Instant Expert Kit - Wim Duisenberg

Sorry, I'm terrible with names . . .
On New Year's Day, Wim Duisenberg will become one of the most powerful unelected men in the world: president of the new European Central Bank. Together with a cabal of representatives from the other euro nations, this Dutch economist will set a uniform interest rate for most of the continent, and oversee the birth of the single currency. Whether we join EMU or not, Duisenberg and his decisions will be at the centre of just about every interest rate story for the next few years. But he is such an unknown to the British that even Tony Blair seems unsure how to pronounce his name, experimenting with "Dye-zenberg" and "Doo-zenberg".

So who gave him this job?
Everybody except France. Fourteen of the 15 member states of the EU were delighted with his track record. Born in Friesland in 1935, he seemed destined for a career in academia, working at the University of Groningen throughout his twenties. But left-wing politics and the high-spending days of the late 1960s led him to act as an adviser to the IMF and the Dutch central bank. He did well and briefly became professor of economics at Amsterdam, before joining the Dutch parliament. At the age of just 38 he was appointed finance minister in the ruling Labour Party (PvdA). However, his socialist policies proved difficult to implement in the aftermath of the 1973 oil crisis, and he began a drift to more conservative monetary values. Significantly, he tried to introduce Europe-wide currency realignments to allow EMU to go ahead at the original date of 1980.

Been in this game for a long time, then?
That's part of the attraction. But it is the tough and independent qualities he showed from 1982-96 as president of the Dutch central bank that really make him the best banker in Europe: he is credited with the Dutch "economic miracle" of reducing debt and lowering inflation, while allowing high spending. He comes from a tradition of politically active bankers with strong personalities; his predecessor, Jelle Zijlstra, had been prime minister. A chain-smoking country and western fan, passionate about golf, he is a reflection of his country's liberal yet efficient image. It is said that in the Netherlands there are three authorities: the queen, the prime minister and Duisenberg. His banking style is "ultra-orthodox" and he firmly believes that "political cries of anguish should be ignored". This horrifies many of the new left-wing European governments.

So the French kicked up a fuss at his appointment?
While the Socialist prime minister Lionel Jospin would certainly like to see a more flexible approach to monetary policy, it was the conservative President Jacques Chirac who tried to block Wim's appointment last May. The compromise is that Duisenberg will serve only half of his eight-year term, and then make way for the equally strict French candidate, Jean-Claude Trichet. European leaders tried to claim it was Duisenberg's own decision. At 62 he was simply too ancient to be in the post for eight whole years, explained Chancellor Helmut Kohl, 68 (who was preparing to ask the German electorate for another four years in office at the time).

So how will Wim cope with demands to be more slack with his cash?
After a year of being a Franco-German political football, he will be in no mood to compromise with the likes of Oskar Lafontaine, Germany's new finance minister, who has called for a lowering of interest rates to boost job creation. Until the euro has been proved a success, for which Duisenberg would be credited most, he will have little to offer the European public except his charm. The biggest rows are likely to be over transparency, an idea in vogue with almost everyone except Wim, who would rather the reasons for the central bank's decisions were never published at all. His choice of spokesman, Manfred Korber (formerly of the Bundesbank, and about as likely to discuss internal debate as a Trappist monk with laryngitis) indicates his determination on this issue.

One more thing . . .
Oh, yes. It's Dow-zenberkh.

Duncan Parrish

This article first appeared in the 01 January 1999 issue of the New Statesman, An earthquake strikes new Labour