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Online Original: Horst Kohler/Germany: Going Back Is Impossible

Cover Story -- Voices of the New Europe

ONLINE ORIGINAL: Horst Kohler/Germany: Going Back Is Impossible

Horst Köhler was a fast-rising official at the Federal Finance Ministry in Bonn when the Berlin Wall was torn down. He remembers "the euphoria, the relief, and the happiness" of the occasion. "You only witness such an amazing event once in your lifetime, and then only if you're lucky," he says.

The collapse of communism was particularly poignant for Köhler because his origins were in the East. Born in Skierbieszow, Poland, in 1943, he and his family fled to East Germany at the end of World War II and then, nearly 10 years later, to Baden-Württemberg in the West.

The fall of the Wall and its repercussions have had a direct impact on Köhler's professional life, too. Appointed Undersecretary of State at the Finance Ministry in 1990, he was heavily involved in German reunification, and he negotiated the financial agreement between Bonn and Moscow on the withdrawal of Russian troops from Germany.

Now 56, Köhler is president of the London-based European Bank for Reconstruction & Development (EBRD), which was set up shortly after communism crumbled to support the transition in Central and Eastern Europe. Overall, he's an optimist. "I'm convinced that freedom and democracy have now been firmly rooted" in those once-totalitarian dictatorships, he says. "The economic reform process has gone so far that there is no possibility of command economies being reinstated."

Indeed, 10 once-communist countries soon will begin formal talks to enter the European Union. In some respects, says Köhler, the candidates for EU membership are actually ahead of some existing members. Among other things, he is impressed that a fifth of all obligatory pension contributions in Poland now go into private funds. "Many EU members haven't reached that level yet," he points out. "Some countries in the West should start making transitions of their own."

Still, Köhler recognizes that there's disappointment in transition countries because living standards haven't improved as fast as was initially hoped. "The solution is to press ahead with reforms," he says.

He's now pushing a new strategy at the EBRD called "Moving Transition Forward," which emphasizes restructuring of the financial sector, supporting small- and medium-sized enterprises, and improving infrastructure. The goal is to improve the investment climate in the East, thereby drawing in more Western companies. "More investment is critical," he says. Ten years after the Wall fell, Köhler is still picking up the pieces.By David Fairlamb in Frankfurt

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