imfboss has invited candidate assessments from civil society voices in the home countries of the candidates to head the IMF. Throughout the process we will be posting these here for your benefit.
By Peter Wahl, World Economy Ecology and Development (WEED), Berlin, Germany
Axel Weber was head of the German Central Bank, the Bundesbank, from 2004 until April 2011. He had been appointed by the Schröder government, which consisted at that time of the Social-Democratic Party and the Green Party. Before his assignment he was part of the so called “Five wise men” an influential advisory board of five German top economic institutes to the federal government.
Weber, a university professor of economics, represents the hard core monetarist school and the tradition of the Bundesbank from the times of the Deutschmark. This paradigm of the Bundesbank has been imposed to the euro-zone and the anchored in the statutes of the European Central Bank (ECB).
It was therefore no surprise, that Weber did not understand the system in which he was playing quite an important role. When the first German bank, the IKB, was collapsing in August 2007 as a result of the rising tide of the US-subprime crisis, he declared that “the exposure of German Banks in the American real estate market is limited. It is concentrated on investments with a high rating. Any comparison, made by some media reports, between the present economic situation and the banking crisis of 1931 are completely erroneous.”
Even the financial crisis would not make an impression on Weber’s belief in the monetarist dogmas, in particular that a central bank has nothing to do other than to prevent consumer price inflation. He therefore strongly opposed the crisis management of the ECB in the Euro crisis. As an important member of the ECB’s board of directors he publicly contradicted the decision of the ECB to break with its own rules and to buy the government bonds of Greece, Portugal and Ireland in the secondary market. As Merkel had, after some resistance, accepted to support the heavily indebted Euro-countries, Weber felt politically isolated and resigned from his post at the Bundesbank and left Germany for a teaching post at the University of Chicago.
Weber’s resignation was also the end of Merkel’s hope to place Weber at the top of the ECB after its current head Jean-Claude Trichet’sterm ends this year. This would have been another element in the strategy to impose the German model to the Euro-zone.
The way how Weber handled the conflict over the management of the Euro crisis shows that ideology is more important to him than diplomatic skills and strategic thinking. Such a person is not suited to deal with the complex configuration of interests in a multinational institution, which increasingly has to take into consideration that the balance of power in the world is changing.
In addition Weber has never signalled any interest in development and the problems of the emerging countries. With his narrow mindedness he might be good for Chicago, but not for the IMF.
Given his behaviour at the end of his career at the Bundesbank, it is not very probable that Merkel will nominate him as German candidate for the IMF.