Evonik CEO Engel gains support for proposal on eurozone crisis

23 November 2011 19:00  [Source: ICIS news]

LONDON (ICIS)--A proposal by Evonik chief executive Klaus Engel to address the eurozone government debt crisis gained support from German commentators on Wednesday.

Engel, who is also president of Germany’s chemicals trade group VCI and a vice president of the country’s top industrial trade group, BDI, proposed at a conference on 18 November that Germany could redirect funds it raises to support its eastern states to help troubled neighbours in the eurozone.

Germany is raising a solidarity tax surcharge, called “Solidaritatszuschlag”, on top of income tax, to support the five eastern states that joined the country following its reunification in 1990.

Bodo Hombach, general manager of Germany’s WAZ media group, said in a commentary that Engel’s proposal is daring and should be welcome at time when many political leaders lack perspective.

Hombach said the proposal would be an alternative to the drastic savings measures facing Greece, Italy and other eurozone countries struggling with high debts.

At the same time, Hombach agreed with Engel that the re-dedication of the solidarity funds would also be a “thank you” to Europe for supporting and facilitating Germany’s reunification, which would not have been possible without the trust and solidarity of its neighbours, he said.

Said Hombach: “Engel is not a romantic; he knows how to do his numbers and succeed in business. But it is more than that: Engel knows that most of our problems are in our head. What is needed is a change in perspective.”

According to German daily newspaper Rheinische Post, the country raises about €13.0bn/year ($17.6bn/year) through the surcharge – probably more money than it should reasonably invest in the eastern states more than 20 years after reunification.

A number of executives from the German chemicals and other manufacturing industries have repeatedly stressed that Germany's export-oriented economy is a principal beneficiary of the euro.

In related news, Germany failed to get bids for about 35% of bonds it offered for sale on Wednesday, fuelling fears that investors may be avoiding not only weaker eurozone members but also the EU's largest economy, Bloomberg and other newswires reported. 

($1 = €0.74)

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By: Stefan Baumgarten
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