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PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSR
DE RUEHRL #0159/01 0371741
ZNR UUUUU ZZH
P 061741Z FEB 09
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC PRIORITY 3243
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUCNFRG/FRG COLLECTIVE PRIORITY
RUEHAK/AMEMBASSY ANKARA PRIORITY 0671
RUEHBS/AMEMBASSY BRUSSELS PRIORITY 0961
RUEHLO/AMEMBASSY LONDON PRIORITY 9555
RUEHFR/AMEMBASSY PARIS PRIORITY 0117
RUEHRO/AMEMBASSY ROME PRIORITY 1691
RUEHDF/AMCONSUL DUSSELDORF PRIORITY 0184
RUEHFT/AMCONSUL FRANKFURT PRIORITY 7855
RUEHAG/AMCONSUL HAMBURG PRIORITY 0260
RUEHLZ/AMCONSUL LEIPZIG PRIORITY 0187
RUEHMZ/AMCONSUL MUNICH PRIORITY 1984
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 BERLIN 000159 
 
SENSITIVE 
 
STATE FOR EEB(NELSON),EEB/OMA(SAKAUE, WHITTINGTON), 
EEB/IFD/ODF(LEATHAM),IO/EDA(DOWNES),DRL/ILCSR AND EUR/AGS 
LABOR FOR ILAB(BRUMFIELD) 
TREASURY FOR ICN(KOHLER),IMB(MURDEN,MONROE,CARNES) AND OASIA 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN GM OECD PREL WTRO IO
SUBJECT: MERKEL PROPOSES A WORLD ECONOMIC COUNCIL 
 
BERLIN 00000159  001.2 OF 003 
 
 
¶1. (SBU) SUMMARY:  What does German Chancellor Angela Merkel 
mean by a "World Economic Council"?  The concept, first 
enunciated by the Chancellor in December 2008, is a moving 
target that has recently been eclipsed by a parallel proposal 
for a global "Economic Charter."  At its root lies Merkel's 
premise that we must understand the origins of the economic 
crisis in order to avert another meltdown.  Her conclusion is 
that the international financial system is broken and in need 
of repair.  Despite recruiting the heads of the IMF, World 
Bank, WTO, OECD, and ILO to her cause, however, Merkel's 
proposals are attracting surprisingly little attention.  This 
may be because her ideas are only half-baked and mainly 
designed to appeal to voters hungry for leadership on the 
economy. END SUMMARY. 
 
THE LITTLE NOTICED SUMMIT 
------------------------- 
¶2. (U) On February 5, the heads of five leading economic 
international organizations (IOs) assembled in Berlin for a 
meeting hosted by Chancellor Angela Merkel to discuss the 
global economic situation.  Dominique Strauss-Kahn of the 
International Monetary Fund (IMF), Robert Zoellick of the 
World Bank, Pascal Lamy of the World Trade Organization 
(WTO), Angel Gurria of the Organization for Economic 
Cooperation and Development (OECD), and Juan Somavia of the 
International Labor Organization (ILO) issued a joint 
statement with the Chancellor endorsing a "stronger, cleaner 
and fairer economy."  The statement specifies five areas for 
cooperation: 1) developing an overarching framework to 
prevent future crises; 2) strengthening the international 
financial architecture; 3) promoting free trade; 4) combating 
climate change; and 5) fighting poverty in developing 
countries.  These themes would underpin a "new charter for 
sustainable economic governance," according to the statement. 
 Certain OECD instruments, the ILO's "Decent Work Agenda," 
and the accession requirements of the other international 
organizations would serve as the basis of the Economic 
Charter. 
¶3. (U) Surprisingly, the joint statement did not mention the 
Chancellor's idea of a World Economic Council.  Rather, the 
Economic Charter proposal seems to have taken center stage. 
During a press conference following her meeting with the IO 
chiefs Merkel did mention the possibility of a World Economic 
Council, but only Juan Somavia of the ILO offered any support 
for the idea.  For his part, Angel Gurria of the OECD 
welcomed the proposal for an Economic Charter, but did not 
mention the World Economic Council. The others were 
conspicuously silent on Merkel's proposals.  This "lukewarm" 
public support, as it was characterized by the "Financial 
Times Deutschland," might in part explain why this gathering 
of the IO A-List received such little attention in both the 
German and international press. 
EVOLUTION OF AN IDEA 
-------------------- 
 
¶4. (U) Chancellor Merkel first floated the idea of a World 
Economic Council in early December 2008 at a CDU party 
convention in Stuttgart.  "Just as there is the UN Security 
Council for security issues, we need a World Economic Council 
for economic issues," she told delegates, adding that the 
G-20 did not represent the entire world.  Merkel and her 
Finance Minister Peer Steinbrueck have long criticized 
unbridled, "Anglo-Saxon" capitalism, and called for 
constraining it at the international level.  In November 
2008, Steinbrueck recommended to G-7 Finance Ministers 
meeting in Washington establishing international standards 
and enhancing international cooperation.  Merkel's concept of 
a World Economic Council has its roots in this thinking. 
Since Stuttgart, Merkel has publicly mentioned creating a new 
Council at least four additional times, adding nuance and 
complexity with each presentation.  By the time she spoke on 
January 30 at the World Economic Forum in Davos, her ideas 
 
BERLIN 00000159  002.2 OF 003 
 
 
had evolved to include the Economic Charter. 
 
MERKEL'S PET PROJECT 
-------------------- 
 
¶5. (SBU) At a February 6, 2009 meeting with EMIN and Econoff, 
Chancellery economic advisors Andreas Nicolin and Johannes 
Scheube downplayed the idea of a World Economic Council under 
UN auspices, saying it might be "unrealistic" and was only a 
"long-term goal."  Merkel's reference to the UN Security 
Council was "just an analogy," Nicolin said, somewhat 
disingenuously.  As for the Economic Charter, thinking was 
still in the "idea stage," according to Scheube.  The 
concepts were of personal interest to the Chancellor, and 
discussions were so far confined to the Chancellery, Nicolin 
confided.  Nicolin thought it would be unproductive to engage 
the various government ministries at this point, as they 
might try to pick the proposal apart or bury it in minutiae. 
Nicolin and Steube gave the sense the proposals had been 
cooked up in Merkel's "kitchen cabinet."  (NOTE: Embassy 
Econoffs had previously sought clarification of Merkel's 
proposals through contacts at the Ministries of Finance, 
Economics and Development, but none could offer any 
information, and most were skeptical or dismissive of the 
notion.) 
 
¶6. (SBU) Now that the heads of the five key economic IOs had 
signed onto her ideas, explained Scheube, the Chancellor 
intended to promote the Economic Charter concept within 
Europe.  (NOTE: The five IOs' deliberative bodies have not 
discussed Merkel's proposals, according to Nicolin.)  On 
February 22, leaders of the EU G-20 members were coming to 
Berlin to prepare for the April 2 G-20 Summit in London, he 
said.  Once they were on board, explained Scheube, the next 
step would be to bring a proposal before G-20 leaders in 
London.  The Chancellor was still "open to suggestions" on 
the best way forward, and hoped for input from developed and 
developing countries, said Nicolin.  Nicolin informed that 
Merkel was already in contact with UK Prime Minister Brown 
about the possibility of inviting the heads of the five IOs 
to the London Summit. 
 
THE VIEW FROM OUTSIDE 
--------------------- 
 
¶7. (SBU) Merkel's ideas have met with bewilderment or 
indifference in most quarters.  A senior German banker 
working for a U.S. bank (and also advising Merkel's CDU on 
economic matters) told EMIN that election-year politics could 
be behind Merkel's proposals.  Creating a World Economic 
Council at the United Nations was her idea, he said, but it 
was still very much a work in progress.  The banker did not 
think anything would ever come of it, however, adding that 
"the last thing we need is another commission."  In his view, 
the point was for Merkel to take a high-profile international 
posture on an issue that might resonate with voters in the 
September national elections -- in this case, "fixing the 
system" so that the man in the street would be protected from 
future financial disasters.  Yet German newspapers have paid 
scant attention to Merkel's proposals, and did surprisingly 
little reporting on what was a somewhat remarkable 
achievement -- assembling the heads of the IMF, World Bank, 
WTO, OECD and ILO in Berlin. 
 
COMMENT 
------- 
 
¶8. (SBU) Though Merkel may genuinely believe in her ideas, 
election-year politics are very likely at work.  Most Germans 
attribute the economic crisis to outside forces (i.e., the 
United States), so Merkel may hope her international reform 
proposals will be viewed as addressing the root causes of the 
 
BERLIN 00000159  003.2 OF 003 
 
 
crisis.  In contrast, Merkel's rival for the Chancellorship, 
Foreign Minister Frank-Walter Steinmeier (SPD), is seen as 
struggling to find his voice on economic issues.  (NOTE: 
According to press reports, Steinmeier opposes Merkel's 
proposals.)  Having been sidelined on economic issues during 
the French EU Presidency by Sarkozy, Merkel can also, by 
proposing overarching reforms, reclaim some of the spotlight. 
 Judging from the atmospherics of the February 5 press 
conference with the five IOs as well as the February 6 
meeting with Chancellery economic advisors, the World 
Economic Council idea is fading.  As for the Economic 
Charter, whether or not the proposal survives until the G-20 
Summit in London depends in part on how persuasive the 
Chancellor is when her EU G-20 colleagues come to Berlin 
later this month. 
Koenig