{"id":35114,"date":"2013-10-21T12:00:49","date_gmt":"2013-10-21T11:00:49","guid":{"rendered":"http:\/\/www.transcend.org\/tms\/?p=35114"},"modified":"2017-05-28T12:06:14","modified_gmt":"2017-05-28T11:06:14","slug":"global-power-project-connecting-josef-ackermann-the-institute-of-international-finance-and-the-euro-debt-crisis-part-2","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2013\/10\/global-power-project-connecting-josef-ackermann-the-institute-of-international-finance-and-the-euro-debt-crisis-part-2\/","title":{"rendered":"Global Power Project: Exposing the Institute of International Finance (Part 2) – Connecting Josef Ackermann, the IFF, and the Euro Debt Crisis"},"content":{"rendered":"

In\u00a0Part 1\u00a0of a Global Power Project expos\u00e9<\/a> on the Institute of International Finance (IIF), I examined the founding the institute as a response by leading world banks to organize and manage their interests in relation to the 1980s debt crisis. When the European debt crisis hit headlines in 2010, the IIF was again on the scene and playing a major part. At the center was the CEO of Deutsche Bank, Josef Ackermann.<\/i><\/p>\n

Josef Ackermann served as CEO of Deutsche Bank from 2002 to 2012, and over the same period served as Chairman of the IIF. Ackermann was also, and still remains, a member of the Steering Committee of the Bilderberg Group and continues to serve on the IIF\u2019s Group of Trustees, a board which includes a number of prominent central bankers including Christian Noyer, the Governor of the Bank of France and Chairman of the Bank for International Settlements (BIS); Jamie Caruana, the General Manager of the BIS; and Jean-Claude Trichet, who was the president of the European Central Bank from 2003 to 2011.<\/p>\n

During the early stages of the financial crisis, Ackermann served as an \u201cunofficial adviser<\/a>\u201d to German Chancellor Angela Merkel and her then-Finance Minister Peer Steinbrueck. In December of 2009, Ackermann was speaking at a summit in Berlin attended by Chancellor Merkel and several other German cabinet ministers, corporate CEOs and others, where he explained that while the financial crisis had largely been \u201cabated,\u201d many \u201ctime bombs\u201d remained — in particular, Greece, which\u00a0he referred to<\/a>\u00a0as the \u201cproblem child\u201d of Europe. Ackermann blamed the debt crisis on people having \u201clived beyond their means for years, if not decades,\u201d warning that pensions and health care systems would \u201ccompound the problem<\/a>\u201d in the future.<\/p>\n

The Financial Times has referred to Ackermann as a \u201creluctant power broker\u201d who \u201chas the ear of Angela Merkel, Europe\u2019s most powerful politician.\u201d Ackermann not only became one of the most influential bankers in the world, but a major political figure as well. As he himself explained: \u201cFinancial markets now are very political \u2013 political considerations have to play\u00a0an important role<\/a>.\u201d In 2011, Ackermann warned that in terms of Europe\u2019s crisis, \u201cI don\u2019t see a quick economic recovery, so we will have a longer time of somewhat lower growth \u2013 certainly three to five years.\u201d<\/p>\n

In October of 2011, Ackermann delivered a speech in which he said that Europe had \u201cnow entered a period of deleveraging\u201d which \u201cwill inevitably entail\u00a0a long period of austerity<\/a>\u00a0as governments, households and firms raise their savings.\u201d At an economic forum in December of 2011, Josef Ackermann stated that Europe had to get its debt under control, \u201ceven at the cost of national sovereignty,\u201d suggesting that neither \u201cthe pressure of financial markets\u201d nor austerity measures \u201cthreaten democracy.\u201d The real threat to democracy,\u00a0according to Ackermann<\/a>, was the \u201cexcessive debt\u201d of European states.<\/p>\n

In 2011, France and Germany agreed to negotiate directly with the “private sector” in the next planned Greek bailout agreement. The lead negotiator for the banks was the Institute of International Finance, which was brought in to discuss the potential for the banks to take a slight loss on their holdings of Greek debt. Ackermann was to be one of the lead negotiators for the IIF (also representing Deutsche Bank,a major private holder<\/a>\u00a0of Greek debt).<\/p>\n

The Institute of International Finance under Ackermann’s chairmanship in turn became directly involved in major European summits, providing key input and suggestions that led to the Greek bailout. In July of 2011, the IIF warned the Eurozone countries that they would have to conclude a bailout agreement for Greece in order to avoid financial markets \u201cspinning out of control<\/a>.\u201d The IIF delivered these warnings in a report delivered directly to European finance ministers, stating: \u201cIt is essential that euro area member states and the IMF act in the coming days to avoid market developments spinning out of control and risk contagion accelerating.\u201d<\/p>\n

The IIF undertook talks with Greek political leaders as well as EU officials, the European Central Bank and the IMF, with the organization noting that its managing director Charles Dallara and an IFF team \u201chad extensive meetings with very senior European government officials over several weeks.\u201d The three main IFF officials involved in discussions and negotiations were Charles Dallara (managing director from 1993-2013), Ackermann and Baudouin Prot, the Chairman of BNP Paribas.<\/p>\n

According to one report, Ackermann even attended a meeting of the European Council during the EU summit to discuss the Greek bailout. Dallara was reported to have engaged in a conference call with top EU officials, including the Eurogroup chair Jean-Claude Juncker and the European Commissioner for Economic and Monetary Affairs, Olli Rehn. Dallara also\u00a0reportedly met with<\/a>\u00a0European Council President Herman van Rompuy, then-French President Nicolas Sarkozy and Angela Merkel.<\/p>\n

Discussions continued over the following months with little resolution. In an October meeting, EU officials reportedly hit a wall, at which point they summoned Dallara as the representative of the banks to the meeting in order \u201cto break the deadlock.\u201d Dallara\u00a0met with<\/a>\u00a0Sarkozy and Merkel and other leading EU officials. While a general agreement was reached with the banks, negotiations over the technicalities continued into 2012,\u00a0taking place<\/a>\u00a0between the Greek government, the EU, IMF and the IIF.<\/p>\n

Ackermann explained that the banks were being \u201cextremely generous\u201d and then warned that failure to agree on a new program\u00a0would open<\/a>\u201ca new Pandora\u2019s box\u201d for the debt crisis. Ackermann spoke at the World Economic Forum where he said that any agreement would have to force Greece to adhere to \u201charsh new austerity measures,\u201d including\u00a0cuts to wages<\/a>\u00a0and pensions, as well as making \u201cthe labor market more flexible.\u201d<\/p>\n

The final agreement had the banks holding Greek debt to take a 50% \u201closs\u201d of their holdings of that debt, which would be done through a \u201cbond swap\u201d where they were to exchange their current junk status Greek debt for long-term Greek government bonds (debt) with\u00a0a higher rating<\/a>. In other words, the much-touted \u201cwrite off,\u201d or \u201closs,\u201d for banks holding Greek debt amounted to a fancy financial method of\u00a0kicking the can<\/a>\u00a0down the road.<\/p>\n

After leaving his position as Chairman and CEO of Deutsche Bank as well as Chairman of the IIF, Ackermann spoke at the Atlantic Council, a U.S. think tank where he stated that elections in Greece were \u201cnot necessary\u201d and \u201ca big mistake.\u201d What was necessary, he said, was \u201cto make the funding of the banking system more certain,\u201d and claimed it would require between 1 and 2 trillion euros. The European Stability Mechanism\u2019s (ESM) ability to provide banks with $1 trillion was, according to Ackermann, \u201csufficient,\u201d but he added, \u201cwe have to do more\u201d and \u201cwe should maintain the pressure on the countries to do the necessary structural reforms and the necessary financial reforms to reduce the debt burden.\u201d However, he noted, \u201cif it comes to the worst,\u201d in terms of a potential collapse of the Eurozone, \u201ceverything will be done to bail the Eurozone out.\u201d\u00a0http:\/\/www.acus.org\/event\/euro-dim-and-dismal-future\/transcript<\/a><\/p>\n

When Ackermann was asked why Germany did not simply come out and say that it would guarantee bank debts in the Eurozone, he explained that \u201cit would be very difficult to get parliamentary approval for such behavior or attitude. People would not support it at all.\u201d Further, if Germany did publicly state that it would guarantee bailouts for banks, many countries in the Eurozone would then ask, \u201cWell, why then go on with our austerity programs? Why go on with our reforms? We have what we need.\u201d Thus, Germany was not saying so publicly, based on what Ackermann called \u201cpolitical tactical consideration,”\u00a0adding<\/a>: \u201cI think to keep the pressure up until the last minute is probably… not a bad political solution.\u201d<\/p>\n

Ackermann has never lacked as a source for controversy. He has been referred to as \u201ca global banker and political power broker\u201d by one financial analyst, and Simon Johnson, former Chief Economist at the IMF, referred to him as \u201cone of the most dangerous bank managers\u201d in the world whose advice not just to Germany and Greece but also to Belgium and Switzerland \u201cshaped talks to bail out German lenders [banks], reduce Greece\u2019s debt, leverage the euro-area\u2019s rescue fund and influence regulation.\u201d Ackermann himself stated, \u201cFinancial markets have become highly political over the past years… Politics and finance will become even more intertwined in the future. Accordingly, bankers have to think and act more politically as well.\u201d One financial analyst\u00a0stated<\/a>: \u201cHe\u2019s the most influential banker in the euro zone.\u201d A German economics professor noted, \u201cDeutsche Bank and its CEO are the target of all the people who feel our social or economic system is unfair or wrong.\u201d<\/p>\n

In 2011, Ackermann was targeted by an Italian anarchist group that claimed responsibility for sending a letter bomb to the Deutsche Bank CEO, though it was intercepted by police<\/a>. When confronted by Occupy protesters during a speech he gave in November of 2011, Ackermann\u00a0touted his<\/a>\u00a0“environmental” credentials, explaining that the UN Secretary General had referred to him as a \u201cvisionary.\u201d<\/p>\n

When Ackermann left Deutsche Bank and the IIF, he did not leave the world of financial and political power. He continued holding positions as a member of the Steering Committee of the Bilderberg Group; Vice Chairman of the Foundation Board of the World Economic Forum; and as a member of the Group of Trustees of the Principles for the Institute of International Finance. On top of that, he became a board member of Investor AB, Siemens AG, and Royal Dutch Shell, as well as being appointed Chairman of Zurich Insurance Group. Ackermann also sits on the international advisory boards of the China Banking Regulatory Commission, the National Bank of Kuwait, and Akbank, Turkey\u2019s largest bank, as well as sitting on the boards of a number of other corporate and financial institutions.<\/p>\n

When Ackermann left his position as CEO of Deutsche Bank and Chairman of the IIF, he was replaced at the IIF by Douglas Flint, the chairman of HSBC Holdings, who also sits on the board of the IIF. Flint is a member of the Mayor of Beijing’s International Business Leaders\u2019 Advisory Council, a member of the Mayor of Shanghai\u2019s International Business Leaders\u2019 Advisory Council, a member of the International Advisory Board of the China Europe International Business School, a former director of BP (from 2005-2011), a participant in Bilderberg meetings (including for the years 2011-2013), a member of the European Financial Services Round Table (a group of CEOs and chairmen from Europe\u2019s top banks), a member of the Financial Services Forum, a member of the European Banking Group (a group of over ten top European bank leaders formed to directly lobby the EU on \u201cregulation\u201d of the financial industry), and a member of the International Monetary Conference (IMC), an annual conference of private bankers formed to “compliment” the annual IMF meetings.<\/p>\n

Whether through the leadership of Josef Ackermann, or now under the chairmanship of Douglas Flint, the IIF has been and will remain a major global player within the debt crisis and future financial crises, representing the organized interests of the financial markets. It\u2019s no surprise, then, that even the Financial Times\u00a0noted in 2010<\/a>\u00a0that, three years after the financial crisis began, \u201cthe markets (and the bankers) still rule.\u201d<\/p>\n

Or as former Deputy Treasury Secretary Roger Altman\u00a0noted<\/a>, in 2011, that financial markets had become \u201ca global supra-government\u201d that \u201coust entrenched regimes… force austerity, banking bail-outs and other major policy changes,\u201d whose \u201cinfluence dwarfs multilateral institutions such as the International Monetary Fund\u201d as \u201cthey have become the most powerful force on earth.\u201d<\/p>\n

We need look no further than the Institute of International Finance to see just how \u201cthe most powerful force on earth\u201d is organized.<\/p>\n

________________________<\/p>\n

Andrew Gavin Marshall is a 26-year old researcher and writer based in Montreal, Canada. He is Project Manager of The People\u2019s Book Project, chair of the Geopolitics Division of The Hampton Institute, research director for Occupy.com\u2019s Global Power Project, and hosts a weekly podcast show with BoilingFrogsPost.<\/i><\/p>\n

Go to the Original \u2013 occupy.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

When the European debt crisis hit headlines in 2010, the IIF was again on the scene and playing a major part. At the center was the CEO of Deutsche Bank, Josef Ackermann, who served as CEO of Deutsche Bank from 2002 to 2012, and over the same period served as Chairman of the IIF.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55,242,146,169,203],"tags":[],"class_list":["post-35114","post","type-post","status-publish","format-standard","hentry","category-capitalism","category-exposures","category-economics","category-trade","category-development"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/35114","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=35114"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/35114\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=35114"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=35114"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=35114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}