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Keeping Markets Open

Interview: Marco Vollmar (win)January 25, 2008

In an interview with Deutsche Welle on the sidelines of the World Economic Forum in Davos, former Siemens CEO Klaus Kleinfeld talked about a global hunger for raw materials and ways out of the current market crisis.

A door with a pile of sand bags in front of it
Germany should open, rather than close, its doors to the global economyImage: AP

Klaus Kleinfeld began his career at the Swiss company Ciba-Geigy before joining German technology giant Siemens in 1987. He managed the company's US operations from 2002 to 2003 and became CEO in 2005. He resigned in 2007 over Siemens' slush fund affair despite having no personal responsibility for the scandal. In October 2007, he became chief operating officer at US company Alcoa, the world's second largest producer of aluminum.

DW: How are the commodity markets shaping up in light of the current stock and financial market crisis?

Klaus Kleinfeld
Klaus KleinfeldImage: dpa

Klaus Kleinfeld: Commodity markets are very strongly driven by China's and Asia's industrialization. Raw materials are needed there because these countries have relatively little of them. Population growth and industrialization are driving forces and that's going to continue to be the case.

The big question is how strong growth will be. I'm convinced that this will depend on chances for growth in the developed countries. But it will still be stronger and better despite of it all. That's why the scarcity of raw materials will continue since they'll continue to be in high demand. That's positive news for Alcoa.

Why? Because prices will remain on a high level with continuing strong demand?

It's a growth business and I'm saying that prices will develop in a positive, stable way.

Which markets are up and coming? What role does Africa play?

A young man in the Democratic Republic of Congo carries wet Cobalt on his back
Africa remains mainly interesting because of its raw materialsImage: AP

Africa is definitely an issue. Africa continues to be more of an issue in terms of delivering raw materials rather than using them. I sincerely hope that Africa, which has long been called a forgotten continent, will strongly profit from this and experience a stronger industrialization. This can already be very much seen in South Africa and in some northern African countries.

Here in Davos, people are talking intensively behind the scenes about continuing talks on global free trade. At the same time, there's currently a global trend -- also in Europe and Germany -- to protect markets. Do you think that's a good thing?

No, I think it's missing the point. I believe that there's nothing that has contributed and led to global wealth over the past 20 years more than the opening of markets. Germany especially profited from this as an export-oriented country -- probably more than most others. That's why people would hurt themselves with this. One can only hope that these trends won't take over.

What can be done to overcome the current economic crisis?

I think the recipe is always the same. Competitiveness has to be fostered, including an increased flexibility and people have to be careful to stay on a course of innovation. That's always been -- and will hopefully always be -- one of the greatest strengths of the German economy. But needless to say, you can't completely separate that from costs and the challenges that come with it.