Clemens Fuest

Merkel's New Economic Prompter

Clemens Fuest Ifo ZEW Source Katrin Denkewitz fuer Handelsblatt 45958998
Clemens Fuest will bring a new, quieter style to Ifo.
  • Why it matters

    Why it matters

    Changes at Ifo, a top economic research center which advises the government, could alter the economic debate in Germany and might lead to policy changes.

  • Facts


    • The Munich-based Ifo is one of the top economic research centers in German.
    • Clemens Fuest has a much more low-key approach to his predecessor, preferring to remain in the background.
    • Mr. Fuest believes Europeans should “keep Greece in the euro, but not at any price.”
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Most economists have little or no relevance to political and economic life in Germany, but that’s not the case with Clemens Fuest. Next March, he will replace the retiring Hans-Werner Sinn as president of the Munich-based Ifo Institute for Economic Research.

The change in leadership is a turning point. Mr. Sinn is not just any German economist. He is the German economist.

No other economic researcher carries as much weight with the media or wields as much influence in the political arena. The bearded professor of economics and public finance at the University of Munich laid the path for the reforms in Agenda 2010 when he denounced the excesses of the banks.

With his pointed criticisms of the euro bailout policy, he became something akin to the intellectual father of the Alternative for Germany (AfD) political party until it stumbled into the dark recesses of right-wing nationalism.

Mr. Fuest doesn’t share Mr. Sinn’s missionary zeal or his passion for lecture halls and television cameras.

When a high-ranking German official argues that without Mr. Sinn “we probably would have communitized the debts in the monetary union a long time ago,” it is a bit of an overstatement, but it underlines Mr. Sinn’s influence in Germany and abroad.

With Mr. Sinn going and Mr. Fuest coming there will be consequences for the economic debates in Germany. And yet, Mr. Sinn and Mr. Fuest are not unalike. Both come from Westphalia, are highly respected as economists and well-connected internationally. Both generally embrace conservative liberal opinions in their advice.

Mr. Fuest is a member of the Council of Economic Advisors at the German Federal Ministry of Finance and in the Kronberger Kreis, an academic research group of liberal economic university professors. Like Mr. Sinn, he is skeptical about the measures taken to save the euro and has voiced his criticism.

Yet despite those similarities, the two are completely different personalites.

Mr. Sinn is a generalist. He wrote one of his first academic papers on Karl Marx and the tendency of profit rates to fall. He has voiced opinions across a wide range of economic policy from climate change to migration. Many of his books are bestsellers, including his treatise on the economic mistakes made in Germany’s reunification, which was written with his wife.

Mr. Sinn views himself as a polymath fighting for his convictions with all his strength and, sometimes, he gets lost in the fighting. He’s a master of making complicated economic issues so easy to understand even laypeople understand and act on them. Fans love him for this. Foes hate him for the same reason.

One of his biggest coups was his thesis on the so-called “target trap.” Since the European Central Bank provides ailing states with money through the cross-border interbank payment system, known as Target, German taxpayers are liable if those loans are not paid back if, for example, a country leaves the monetary union.

It’s clear to Mr. Sinn money is being distributed without parliaments being involved, but when he chose to publish his theory in a newspaper instead of an academic paper, he set off a fierce debate.


Video: Clemens Fuest on the euro crisis.


Mr. Sinn pays as much attention to refining the formulation of the words as his colleagues do with their mathematical equations, coining such phrases as “banknote presses are running hot” and the “German savings capital” is being given a “rearguard escort” by the central bank.

This method allowed Mr. Sinn to achieve maximum effectiveness with the public, where he enjoys cult standing, as well as the conservative middle class. Critics, however, accused him of backpedaling time and again in the course of debates he started because his propositions were too sharply formulated.

It’s unlikely anything like that will happen to Mr. Fuest. He doesn’t share Mr. Sinn’s missionary zeal or his passion for lecture halls and television cameras.

It may be due do to his academic career. After being a lecturer at the University of Munich, a professor of economics at the University of Cologne and visiting professor at Bocconi University in Milan, Italy, he moved to the University of Oxford. In Britain, he was professor of business taxation and research director of the Oxford University Centre for Business Taxation.

A few months ago, he was named president and director of Science and Research at the Centre for European Economic Research in Mannheim. Mr. Fuest knows the currency of modern academic life is publication in academic journals and, therefore, is one of Germany’s most frequently published economists.

Mr. Fuest prefers to work in the background as a political adviser through the many groups, panels and committees on which he serves. If he does go public, it’s in quiet tones.

Mr. Fuest prefers to work in the background as a political adviser through the many groups, panels and committees on which he serves. If he does go public, it’s in quiet tones.

The differences between the two economists can be seen in the case of Greece. Mr. Sinn argues for that country’s exit from the monetary union because he believes the Greeks are incapable of being competitive using the euro and will need to be financed by European taxpayers for years to come. He traveled to Berlin last week for a press conference, where he called for an end to the “Greek experiment.”

Mr. Fuest shares Mr. Sinn’s concerns, but believes the risks of a Grexit cannot be calculated. This is why two years ago he and other leading economists published a response to the demands of AfD, which was calling for the dissolution of the monetary union.

With this approach, Mr. Feust should find it easier to navigate through Berlin’s political landscape than Mr. Sinn did, as he agitated German Finance Minister Wolfgang Schäuble and Chancellor Angela Merkel. Mr. Fuest believes Europeans should “keep Greece in the euro, but not at any price.” That is basically what the chancellor would say.

The move to Munich is also a return to Mr. Fuest’s academic roots as a professor. After studying in Bochum and Mannheim and completing his doctorate in Cologne, Mr. Fuest qualified as a professor in the Bavarian capital, where he came to know Mr. Sinn.

Ifo is one of Germany’s leading economic institutes. The Munich researchers cooperate with the German federal government on economic forecasts and publish a highly respected monthly business climate index. Mr. Sinn can take credit for this. When he took over the Ifo Institute, it was in a disastrous state, but he engineered a rise to the top.

Mr. Fuest is expected to strengthen the tax division, but major changes in the institute’s focus are unlikely. Things are running smoothly and the new boss wants to meet and talk with the staff before plotting a course. Mr. Sinn has told friends he wants a lower public profile when he leaves Ifo.

The economic policy debate in Germany will become more predictable, but also a little more boring.


This article first appeared in German weekly newspaper Die Zeit. To contact the author:

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