Europe Has A Superiority Syndrome

Image: Amit Verma

Frank-Jurgen Richter, Chairman, Horasis

Frank-Jurgen Richter
Age: 44
Designation: Chairman, Horasis
Education: Diploma in Business Administration and Mechanical Engineering, Doctorate in Business Administration
Career: 1994-2000: Robert Bosch GmbH (four years as CFO China, based in
Beijing), 2001-2004: Director, World
Economic Forum
Interests: Travelling the world, learning languages, reading (classics, post-modern writing, history and economy), sports

Do you think there is a leadership deficit in Europe?
I think Europe really has a leadership deficit. The national governments are weakened. Spain could see a change in government in November. Angela Merkel is losing out to the Left and Italy is weakened because of Berlusconi’s scandals. Also, at the [European] commission level what I miss really is Brussels coming in decisively and saying what has to be done. Most of what they have done is short-term measures like there is a fire and pouring water on it. But we don’t really think how to construct a building. And the high-rise of Brussels is in a way an unfinished agenda. Even though we have a European Union at the end of the day, we all follow our national interest. I am true European though I am based in Switzerland and I look at Brussels with a lot skepticism and criticism.
 
Many influential experts have suggested that Greece should withdraw from the Union. What is your view?
Whatever we do we have to do it now. If we wait any longer, the markets will get the wrong signals and may even abandon Europe saying that it is a lost continent. Greece going back to the drachma is a charming, but isolated solution. The question is whether it will stop the squeeze. What will happen with Italy? What will happen with Spain and Portugal? My strategy would be to first go for a sharp and fast solution to save Greece. We can’t continue like this for months. We have to go into the details and decide.


How has the idea of China as a White Knight gone down in Europe?
The governments and businesses like the idea because China is really the lender of last resort; a bit like the World Bank’s role, may be 20 years ago. People are actively knocking on its doors. Even I get a lot of requests asking me if I knew companies or sovereign wealth funds that could invest in their companies. But people on the street don’t like or don’t understand it – “How can China bail out Europe?” I think Europe still has a superiority syndrome. The emerging world today is mainstream and Europe is sort of the fallen angel. So when I advise hedge funds I tell them to look at the new globalisers. I don’t say emerging markets because you have already emerged. But I tell them not to put too many of their eggs in the European basket.

How is the private sector viewing the prospect of large scale bank nationalisations?
Of course, all fear nationalisation of banks. We had partial nationalisation during the last crisis two and half years ago. A vibrant industry based on free entrepreneurship needs private banks. We can’t go on with state banks. May be we need a bit of emerging market feeling in Europe. We are all leading a very nice life. We work about 35-40 hours, leave office at 5 o’clock and do not even look at the BlackBerry on weekends, that is, if you have a BlackBerry at all. A Chinese and Indian, even American entrepreneur is different. May be migration is a solution. The reason the US is so strong is because there are a lot of Indians, Chinese, East Europeans coming over and creating companies keeping the economy alive. So, I would say a very active migration policy could be a solution.

Do you think the uncertainty in the continent would continue for a long time?
I would say it is the age of uncertainty. The US is likely to stabilise, especially after the elections. What is happening there is that there is too much emphasis on the domestic economy, which may be the right thing to do, and of course, it is all party politics now. Everybody is getting into the ring. But once it is over the new, or old president is likely to focus on the global role that the US is playing. In Europe, you can’t really see any global role. There was a bit of action in Libya when France and UK rushed in. But we don’t really see a leading role. So, yes, uncertainty will continue in Europe. It is a bit like a Greek tragedy. It is kind of going up stage by stage. In the end, it really may be like a Greek tragedy. There is no way out, unfortunately.