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Economic issues 'never a priority' for ex-German Chancellor Helmut Kohl

DW's Manuela Kasper-Claridge spoke with veteran political advisor Roland Berger on the legacy of the recently deceased ex-Chancellor of Germany Helmut Kohl. A great man, yes, but flawed in many ways, Berger says.

DW: What is your assessment of Helmut Kohl's legacy from an economic point of view?

Roland Berger: The economic legacy of Helmut Kohl is dominated by his major political achievements, which are German reunification and the promotion of the European Union together with former French President François Mitterrand and ex-European Commission President Jacques Delors. Kohl always prioritized political visions, ideas and actions over economics. He never made economic issues a priority.

Does that also mean he committed big economic mistakes?

He definitely made at least three mistakes. First of all, under Kohl's chancellorship no major economic reform took place in Germany, like the ones that were pushed through by his successor Gerhard Schröder. Another mistake was in connection with German reunification, when Kohl allowed labor costs in East Germany to skyrocket to West German levels even though productivity in the former was essentially ten times lower than in the latter.

The third mistake was related to the introduction of the euro. Kohl supported the common currency, despite its many drawbacks, if I may say so. The euro was introduced without putting in place a formal leadership structure in the EU, without a political government to frame common political and economic policies for the eurozone.

The currency is solely based on the European Central Bank, an independent institution underpinned by the Maastricht Treaty. That treaty, which is supposed to guarantee the stability of the euro, has been violated over 200 times and this was a reason behind the euro crisis. It has in turn led to public and private debt crises in the currency zone.

But is it fair to pin the blame for all the current eurozone troubles entirely on Helmut Kohl, given that he might not have known all the things that we know now regarding the problems with the euro?

He could have known them all, because there were economists all over Europe who told the European leaders that the single currency would never work and that it had numerous defects.

Secondly, there were a lot of people in the economic and political world – for example then Prime Minister Edmund Steuber and Gerhard Schröder – who were critical about the introduction of the euro.

The problem with the euro, of course, was it was introduced at exchange rates which reflected the competitiveness of the different member states in the mid 1990s, but when the euro crisis broke out, this competitiveness between countries was very different.

Most of the European countries were used to simply devalue their currencies according to their needs. This devaluation and revaluation which was possible before the introduction of the euro was not there anymore. This led to the crisis.

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'Kohl was a master of the art of politics'

You knew Helmut Kohl personally, why didn’t he listen to economists and business leaders?

He was a very tough person. In the many meetings he had with the top managers of German industry - after reunification, for example - there was never an open discussion. He was essentially giving orders to them on how to rescue East Germany or to bring it up to the level he had in mind.

Let us talk about German reunification. From an economic perspective, what did he do wrong?

The real mistake was that Kohl allowed East German wages to rise almost up to West German levels, while the productivity of the East German economy was one tenth that of the West German economy.

This led very quickly to a total deindustrialization of East Germany and ultimately two thirds of the people lost their jobs and long-term unemployment in East Germany of more than 25 percent persisted for many years. Even now unemployment in the eastern part of Germany is double that of the western part.

Roland Berger Interview MKC (Interview)

Roland Berger (right): 'Under Kohl's chancellorship no major economic reform took place in Germany'

Are you saying that Helmut Kohl’s chancellorship was responsible for the economic troubles Germany experienced after unification?

Very simply, Helmut Kohl continued as chancellor of Germany for nine years after German reunification. All of this happened during that time. Gerhard Schröder, his successor, was elected only in 1998 and started his chancellorship in 1999. He inherited all those problems, which was the reason why he had to make such major reforms, starting from tax reform to labor market reforms, social security and pension reforms and to the so called Agenda 2010.

Helmut Kohl - you said yourself - was a great statesman, a great politician. Will you miss him?

Yes, I will certainly miss him because he was a great politician. He was also an impressive personality. He had the great gift of creating trust around him. Trust with all the heads of states whom he met during his chancellery. He made them friends. He and Germany desperately needed this kind of trust and friendships to achieve German reunification.

Roland Berger is a German entrepreneur, consultant and philanthropist. He is the founder and honorary chairman of the supervisory board of the international strategy consulting firm Roland Berger Strategy Consultants. He has been a closer advisor of former German Chancellor Gerhard Schröder.

The interview was conducted by Manuela Kasper-Claridge.

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