When Karl-Theodor zu Guttenberg jets into Washington this Sunday he plans on asking some tough questions. Germany’s new Economy Minister is due to meet U.S. Treasury Secretary Timothy Geithner and bosses at embattled American carmaker General Motors. Opel, a Germany-based division of GM, is fast running out of cash and GM and Opel bosses recently went cap in hand to Berlin to ask for $4.25 billion in state aid. In return, GM say they will restructure Opel by cutting costs and loosening the company’s ties with the parent company in Detroit. Opel would become an autonomous legal entity, half of which could end up in the hands of private investors. The question is: should German taxpayers help out America’s biggest carmaker?
After meeting GM executives in Germany on March 6th, Zu Guttenberg said there were still “many questions that need to be cleared up.” A few days later he suggested that insolvency might be a better solution for Opel than a state bailout.
The cost-cutting plans have terrified Opel’s 26,000 workers in Germany. Over the past month, rumors of mass layoffs and plant closures have been swirling in the German media. Union leaders are clamoring for a quick decision on the bailout. But Chancellor Angela Merkel’s government wants guarantees that any cash that it doles out will not flow back to GM’s embattled operations in the U.S., or go down the drain if GM goes bust.
The job of deciding whether to trust GM falls to Zu Guttenberg, who took up his new job just four weeks ago. At 37, he’s the youngest economy minister in Germany’s post-war history and already he’s being hailed as one of the country’s most popular politicians. With his slicked-back hair, and boyish good looks, Zu Guttenberg exudes the one thing which most German politicians lack: charisma. Unlike his predecessor Michael Glos, a 64 year-old political veteran who shied away from the cameras, Zu Guttenberg has gone on a major media offensive.
He’ll need all of that slickness and more. Germany is stuck in its worst recession since WWII and exports are plunging. The young politician was elected to the German parliament just seven years ago representing the conservative Christian Social Union party, which is aligned with Chancellor Merkel’s party. A fluent English speaker, he soon made a name for himself in parliament as a foreign policy and defense expert. But it wasn’t until last fall, when the CSU went into meltdown after suffering big losses in the Bavarian state elections that Zu Guttenberg was thrown into the spotlight. Last November the rising star won his party’s top job. When Michael Glos quit his job as Economy Minister last month, the CSU decided to replace him with Zu Guttenberg.
Germans were gobsmacked. Who was this young upstart Karl-Theodor Freiherr von und zu Guttenberg is a baron, the son of an aristocratic family in Franconia, in southern Germany. His family can trace its tree all the way back to the 12th century. Zu Guttenberg studied political science and law before entering politics and is married to 32 year-old Stephanie, the Countess of Bismarck-Schönhausen, a descendant of the “Iron Chancellor” Otto von Bismarck.
While his blue blood credentials are unquestioned, Zu Guttenberg is a novice when it comes to economics. He’s worked as chief executive of his family’s company, Guttenberg GmbH, which looks after the family’s investments, but, apart from that, the minister doesn’t have much of a proven track record in economic issues. “Mr Guttenberg’s biggest challenge is how to develop concepts to deal with the recession. Up until now, the Economics Ministry has failed to do this,” Gustav Horn, the director of Duesseldorf’s Macroeconomic Policy Institute says. “Mr Guttenberg is a good PR man — he’s not an economic policy expert. The minister will have to decide what to do with the ongoing economic crisis and he’s bound to come under growing pressure to introduce another fiscal stimulus package.”
But the man sometimes dubbed ‘Franconia’s Obama’ doesn’t seem daunted by his new job, even as Germans sink into a period of national soul-searching. “Let’s not kid ourselves, we’re in the middle of a tough crisis, but we’ve now got a very good stimulus plan,” Zu Guttenberg told Germany’s Bild newspaper recently. “We expect the economy will pick up this autumn, at the very latest.” The next few days will decide whether Opel will be part of that resurgence — and how.
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Read a TIME story on Germany’s auto industry.
