing Köhler and the IMF of being too harsh on Germany and too soft on the risks and policy failures of the United States. Köhler defended the harsh criticism of Germany and rejected the notion that the IMF was too soft on the US. However, experts pointed out in 2003 that there was growing evidence that the IMF was reluctant to explore the more problematic aspects of American economic and financial policies such as the concentration of derivative risks at a few big US financial institutions and early warning signs of the building up of risks in Fanny Mae and Freddie Mac.[17] The public and global sentiment in 2003 was against Eichel as Germany was then viewed as the 'sick man of Europe' but consequently, the developments of the global financial crisis radiating out of the US, happening in parallel with the renaissance of the German economy, would suggest that Eichel was in the right.

After the tax reforms of 2001 and 2002, the German banking industry association sent Eichel's internal revenue ministry three letters in total in late 2002 and early 2003 warning about a tax loophole allowing investors to receive more than one tax reimbursement for a single short transaction. Depending on how many times investors short sold a share in a period of 48 hours after a dividend disbursement, tax refunds were erroneously paid out up to four or five times for that single short-sell transaction. Eichel's ministry took no corrective action in response, and from that time forward, gradually larger and larger amounts of forfeited tax revenue resulted.[18]

G-20

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The G-20 was created in 1999 in the aftermath of the Asian financial crisis as a forum for cooperation and consultation on matters pertaining to the international financial system.

According to senior researchers at the Brookings Institution, the G-20 was founded at the initiative of Eichel, then German finance minister who was also concurrently chair of the G-7. Other sources identify Hans Eichel, US Treasury Secretary Larry Summers, and Canadian Finance Minister Paul Martin as the three key initiators.[19][20]

According to University of Toronto professor John Kirton, the membership of the G-20 was decided by Eichel's assistant Caio Koch-Weser and Summers' assistant Timothy Geithner. In Kirton's book 'G20 Governance for a Globalised World',

Geithner and Koch-Weser went down the list of countries saying, Canada in, Spain out, South Africa in, Nigeria and Egypt out, and so on; they sent their list to the other G7 finance ministries; and the invitations to the first meeting went out.[21]

The group was formally inaugurated in September 1999, Canadian finance minister Paul Martin was chosen to be the first chairman and German finance minister Hans Eichel hosted the first G-20 meeting of finance ministers in December 1999 in Berlin.[22]

Other activities

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Eichel currently leads the expert group on sustainable structural development for the Friedrich Ebert Foundation, the world's oldest and largest foundation to promote democracy and political education.

In addition, Eichel has been holding various paid and unpaid positions since leaving active politics, including the following:

References

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  1. ^ "Hans Eichel". Hans-eichel-kassel.de. 24 December 1941. Retrieved 14 April 2022.
  2. ^ Kirton, Professor John J. (28 March 2013). G20 Governance for a Globalized World. Ashgate Publishing. ISBN 9781472404503.
  3. ^ Eric Lam (28 December 2011). "Canada's economy second-best among G7: BMO - Financial Post". Financial Post.
  4. ^ Larry Elliott (6 March 2003). "Europe's powerhouse in crisis". the Guardian.
  5. ^ "The economy: Dissecting the miracle - The Economist". The Economist. 13 June 2013.
  6. ^ "Mehr als 470.000 protestieren gegen den Sozialabbau". 19 May 2010.
  7. ^ Böcking, David (12 March 2013). "Warum die Agenda 2010 eine unverstandene Reform ist". Der Spiegel.
  8. ^ "G20 - The Treasury". Archived from the original on 14 January 2014.
  9. ^ "Eichel, Hans Biography". S9. Retrieved 13 September 2012.
  10. ^ "Hans Eichel, stodgy but safe". The Economist. 18 March 1999.
  11. ^ Alexander Kohnen, Verena Töpper. "Wie aus Büroklammer Eichel der Spar-Hans wurde". MACHTMASCHINE. Retrieved 13 September 2012.
  12. ^ "CBSi". FindArticles.com. Retrieved 14 April 2022.
  13. ^ "Germany broke?". CER. Archived from the original on 9 April 2001. Retrieved 13 September 2012.{{cite web}}: CS1 maint: unfit URL (link)
  14. ^ "Germany's finance minister: Under the gun - The Economist". The Economist. 15 May 2003.
  15. ^ "Germany's Budget Gap Sets a Bad Example". Businessweek. 24 November 2002. Archived from the original on 20 November 2002. Retrieved 13 September 2012.
  16. ^ Plan Cancels Some of Debt Owed by Iraq New York Times, 21 November 2004.
  17. ^ http://www.international-economy.com/TIE_Su03_Engelen.pdf [bare URL PDF]
  18. ^ "Peer Steinbrueck's Gaping Tax Loophole". German news Web site. 1 May 2013. Retrieved 1 May 2013.
  19. ^ Colin I. Bradford (1 April 2004). "Global Economic Governance at a Crossroads: Replacing the G-7 with the G-20". The Brookings Institution.
  20. ^ "Who gets to rule the world". Macleans (Canada). 1 July 2010; Thomas Axworthy. "Eight is not enough at summit." Toronto Star (Canada). 8 June 2007. Retrieved 16 April 2011.
  21. ^ Kirton, Professor John J. (28 March 2013). G20 Governance for a Globalized World. Ashgate Publishing. ISBN 9781472404503.
  22. ^ "What is the G20?".
  23. ^ Peter Brors and Christian Rickens (25 August 2020), Aufsichtsräte Wiedeking, Cordes, Eichel und Fuchs verlassen Agentur WMP im Streit Business Insider.
  24. ^ Board of Trustees Archived 8 January 2017 at the Wayback Machine Institute for Law and Finance (ILF).
  25. ^ Advisory Board Archived 4 August 2018 at the Wayback Machine Official Monetary and Financial Institutions Forum (OMFIF).
  26. ^ Board of Trustees Rheingau Musik Festival.
  27. ^ Board of Trustees 7000 Oaks Foundation.
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Political offices
Preceded by Minister-President of Hesse
1991–1999 		Succeeded by
Preceded by Minister of Finance of Germany
1999–2005 		Succeeded by
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