Saturday, January 04, 2014

Merkel's high standards on clean government and transparency

Given the endless complaints from Germans about how corrupt their southern eurozone neighbors like Greece and Italy supposedly are, it's worth taking note of the high ethical standards displayed by the German political elite. The leading example currently in the news is the former Chief of Staff of Chancellor Angela Merkel's Chancellery, Ronald Pofalla.

Ronald Pofalla, 2007: the face of German integrity and anti-corruption

Spiegel International reports in Conflict of Interest? Ex-Merkel Deputy's Career Move Under Fire 01/03/2014:

In recent months, moves by former German ministers and senior politicians into lobbying positions have been a lightning rod for criticism, drawing allegations that these high-profile former decisionmakers are being bought by the private sector. The latest politician to draw unwelcome headlines is Chancellor Angela Merkel's outgoing chief of staff, Ronald Pofalla, following reports this week that he may join the board at Deutsche Bahn, Germany's partly government-held national railway.
Deutsche Welle English reports in Merkel's right hand man to take lobbyist job 01/03/2013:

The anti-corruption NGO Transparency International has criticized the reported move. (Transparency kritisiert Pofalla-Wechsel Yahoo! Nachrichten Deutschland 03.01.2014) Christian Humborg of the German branch of the organization says:

Wir finden es problematisch, weil hier wieder ein Politiker durch die Drehtür geht, ohne dass wir Regelungen haben, die festlegen, wann das so okay ist und was nicht. Und zum anderen wundern wir uns, dass bei einem öffentlichen Unternehmen offensichtlich ein Posten geschaffen wird, der so gar nicht vorgesehen ist, wo man den Eindruck hat, dass er möglicherweise extra für Herrn Pofalla geschaffen wurde.

[We find it problematic, because here again a politician is going through the revolving door, without our having regulations that determine when that is okay and when not. And, for another thing, we wonder that in a public business a post is clearly created that was not at all expected, where one has the impression that it was possibly created extra for Herr Pofalla.]
The compensation he would receive in his reported new lobbying job for the German railway system would be only chump change. Well, chump change by Mitt Romney standards:

Both the Saarbrücker Zeitung newspaper and news agency Reuters reported this week that Pofalla plans to join Deutsche Bahn's board, where he is reportedly to be handed responsibility for political contacts in Germany and at the European Union level in Brussels. Deutsche Bahn officials have neither confirmed nor denied the report. Pay for a position on Deutsche Bahn's board runs between €1.3 million ($1.7 million) and €1.8 million per year.
How bad is this practice? Sebastian Gierke in Vertretet das Volk, nicht die Firmeninteressen Süddeutsche Zeitung 04.01.2014 suggests that it's reaching US American levels of corruption. And that's grim. He writes:

Die USA sind ein erschreckendes Beispiel dafür. Einige Firmen zahlen Angestellten dort hohe Boni, wenn sie auf schlechter bezahlte Posten in der Politik wechseln. Unter anderem Banken, Mitauslöser für die weltweite Finanzkrise, sicherten und sichern sich so Einfluss und Macht in Washington. Jeder weiß es, kaum einen kümmert's.

[The USA is a frightening example of this. Some firms pay employees there high bonuses, if they move to lower paid posts in the political world. Among other banks, co-originators of the worldwide finance crisis, have secured and continue to secure influence and power in Washington in that way. Everyone knows it, hardly anyone cares.]
But, surely you say, that upright Chancellor Merkel must be disturbed by such practices, seeing as how she holds Germany up to the lesser nations of the eurozone as a model for responsible economic practices lacking the corruption Germans are especially fond of accusing Italians of indulging? Well,not exactly. As Spiegel International reports:

Last year, former senior Chancellery official Eckart von Klaeden of Merkel's conservative Christian Democrats drew fierce criticism after leaving his position for an executive post at carmaker Daimler, where he became the company's chief lobbyist. The public prosecutor's office is currently investigating the possibility that the politician may have accepted advantages during his switch to the private sector because he met several times with Daimler representatives during his term in office. In addition, between January and May, he was also provided with government position papers on Berlin's response to a planned European Union tightening of CO2 emissions standards for cars, which have been contested by manufacturers including Daimler. Merkel, however, has defended Klaeden, saying he was not involved in automobile industry policy decisions. [my emphasis]
But I wouldn't want to suggest that Merkel only listens to Daimler on auto industry concerns. Deutsche Welle reported in October (BMW donation to Merkel's Christian Democrats prompts criticism 15.10.2013):

BMW's major shareholders Johanna Quandt and her two children Stefan Quandt and Susanne Klatten each donated 230,000 euros ($310,000) to the Christian Democrats. The transfers went through on October 9 and were made public by the German parliament on Tuesday; the CDU confirmed the receipt.

The family behind BMW, based in the conservative heartland of Bavaria, is a traditional source of CDU income. The trio donated a combined 450,000 euros after the last election. ...

The timing of the windfall prompted criticism, however, as the news broke hours after Germany blocked EU efforts to establish tougher carbon-dioxide emissions targets for passenger cars as of 2020. BMW's high-end fleet of cars tailoring to executives and long-distance travelers has an above-average emissions output compared to much of the European competition.
But I'm sure there was no connection at all between Merkel's loyal service to the auto lobby the BMW family's donations of over $900,000. And it's not like that a lot of money. Shoot, it barely amounts to half a year of the salary Pofalla looks to score at Deutsche Bahn!

And it's no doubt just coincidence that the EU decision that Merkel blocked to the benefit of the auto lobby just before the completely unrelated Quandt family donations was the same decision Von Klaeden had means to influence before his completely unrelated hiring as a Daimler lobbyist.

Sebastian Gierke writes:

Im Fall von Pofalla musste die Satireseite Postillion nur noch die Fakten aufschreiben: Wieder einmal ist die Realität irrsinniger als jede Fiktion. Das ist gefährlich.

Und es gibt viele weiter Beispiele: Martin Bangemann, ehemaliger EU-Kommissar für Industrie und Telekommunikation und Ex-FDP-Chef, nimmt während seiner Amtszeit einen Job beim spanischen Telekommunikationsunternehmen Telefónica an. Altkanzler Gerhard Schröder wird kurz nach seiner Abwahl Aufsichtsratschef des Pipeline-Konsortiums NGEP. Der frühere Staatsminister im Kanzleramt, Eckart von Klaeden, geht als Cheflobbyist zu Daimler. Martin Jäger war vor seinem Wechsel, ebenfalls zu Daimler, Sprecher von Außenminister Steinmeier.

[In Pofalla's case, the satire site Postillion just had to write down the facts: Once more, reality is goofier than any fictions. That's dangerous.

And there are many more examples: Martin Bangemann, former EU Comissioner for Industry and Telecommunications and former FDP chief, accepted during his time in office a job with the Spanish telecommunications firm Telefónica. Former Chancellor Gerhard Schröder became the head of the oversight council of the pipeline consortium NGEP shortly after being voted out of office. The former State Minister in the Chancellor's Office, Eckart von Klaeden, is going to Daimler as chief lobbyist. Martin Jäger was before his job change, also to Daimler, the spokesperson for Foreign Minister Steinmeier.]
In Pofalla's case, it's not even clear that he intends to give up his seat in Parliament while he serves as a modestly paid (cough, cough) lobbyist for the Deutsche Bahn.

The lesser nations of the eurozone can only be glad they had a shining example of integrity and economic efficiency like Germany to look up to. They must be terribly grateful.

Two Greeks, Antonios Kantas and Thomas Liakounakos, must have been especially grateful. Kantas is a former senior official in the Greek Defense Minister who confessed to an Athens prosecutor in December that he had received €600,000 back in 2001 from Liakounakos, who worked closely with the firm now known as KMW (Krauss-Maffei Wegmann), to facilitate the sale of Leopard 2 tanks produced by KMW to Greece. He expected to get a total of €1.7 million after the full set of expected transactions were done. KMW denies that they knew what Liakounakos' company was doing on their behalf. Why, this was just one corrupt Greek corrupting another corrupt Greek! Surely no upstanding German businesspeople would ever sink to such levels!! (David Böcking und Giorgos Christides, Rüstungsdeals mit Griechenland: Die Schmiergeldliste des Antonios K. Spiegel Online 28.12.2013; "Leopard 2": Deutsche Justiz überprüft Panzerdeal mit Griechenland Spiegel Online 28.12.2013; Tony Peterson, German arms firms in bribery claims over sale of Leopard tanks to Greece The Independent 12/29/2013)

Kantas is one of the inevitable products of what Jamie Galbraith calls the Predator State, the neoliberal ideal in which the state primarily functions to transfer tax money to private corporations and their owners. The amount he collected as a Defense Minister official over the Leopard 2 deals was only a few months worth of the salary Ronald Pofalla looks to rake in if he becomes the Deutsche Bahn's lobbyist. But according to Klaus Ott und Tasos Telloglou in Griechischer Ex-Spitzenbeamter gesteht Schmiergeld-Deal um deutsche Panzer Süddeutsche Zeitung 28.12.2013, Greek officials discover hidden account of €14 million, that he supposedly got from facilitating additional arms purchases by Greece. That's pretty impressive. Pofalla would have to work seven, maybe ten years to earn that much on a Deutsche Bahn lobbyist's pay!

Ott and Telloglou explain in a separate article, Auf gute Beziehungen Süddeutsche Zeitung 28.12.2013, explain that the Kantas/KMW case is just one part of a larger picture in which German politicians and weapons manufacturers pressure Greece by means (technically) fair and foul to buy weapons from German firms. At healthy profit margins, of course. The Great God Free Market must have his due, even if it requires a little market manipulation via bribes to do so. This is one of several ways that Greece's current dependence on Germany's goodwill in the euro crisis and debt management works to the benefit of the German and Greek One Percenters. To ordinary Germans, not so much. To ordinary Greeks, just the opposite; they wind up in depression conditions indefinitely.

If Merkel and Germany were to insist on a debt haircut for Greece, it would not only put pressure on German banks and highlight their insufficient capitalization. It would remove the automatic clout that German official now have when they make friendly hints that their Greek dependents should give favorable consideration to German arms manufacturers and other businesses.

There are probably more shoes to drop in the Kantas revelations. He may have also been involved in corrupt weapons deals with companies from France, Israel, Russia, the United States and Scandinavian countries. He had to have gotten that €14 million from somewhere.

Klaus Ott has been on the Greek Defense Ministry corruption beat for a while. In this German video report from , he talks about the jailing of a former Greek Defense Minister, Akis Tsochatzopoulos, Griechenland und der Fall Tsochatzopoulos Süddeutsche Zeitung 05.05.2012:

On his case, see also: Greek former minister Tsochatzopoulos guilty of fraud BBC News 10/07/2013.

None of this is meant to minimize the seriousness of corruption in Greek politics. Corruption in Greece, America and Germany is a major problem. In itself, it doesn't necessarily inhibit economic development, especially if the countries used as a standard of comparison also suffer major corruption problems. In the case of a hopelessly over-borrowed and effectively bankrupt country like Greece currently is, the corruption can have the effect in cases like weapons purchases of adding to difficulty of managing the already impossible debt burden. Which definitely seems to be happening in the case of Greece.

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