24 December 1941 |
Hans Eichel is a German politician (SPD). As of 2014, he is Germany's second longest serving Minister of Finance since WWII reconstruction. Eichel chaired the G-7 in 1999 and chaired the G-20 in 2004. Before that, Eichel served eight years as Premier of Hesse, home to Frankfurt and the European Central Bank and Germany's wealthiest state per capita with an economy larger than Finland, Vietnam and Pakistan.
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. 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. It is widely regarded as the most successful economic reforms in Germany in over half a century, and the most successful economic reforms in any G-7 country in 30 years.
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 G-20 rapidly grew to become the most influential economic body in the world. Eichel went on to serve as chairman of the G-20 in 2004, when he pressed for the reforming of the international financial architecture and establishing a code of conduct on preventing financial crises.
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.
He 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. 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.
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.
From 1975 to 1991, he was the mayor of Kassel, initially gaining the office at the age of only 33. From 1991 to 1999, he was Premier (Ministerpräsident) of Hesse in a coalition with the Greens. The coalition won again four years later and was the first red-green coalition to serve two consecutive terms. However, he unexpectedly lost the state elections in February 1999 to Roland Koch's CDU and lost his office. However, in March Oskar Lafontaine resigned as German finance minister and Eichel replaced him a month later. Eichel also served as President of the Bundesrat from November 1998 to April 1999. He has been a member of the Bundestag since 2002, but has announced to retire in 2009.
At the beginning of his term of office, he tried to decrease the German federal deficit and wanted a balanced budget until 2006. Initially he was successful and earned the nickname Iron Hans or Iron Minister 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
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 these plans. After the election Eichel had to recalculate the budget due to the deteriorating economy and found that he would have $18 billion 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.
Eichel had a public spat in 2003 with then IMF chief Horst Kohler, accusing Kohler and the IMF of being too harsh on Germany and too soft on the risks and policy failures of the United States. Kohler 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. 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 (finance) 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.
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 Institute, 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 Prime Minister Paul Martin as the three key initiators.
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.
The group was formally inaugurated in September 1999, Canadian prime 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.
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Walter Wallmann (CDU)
|Minister-President of Hesse
Roland Koch (CDU)
Oskar Lafontaine (SPD)
|Minister of Finance of Germany
Peer Steinbrück (SPD)