ECB’s Asmussen Is Where Money and German Politics MeetJeff Black and Birgit Jennen
In the afternoon, Joerg Asmussen is by his boss Mario Draghi’s side. In the evening, he’s among old party comrades.
As a day in the life of the European Central Bank’s German board member, June 25 wasn’t atypical. After attending a speech with ECB President Draghi in a Berlin hotel, he went on to a summer party thrown by the Social Democrats, the 46-year-old former deputy finance minister’s political home.
Since the global financial upheaval began in 2007, Asmussen has been wherever German politics and money meet. When the U.S. subprime crisis spilled into Europe’s biggest economy, Asmussen was there. When Greece needed a rescue, Asmussen helped cut the deal to keep the euro intact. When Draghi pushed through a bond-buying plan to calm markets in 2012 over Bundesbank objections, Asmussen backed him up.
Now, as Germany enters the final months of an election campaign, Asmussen is being touted as a potential finance minister if Christian Democratic Chancellor Angela Merkel is forced to share power with the SPD after the Sept. 22 vote.
“If the Social Democrats were to gain the finance ministry in a grand coalition, Asmussen has the best chance of taking that job,” said Juergen Falter, professor of political science at the University of Mainz. “Asmussen is the only candidate for that position that I can see far and wide.”
His insider’s knowledge of markets, finance and politics makes Asmussen unique among Germany’s two biggest parties, says former finance minister Hans Eichel. That would position him well in the event of a bipartisan coalition that polls give a better-than-even chance of happening.
There are “not enough people who, like Asmussen, understand the financial markets. Those few then become indispensable,” said Eichel, a Social Democrat who was finance minister between 1999 to 2005. “That’s especially true for Asmussen.”
Still, Asmussen’s rise from a finance ministry officer responsible for international economic and monetary affairs in 1996 to the board of the world’s second-most important central bank hasn’t been without blemishes.
While he helped design a rescue for German banks in 2008, Asmussen had previously sat on the supervisory board of Dusseldorf-based IKB Deutsche Industriebank AG, the first to be bailed out after the U.S. mortgage-bond collapse.
Asmussen created opponents in the SPD’s rank and file by his advocacy of liberalization in the financial industry -- for example through his support during Merkel’s first term of a new German body to promote asset-backed securities.
“Asmussen is tactically oriented -- he positions himself in whatever direction the wind is blowing,” says Michael Mueller, a former Social Democrat deputy environment minister, who knows Asmussen from internal government meetings.
In March, the banking crisis in Cyprus pushed European policy makers including Asmussen into a corner. At a late-night press conference on March 16, Asmussen backed a deal to tax all Cypriot bank-account holders to help pay for a bailout. After the country’s parliament rejected it and markets protested, the deal was revised just over a week later.
Asmussen declined to be interviewed for this article.
On April 9, Asmussen, a native of Flensburg near the Danish border, was at the microphone before a half-empty nave in the former Church of the Cross in Nuertingen, a town of about 40,000 near Stuttgart.
Standing in front of a stained-glass window depicting the crucified Christ, Asmussen explained the ECB’s economic outlook to guests invited by the local CDU lawmaker. He then gave a synopsis of the euro-area’s policy debates. The event, one among many, helps explain his part of growing profile.
Since being appointed to the ECB’s board in January 2012, the University of Bonn-trained economist has criss-crossed Germany explaining what the central bank can and can’t do to ease the debt crisis. This year, he’s addressed audiences in provincial cities from Kiel to Schwaebisch Gmuend and Magdeburg to Ingolstadt, seeking support for the central bank and for pro-European Union policies.
In a country where both the euro area’s bailout fund and the ECB’s bond-buying plan are the subject of cases at the Constitutional Court, that can be a tough sell.
In that time, about half of Asmussen’s 19 official speaking engagements in Germany have been in Berlin, where he lives with this family. That’s where he’s esteemed the most -- among the political elite of both Germany’s major parties.
Both Merkel and Finance Minister Wolfgang Schaeuble “value him highly,” even though they’re from the opposite side of the political divide, Eichel says.
As a regular participant in meetings of European finance ministers, Asmussen has shown how close the independent ECB has grown to political decision makers.
On June 20, in a dark gray slim-fit suit, skinny tie and metal-framed spectacles, Asmussen arrived for a meeting of finance ministers in Luxembourg alongside Schaeuble and his staff. He chatted with his successor as deputy finance minister, Thomas Steffen, before speaking to the cameras.
“With Asmussen, it was quite clear that the Germans wanted their guy to represent their interests at the ECB,” said Christian Schulz, senior economist at Berenberg Bank in London. “To have such a pragmatist back in the finance ministry would be a definite plus for the euro zone. That may not make him popular with the German public though.”
A grand coalition, reprising the SPD-CDU government under Merkel that ruled from 2005 to 2009, has about a 60 percent chance of becoming reality, if Merkel’s current coalition partners, the Free Democrats, suffer a slump in their vote, according to Falter, the political scientist.
Come September 23, the day after the federal election, if the SPD is positioned to join a government, Asmussen’s phone could be ringing.
“Asmussen has proven in the past that he can lead,” says SPD lawmaker Johannes Kahrs, when asked if Asmussen could be in the running for office on that day. “He’s a man with ability.”