Day: June 25, 2012

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Interview

Incredible interview of German Finance Minister Schauble

Below are the excerpts of the interview of German Finance Minister Schauble with Der Spiegel.The minister says that we may be on the cusp of history and a United States of Europe may actually happen sooner than we think

SPIEGEL:You want nothing less than a United States of Europe.

Schäuble: Even though the term is used repeatedly, it doesn’t make it any better. No, the Europe of the future will not be a federal state based on the model of the United States of America or the Federal Republic of Germany. It will have its own structure. It’s an extremely exciting venture.

SPIEGEL: It sounds more like a new experiment, not unlike the introduction of the euro. And yet you want to transfer as much power as possible to Europe?

Schäuble: That may be. Of course, a lot of people in Europe are worried about the future. But as far as I can see, the vast majority of Germans and people in other countries are pro-European. Aside from relatively small movements, there are no nationalist tendencies.

SPIEGEL: In Germany, the Federal Constitutional Court has imposed tight restrictions on relinquishing further sovereignty. Given the German constitution, how much more European integration is possible?

Schäuble: If the things that I’ve just outlined were in fact implemented and we concluded that the limits of the constitution had been reached, the Constitutional Court would be correct in saying: There’s no problem with transferring more rights to Brussels, but the German people will have to make that decision.

SPIEGEL: Are you saying that we will soon have a referendum in Germany?

Schäuble: I don’t know when that will happen, and I doubt anyone does. But I assume that it’ll happen sooner than I would have thought a few months ago. At the EU summit at the end of this week, the heads of four European institutions plan to present concrete proposals for greater integration. We’ll see what happens after that.

SPIEGEL: You believe that the Germans will vote on a new constitution within the next five years?

Schäuble: A few months ago, I would have said: In five years? Never! But now I’m not so sure. Do you want to know why?

SPIEGEL: Yes, please.

Schäuble: Many in Germany said that (former US President) Ronald Reagan was crazy when he stood at the Brandenburg Gate in 1987 and said: “Mr. Gorbachev, tear down this wall!” And then it happened two years later. At the time, I too didn’t believe that German partition would soon come to an end. In the spring of 1989, I had just become the new interior minister in Bonn. The new US ambassador introduced himself to me and predicted that the Wall could come down in the next three years. I replied: “I would have doubted that a few months ago, but now I would say that with a little luck, it’ll happen in the next 10 years.” And how long did it really take? Less than half a year.

Categories
Video

Incomplete infra chokes India’s growth

Categories
MarketMoves

Europe is imploding again !!

Categories
Policy

RBI announces further liberalization for capital account transactions

A huge disappointment for the markets and further proof that our policy makers are in denial.

Categories
Anecdotes

SBI’s Greatest Chairman

N Vaghul has written a booklet to honour the memory of R K Talwar, the trail-blazing chairman of State Bank of India (SBI) from 1969 until his abrupt departure in 1976, at the height of the Emergency. The vignette that deserves a wider audience relates to Talwar’s ouster.

 

Mr Vaghul, who started his own distinguished banking career in SBI, recalls that a cement company to which the bank had given a loan became “sick”, with mounting losses. Seeing that the problem was mismanagement, the bank agreed to a restructuring package provided the company’s promoter, also its chairman and CEO, made way for a professional. The promoter happened to be a friend of Sanjay Gandhi.

 

Sanjay called the finance minister (who, though unnamed, was C Subramaniam; Pranab Mukherjee was nominally under him as minister for revenue and banking), and asked him to direct the bank to waive the condition on change of management. The minister phoned Talwar, who called for the details of the case, satisfied himself, and informed the minister that the condition could not be waived. The minister summoned Talwar to Delhi and told him that he had instructions from “the highest authority” in the country. Talwar stood his ground.

 

This was communicated to Sanjay, who called for Talwar. Talwar refused to meet him, saying he had no constitutional authority. Sanjay’s response was swift: Sack Talwar.

 

This was easier ordered than done, because under the State Bank of India Act the chairman could not be removed without sufficient cause. So the minister offered Talwar a different assignment, to chair the proposed Banking Commission. Talwar said he would accept and could do that in addition to being the SBI chairman.

 

The minister looked unhappy, so Talwar observed that the minister seemed to be “very particular” that Talwar not continue as the bank chairman. The minister admitted that the problem was Talwar’s lack of flexibility on the cement company issue, and said that if he did not resign, he would have to be dismissed. Talwar said he had no intention of resigning, and the minister could decide on dismissal.

 

As Mr Vaghul tells it, Sanjay next asked the Central Bureau of Investigation (CBI) to look for grounds on which Talwar could be dismissed. It turned out that Talwar had sent appeals to many businessmen, seeking donations for the Auroville project to which he was devoted. But no businessman was willing to testify that Talwar had spoken to him or tried to persuade him to make a donation. All that he had done was to forward an appeal signed by the prime minister and the secretary-general of the United Nations (U Thant), recommending the Auroville project for support. The CBI was forced to close the case.

 

Sanjay now lost all patience, and told the minister to amend the SBI Act so that Talwar could be dismissed without stating the reason. With opposition leaders in jail, Parliament rubber-stamped the Act’s amendment in no time. The minister told Talwar one final time that if he did not resign he would be dismissed. Talwar remained defiant.

 

Finally, on August 4, 1976, Talwar was given 13 months’ leave and asked to hand over charge to the managing director of the bank.Even after arming itself with the required powers, the government could not bring itself to sack Talwar. Mr Vaghul records that there was hardly anyone to see off SBI’s greatest chairman that evening, so great was the atmosphere of fear at the time.