COLORADO SPRINGS, Colo.
The European Union is going to have a very difficult time
recovering from its sovereign debt crisis, banking crisis,
structural crisis and competitive crisis, according to Gisbert
Rühl, chairman and chief executive officer of Duisburg,
Germany-based Klöckner & Co. SE.
"The importance of the European
Union globally has decreased with the rise of Asia, especially
China, and the collapse of the European Union has an impact for
the economies of the U.S. and China," Rühl said at the
American Iron and Steel Institute (AISI) and Metals Service
Center Institute (MSCI) joint annual meeting in Colorado
There is a battle between the
more prosperous northern European countries that are pushing
austerity measuresspecifically lower public spending and
a departure from a history of subsidizing labor without gains
in productivityand the southern European countries whose
political leaders think they can spend their way out of
recession, or at least long enough to be re-elected, Rühl
In Spain, "public expenditures
on wages were increasing and productivity went down," he said.
In France, the public sector accounts for 57 percent of gross
Other European nations,
especially in the northern half of the continent, "kept up with
reforms to keep labor costs under control, and with this
increased productivity and competitiveness.
"The difficulty is to find the
right balance between necessary austerity measures on one side
and public spending to support recovery," but Rühl
believes "pouring more and more money into an inefficient
system will not work."
Structural reform to achieve
competitiveness again would require the eurozone to have a
"common fiscal policy of budgetary discipline and strong
integration and, finally, banking reform. It is extremely
difficult to achieve because member states would have to give
up some part of their autonomy," Rühl said.
"To come out of the mess," he
said, Europe needs responsible political leadership that "will
sort things out together. The qualification of European leaders
has never been as bad as today. We hope rationality will
But even in the best-case
scenario, Rühl predicts four or five years will pass
before the E.U. can again achieve significant economic