[a biographical article on Hans Tietmeyer, ex-president of the German Federal Bank [Deutsche Bundesbank) can be found at the end of this lecture]

The concept of "economic globalization" has plainly been undergoing a boom for some time in the economic and political debate. At all events, there is hardly a major meeting of media discussion at which the phenomenon of globalization and its implications are not the focus of interest. That was demonstrated once again by the recent Global Economic Forum in Davos and the heartfelt plea of US President Clinton, as well as by the reactions evident earlier on at the WTO Conference in Seattle.

As a matter of fact, neither the phenomenon nor the concept is anything new. Even so, until well into the eighties the concept of "internationalization" remained in the forefront. It was only during the nineties that the concept of "globalization" became more generally accepted - largely on account of the acceleration and intensification of the development it denoted.

Even more than the former term "internationalization", the concept of "globalization" nowadays triggers an ambivalent response. Besides the predominantly positive rating by economists, more and more people associate fears and apprehension with globalization. For them, economic globalization also implies increasing helplessness in the face of developments in anonymous markets with incalculable consequences for their own future.

In many cases, this uncertainty is further exacerbated by one-sidedly formulated doomsday hypotheses, spelling out the growing impotence of policy-makers and the path heading to greater injustice - indeed, to the demise of democracy.
 
 

In view of this ambivalent - indeed, increasingly adverse - assessment of the concept, it is probably useful, as a first step, to analyze in rather more detail what is actually meant by the process of economic globalization.

Cross-border economic activity, especially in the form of mutual trade, has always played a part in human history. Here in Italy, the renaissance is before our eyes to this day, as one of the peaks of a trading system which, even at that time, was operating on a virtually worldwide basis. The establishment of major shipping routes, such as the Suez Canal, the development of the railways and, above all, industrialization constantly served to expand international, and intercontinental, trade continuously during the last century.

Although there was a temporary slowdown, and even a slight decrease, in international trade relations between the two World Wars, after the end of the Second World War, a new period of expansion began back in the fifties. First of all in Europe, but then in other parts of the world as well, new forms of cross-border economic cooperation and integration evolved.

That regional development was accompanied and fostered alike by growing pressure towards the global dismantling of trade barriers, - a target that was laid down as early as 1947, upon the signing of the General Agreement on Tariffs and Trade (GATT). Not only the industrialized countries were expected to open up their markets; the developing countries and especially the emerging economies were also to be included increasingly in world trade. However, the countries belonging to the socialist system in eastern Europe could not be included in this opening-up process until after the collapse of the Iron Curtain from 1990 onwards.

These few remarks help to remind us that the process of border-crossing, and therefore the globalization of trade, is anything but fundamentally new. What is conspicuous, however, is its sharp acceleration in the past few years, and the fact that the process has at the same time assumed a new quality. It is fair to speak of a revolutionary trend, especially in the last decade of the millennium that has just ended.
 
 

The causes of this development are many and varied. Some have been operative for some time, others have exerted their explosive impact only recently. The important point is, however, that the various causalities have not infrequently mutually reinforced one another, and are still doing so today.

One of the principal causes of the steep increase in international trade in the last five decades has undoubtedly been, and still is, the policy of the progressive opening-up of national borders. The EC, the OECD and many other regional cooperation schemes, and above all the various rounds of liberalization under the auspices of GATT, have granted more and more latitude to cross-border trade, and included more and more countries in free economic activity. At the same time, the improvement of transport systems on land, by sea and, above all, in the air has technically facilitated, speeded up - and distinctly cheapened - the exchange of goods and services.

However, the main driving force in technological terms was and remains the downright explosive development of the latest information technology. In particular, it made feasible what had previously seemed impossible - instantaneous new global communications facilities - and plainly is still doing so today. In this area, at all events, the innovation process still seems to be near its beginning, rather than its end.

All these causalities have significantly altered the outward manifestations of international economic relations, and are doing so increasingly with every passing day. For instance, intra-industrial trade has radically changed in the past few decades. Whereas, initially, finished products were mostly exchanged for raw materials, this has developed more and more over the decades into trade in identical or very similar products.

And the last two decades have been primarily marked by the cross-border inter linking of production itself. By the splitting-up of value-added chains, more and more products are being composed of parts which have been produced in different countries - not just in neighboring countries but in nations spread all over the world. The comparative advantages of the various locations (differing labor costs, differing qualifications of the labor force, differing regulations and tax systems, etc.) are increasingly being exploited worldwide because the lightning pace of advances in information technology and transportation systems makes that possible.

This new form of competition is taking place not just between the industrialized countries but equally between and with the developing nations and emerging economies as well as the countries in transition. It is global in the full sense of the word, since it excludes - at least in principle - none of these countries. All countries and groups of countries are included in this new competition. At any rate, outsider countries, which isolate themselves as a matter of principle, such as Cuba and North Korea, no longer have any chance of going it alone.

The greatest headway in the economic globalization process has undoubtedly been made by the financial markets. As the "front runners", they are at the same time one of the strongest driving forces for other economic sectors.

During the first few decades after the Second World War, many countries endeavored to protect their national financial and capital markets from external constraints by means of controls on capital movements. However, technological developments and the progressive opening-up of national borders to other areas greatly eroded such controls over the years, which not infrequently exerted counterproductive effects in the countries concerned.

Hence there, too, a process of liberalization ultimately turned out to be unavoidable, even if the right sequencing of such liberalization is essential for the emerging economies. Capital is not only extremely mobile, it is also increasingly being traded in highly professionalised markets in the form of hybrid and other investment vehicles. The upshot is not only a high degree of mobility but also not infrequently a high level of volatility in the financial markets. That may well pose exceptional problems, especially for all those who are not prepared for it.

If one now asks about the implications of this increasing globalization of economic activity, one point is indisputable.

Viewed as a whole, the markets are becoming larger, and likewise deeper. For the market economy that undoubtedly implies fiercer competition, with the consequence of a better allocation of resources, in the sense of enhanced economic efficiency. This increase in efficiency at the same time implies an improvement in global prosperity.

It is no doubt true that the distribution of this growing prosperity depends to an even greater extent than it used to on the working capacity and competitive capacity of the players. Overall, however, the progressive economic globalization is not a zero-sum game in which profits and losses ultimately balance out without there being any benefit to the public at large. Quite the contrary. The increase in worldwide competition is at the same time tantamount in principle to an increase in the world national product.

Needless to say, that does not mean that globalization involves nothing but advantages for all those concerned. As at the time of any increase in competition, alongside the winners there are also losers. But it is necessary to make a careful distinction here.

In the current debate, for instance, globalization is not infrequently made responsible for problems whose causes actually lie elsewhere.

If, for example, financing problems arise in the retirement pension schemes of some industrialized nations on account of changed demographic structures, or if the growth of the national debt increasingly encounters barriers, or if the innovative capacity of the economy is increasingly imperiled by social or political ossification, then such trends owe nothing - and any rate, nothing directly - to globalization.

Such problems are the outcome of unwelcome developments which will have to be remedied anyway. However, politicians are often inclined at present to make out that these pent-up problems are also simply due to globalization.

What is true, however, is that globalization brings such internal weaknesses and problems into the open more rapidly and more consistently.
 
 

• Inflexible structures on the labor market are penalized faster and more lastingly than hitherto by global competition in the markets, and between the locations of capital projects, namely by growing unemployment.
• The financial markets insist on lasting discipline on the part of national monetary and fiscal policy-makers; they thereby block the easy escape route for the state of simply passing on the burdens to the next generation by running up more national debt.
• It is of course likewise true that globalization affords many enterprises better chances of shifting their earnings to other countries, thus saving taxes and official levies. In countries with high rates of tax and other levies, that aggravates still further the financing problems faced by the public sector.

In this connection, however, causes and effects must not be confused. The fiercer global competition is not the true cause of the problems. But it does bring them into the open more consistently and, above all, it penalizes them more swiftly.
 
 

Owing to globalization, however, quite a new dimension of competition itself comes into being.

That is reflected most clearly in the increased interaction of globally highly mobile capital, on the one hand, and the clearly less mobile and less flexible production factor labor (especially in many European countries), on the other. Particularly in countries with relatively low occupational, regional and social mobility, labor costs are performing an increasingly crucial function as a competitive factor. This new situation may result in far-reaching changes. That goes especially for the wage-formation process to date, at least in areas where collective agreements have hitherto been prevalent. And the outcome may well imply, in some countries, a greater measure of differentiation than hitherto in the distribution of income from employment.

Moreover, in the global competition for investments, what ware known as "locational factors", taken as a whole, are undoubtedly increasing in significance. Under conditions of globalized competition, investors can plainly choose the location for their investment with greater freedom than in the past.

Today, tradition and regional and national connections, are already decreasing in importance, especially among large-scale enterprises. By contrast, labor costs, taxes and other levies, official regulations and, not least, the overall credibility of policy-makers have assumed much greater importance than they used to have.

Viewed as a whole, that is by no means a bad thing. However, problems may arise if, for instance, particular countries deliberately bank on distortions and discrimination in their favor by resisting, or failing to apply, international minimum standards, such as environmental protection rules or bans on child labor.

Unwarranted competitive problems may also arise if unjustified exaggerations (i.e. ones not taking due account of actual developments) occur on account of undue short-termism in the financial markets. Such temporary exaggerations may take place - not least owing to the herd instinct often prevailing those markets - when a country's debt structure is overly short-term. Besides the avoidance of too short-term an orientation of debt, a high level of economic credibility on the part of policy-makers is a key factor in preventing dangerous overreactions by the financial markets.

For the lasting functioning of the global financial markets, however, a minimum degree of regulation of the actors and institutions operating there is required. The existing national supervisory systems are increasingly encountering limits when faced by global competition. That is why further efforts are essential here.

A new dimension is also opening up in the area of global competition for "antimonopoly policy". The reports published on an almost daily basis on cross-border mega-mergers (in both the financial and the non-financial sectors) raise the question of whether, and if so from when, a trend towards oligopolization or monopolization in certain areas of the world economy may undermine the viability of future competition.

Ultimately, the same thing also applies to the question of whether the often-cited too-big-to-fail theory may not in the long run endanger competition, and thus the free-market economic system. For me, as a committed champion of a lastingly competition-oriented system, at all events, this area is increasingly fraught with questions which, as I see it, call for international, or even supranational, answers.
 
 

It is particularly this new dimension of competition that confronts the concept, and reality, of the nation-state, which currently predominates in the world, with new and far-reaching challenges.

The present-day state defines itself chiefly in terms of three elements: national territory, national residents and national powers. In the exercise of its powers, it is sovereign under international law. That is to say, it can decide itself on its own systems and its own regulations. However, those systems and regulations must take due account of the fact that the present-day state is at the same time a mutually supportive association, whose members must in major areas be accountable for one another and for the whole - and that across the generations.

In actual design, however, the reality of the present-day nation-state displays some substantial differences (depending on its history, and also on its dominant social and religious values).

Even among the traditional western democracies, there are not only major constitutional differences. The differences between the concrete economic and social systems are also particularly marked. That begins with the distinction between the public and the private spheres or responsibility, which sometimes diverges vastly. It is expressed in the most concrete terms in the competition rules, the tax and social security systems and, not least, in the regulations governing wage settlements and working hours, which are likewise so important for the labor market.

Already in the past few decades, national economic and social policy makers have increasingly had to take account, in their decisions, of actual or potential repercussions on the competitiveness of their own economy. To that extent, national policies were already no longer really sovereign, in point of fact.

But with the escalating economic globalization and the further internationalization of the markets, that trend has now assumed a new quality. At any rate, national policy's room for maneuver has dwindled distinctly in recent decades. And, unless I am much mistaken, the actual erosion process of national policy will tend to accelerate further in the future.

If the attractiveness to investors of the national location, in comparison with other locations, diminishes (on account, say, of existing or new social burdens or of regimentation), then weak growth coupled with rising unemployment is virtually unavoidable, at least in the long run. Or if the players in the financial markets judge the national policy, compared with that of other countries, to be less conducive to growth, stability and employment, then this will have repercussions on financial flows, and thus on exchange rate and price effects.

Admittedly, the merging of eleven EU currencies into the common currency (the euro) and the transfer of monetary policy to the European Central Bank now afford the participating countries slightly more protection from exchange-rate effects.

But the monetary union is also - as I have often said - a risk community and a mutually supportive community of the participating states. All are now accountable for mistakes made by individual member states. The present weakness of the euro has brought this home clearly - and in part painfully - to all participants.

However that may be - whether as a nation-state or as a merged regional entity with a partly supranational structure - in the era of economic globalization and of the daily valuation of the competitiveness by the markets, the room for maneuver available to economic policy has undoubtedly contracted.

Policy-makers must realize that they are exposed to continuous testing by the markets, and that worldwide. This is why they must heed the stricter limits imposed on their freedom of action.

However, that must not be interpreted as an all-round loss for policy-making. Policy-making, as a fight for the best conditions for shaping society, will continue in future, too - indeed, perhaps even more so than at present. After all, the globalized environment and globalized competition will not rest, but will constantly pose new challenges.

That applies particularly to the shaping of the welfare state. I do not regard the hypothesis of an inescapable levelling-out at the lowest level as being persuasive. And in my view the way back to "Manchester liberalism" is by no means inevitable destiny.

Instead, I am quite convinced that there will be divergent social systems in future, too, depending on past traditions, social structures and the predominant scale of values. The crucial point is that such social systems, with their incentive effects and in their economic efficiency, can actually survive in the face of globalized competition.

Under the conditions of economic globalization, national economic and social policies must concentrate their efforts mainly on a twofold task:

• First, in all areas (ranging from education policy to social policy) they must foster the forces of innovation, flexibility and performances in its own right.
• Second, they must bring the existing regulations and systems into line with the constantly changing conditions. In the world of today and tomorrow, there can no longer be any unchanging social vested interests.

Responsible policy-makers must also be prepared to let a possibly ever-larger part of policy-making out of the "shell of the nation-state" in the form of closer international cooperation, or even in part by its assignment to supranational entities.

Under the heading "global governance", a debate is currently being conducted worldwide which is unfortunately suffering from the imprecision of the concepts being used. On the one hand, there is talk of the necessity of an "international system", while, on the other, concepts such as "world society", "world government" or even "world state" are cropping up as requirements. In my view, however, this abstract, and at the same time extremely ambitious, debate is not getting us anywhere.

The very hypothesis of the "detachment of the state and nation" (e.g. Martin Albrow, Abschied vom Nationalstaat - Farewell to the nation-state, Frankfurt 1998) goes too far for me. The nation-state will remain the dominant political structure - at least on a global scale - in the foreseeable future

Under the conditions discernible today, at least, I can hardly visualize a "world state". Given the extreme heterogeneity of the "world people", it could hardly be a democratically governed state, either. For that reason I regard the world state not only as not very attractive, but also as an illusion, at least insofar as it is foreseeable today.

The basis of international cooperation - and it is ultimately, after all, the further development of such cooperation which is at stake - will primarily remain nation-states throughout the world in the foreseeable future, although this does not rule out the possibility of certain supranational structures in specific areas, and especially in limited regions, such as Europe.

However, when drawing up and implementing rules for the economy and the welfare state, international cooperation is anything but easy. After all, there are often some very divergent ideas and experiences among the states and their societies. For instance, the scales of values predominating in the English-speaking countries quite often differ substantially from those prevailing on the continent of Europe, in Asia or Latin America. In addition, decision-making structures differ both within the business community and as between business and policy-making.

But that does not mean that cooperation in drawing up and implementing international rules is quite impossible. On the contrary, it is possible, but it is anything but simple.

Next to nothing is more dangerous than entertaining illusions about that. General postulates or ambitious blueprints of new architectures rarely yield progress, but they may easily cause frustration and not infrequently exasperation, especially if the cannot be implemented.

What is really required, in my estimation, is primarily the meaningful, gradual and realistic further development of existing rules and systems in particular segments of the economy. By contrast, I regard any attempt to devise an all-embracing and comprehensive set of rules, under the auspices and direction of the United Nations, as problematic - especially in the light of past experience of the United Nations.

The review and further development of the existing approaches should focus mainly on the following three fields of activity:

• A further development of the rules of the World Trade Organization (WTO)
• A critical reexamination of the work of the IMF and World Bank.
• A further development of the cooperation between the national supervisory authorities for financial institutions.

The WTO should continue to advocate the reduction of protectionism and the progressive liberalization of world trade. In addition, I think that two other tasks are becoming more and more obvious for it:

1. The mounting number of mega-mergers, particularly in recent months, raises the question ever more urgently of whether, in the long run, this is good or bad for competition. Most major industrialized countries (including those in the EU) have rightly already set up competition-control or merger-control authorities. In the light of the globalization of many markets, the time has come in my opinion to reconsider whether these national or regional arrangements still suffice, or whether supplementary regulations, including certain decision-making powers, are not also required under the auspices of the WTO.

 

 

2. In view of the social responsibility of the business community, I also consider it legitimate to visualize a link between the rules of the WTO for trade and investment and the minimum social standards of the International Labor Organization (ILO), and to supplement the latter at the same time by an elementary catalogue of environmental standards. However, great caution is required in this connection, for such minimum standards must not be misused as protection for industrialized countries from competition from developing countries, or vice versa.

In recent years the two institutions IMF and World Bank, which can be traced back to the Bretton Woods Agreement of 1944, have not infrequently been subject to massive criticism. Viewed as a whole, however, it seems to me - notwithstanding all the criticism which I, too, have voiced on occasion - that they have done a pretty good job. At all events, I think that a radical change in their mandates and architecture is neither necessary nor worthwhile.

However, the following three considerations should be heeded more carefully:

1. The IMF should consider its duties to lie mainly in the regular and critical surveillance of the macroeconomic policies of its member states. The recently initiated enhancement of the transparency of data and their valuation may help to counteract undesirable developments both in the markets themselves and in policies.

 

 

2. If IMF assistance is required in any crises that may arise all the same, it must in future be tied even more explicitly than before to strict conditions on the adjustment of the existing undesirable developments. Moreover, such assistance must be gauged in such a way that no moral hazard problems for other countries arise from it. The IMF's main task is that of preserving the viability of the international monetary system, whose global guardian it is.

 

 

3. The task of the World Bank and the regional development banks is distinct from that. They are designed to promote economic activity in the developing countries by extending credit and providing consultancy services, and thus to help overcome the poverty which so often prevails there. The tasks of the IMF and World Bank are complementary in a sense, but the borderlines of their responsibilities should not be blurred.

A particularly thorny issue in view of the globalization of the financial markets is the regulatory surveillance of the financial institutions operating in the markets. Almost all existing regulatory systems have been set up at national level, and are broken down by sector: banks, stock markets, insurance companies, etc.

Although the regulatory authorities of the G-10 countries for the banking sector, in particular, have been cooperating relatively closely since the eighties, and have meanwhile elaborated some "core principles", or common minimum standards for supervision, this informal collaboration, which has evolved mainly with the support of the BIS in Basle, is now to be developed further and put on a broader footing.

Acting on my suggestion, the G-7 countries last year set up an "International Stability Forum" with the aim of intensifying cooperation between the national regulatory authorities and the IMF, the World Bank, the OECD and the BIS, and counteracting potential unwelcome developments and crises in good time.

That forum, to which a number of emerging countries have meanwhile acceded, is currently engaged in elaborating concrete proposals on a variety of particularly topical issues (such as the inclusion of offshore centers and hedge funds and greater transparency for capital flows). The principal objective is not an increase in regimentation. Instead, it is chiefly a matter of taking precautions so as to ensure the lasting viability of the financial markets, and to make them less dependent on short-term responses.

A key feature of the forum's effectiveness is its informality. I deliberately refrained from proposing a new, formal international institution. The implementation of such an institution would not only have taken a long time but would also have triggered political rivalries and controversies (at least in the startup phase).

The format now realized, of a regularly convened "round table" (with a small secretariat at the BIS), is without any doubt a more effective form of cooperation between national-states and international organizations (at least in the early stages).

All things considered, a cautious further development of the international system seems to me to be the appropriate path to pursue.

Overly ambitious reform and reconstruction plans not only run the risk of setting off tedious and controversial debates; at the end of the day, they not infrequently also give rise to cumbersome and costly organizations that are barely able to take action.

Often, moreover, egalitarian objectives in relation to other cultures, nations and structures lurk behind overly ambitious ideas. Notably in Europe, and also in the United States, fanatics fired by missionary zeal sometimes emerge whose thinking is dominated by neocolonialist notions.

Likewise in the efforts (which I consider to be right in principle) to elaborate a catalogue of new global ethics (see Hans Küng), I think that a cautious approach is essential. After all, globalization is not identical from the outset with universalization, in the sense of a uniform orientation of values.

In tomorrow's world as well ,the diversity of traditions and cultures will ultimately remain the predominant feature. Hence neither the nation-state nor national policy-making will disappear in future. But they will face global competition to an even greater extent than is the case today.

That is because economic globalization is, and will remain, irreversible. Its further development is also irresistible.

Nation-states must face up to this challenge in their domestic policies and at the same time help, by means of cross-border cooperation, to lay down and implement a minimum of international rules, so as to be able to contain the risks and problems associated with globalization.

Biographical article: Hans Tietmeyer, The D-Markís dogged defender
From: The Economist; March 21, 1998

He has been called many things, from "grey gnome of Markopolis" to "archbishop of Frankfurt". The latter, at least, is not far wrong. There is a missionary zeal about the way Professor Dr Johannes (Hans) Bernhard Josef Tietmeyer, president of the Deutsche Bundesbank, preaches the gospel of monetary stability. And there is an air of religious conclave about those fortnightly meetings at which he leads his 16 colleagues of the central bank's council in deciding the fate of Germany's, and therefore in large measure Europe's, interest rates. What Mr Tietmeyer has not so far been called, though it suits him rather well, is "Mr Ping-Pong".

Table tennis happens to be a game that Mr Tietmeyer has mastered with the same diligence he applies to cracking the mysteries of monetary policy. In younger days he walked off with the championship in his home state of North Rhine-Westphalia and now, at 66, he can still trounce players half his age. His specialty? An almost impenetrable defense. He doggedly counters every spin and returns every smash until his exasperated opponent is driven, exhausted, into error.

Not dazzling, perhaps, but effective. And Mr Tietmeyer is not interested in show: not in sport, not in social life (he hates drinking parties and spends his holidays in the same dozy corner of Bavaria every year), not, above all, in interviews. Seated bolt upright in his office, he fields questions with all his ping-pong skill. The guard never falls - or hardly ever. "The episode is closed," he mutters when asked about the government's abortive bid last year to get extra cash by making the Bundesbank revalue its gold. Just a flicker of pain, as though asking himself again, "How could they have been so stupid?"

Strange to say, this is not typical of a Bundesbank president. Back in the 1970s Otmar Emminger would make a point and promptly clutch for lists of figures to prove it. In the 1980s the self-assured Karl Otto PCohl tended to dismiss mere statistics with an airy wave of the hand. Mr Tietmeyer not only has most of the figures in his head, available for rapid fire when needed; he seems more certain of his ground than his predecessors-or, indeed, almost anyone.

When he comments with raised finger on the evils of debt, inflation and sloppy currencies, the words "Thou shalt not" hover, constant if unspoken. Why the overweening self-assurance? Partly because in economic and monetary matters Mr Tietmeyer's experience is all but unmatched. He has now "served" (as he puts it) at the Bundesbank for eight years, nearly five as president. Before that he spent almost three decades in Bonn, first under the legendary Ludwig Erhard at the economics ministry and eventually as a "sherpa" helping the chancellor, Helmut Kohl, prepare for economic summit meetings. His devotion to duty is still spoken of in Bonn with awe. After escaping an assassination attempt in 1988 (the assailant's gun jammed), he calmly proceeded to his office and began ploughing through files.

But there is more behind his attitude to life and work than that. Born in Metelen, a small Westphalian town near the Dutch border, he was one of 11 children. His family was poor. A note was kept of every expense. Hans was 13 when the war ended, 17 when for the second time in this century German hyperinflation ended with currency reform. In the 1950s he saw rising prosperity based on a hard D-mark defended by an independent central bank. He then worked under Erhard, "father of the economic miracl". A devout Catholic, Mr Tietmeyer at one stage considered the priesthood before plumping for an economics degree. Somehow the two inclinations remain linked. When he talks of the need for sound money, he does so as if it were a well-nigh religious imperative. The word "stability" peppers his speeches as in a catechism. Small wonder, then, that Mr Tietmeyer is no fan of dropping the D-mark for what could be a pig in a poke, namely the euro. That does not make him, as Helmut Schmidt, an ex-chancellor, says, "EMU's most important foe". But he does reckon the euro will stand little chance if countries not yet ready lock themselves into it next January. Don't the figures show that most would-be participants last year met the Maastricht criteria, including the central one limiting public borrowing to a maximum 3% of GDP? They do seem to, but Mr Tietmeyer sniffs at persnickety talk of 2.9% or 3.1% in this or that year. His buzzword is "durable". "What we need", he insists (forefinger wagging), "are countries economically able and politically willing to lock themselves together for ever."

Are there really 11 such paragons at the ready, as seems to be widely assumed, at least in Brussels? Mr Tietmeyer does not name names. But it will be something of a miracle if he and his Bundesbank colleagues raise no serious question-marks over some potential entrants, including Italy and France, in the report on "convergence" they are now preparing for the Bonn government. Mr Tietmeyer will be presenting the document to Mr Kohl and his ministers on March 27th, two days after the European Commission and the European Monetary Institute produce their own reports. Expect one of the more lively cabinet sessions.

So what? Won't the 11 be nodded through anyway in May by Europe's leaders, however much Mr Tietmeyer and his men stamp and growl? Probably, but that does not mean the Bundesbank's report will be ignored. For one thing Mr Kohl hopes that his role as "chancellor of European integration" will help him in his campaign to be reelected in September. It won't if the verdict from the Bundesbank, which most Germans highly respect, is carping. The central bank's arguments will also give ammunition to the single currency's German foes. They have taken their cases to the Constitutional Court, which has a knack of giving cocky politicians nasty surprises. Tricky weeks ahead for Germany's government, then. But tricky, too, for Mr. Tietmeyer, whose skill in blocking shots from all angles will be tested to the full.