Jürgen Karcher, Managing director and country head of fixed income, Germany, Salomon Smith Barney
Pedro Solbes, a former Spanish finance minister who in September took up his post as European Union commissioner for monetary and economic affairs, is reckoned to be one of the ablest politicians from the Spanish centre-left and one of the most tireless negotiators on the continent. He is also well acquainted with the Brussels EU bureaucracy, having spent almost his entire career in jobs linked in some way to matters European. This is the first time he has actually lived in the Belgian capital since the 1970s, however, and when Euromoney spoke to him, he was trying to decide whether to buy or rent his accommodation.
Such domestic considerations may well be light relief for someone now charged with making policy for the eurozone, helping to negotiate accession of new countries to the single currency, and being involved with such practicalities as introducing euro notes and coins by 2002. With fellow commissioner Frits Bolkestein (responsible for the internal market), Solbes will also be responsible for coordinating fiscal policy and eventually for imposing sanctions on eurozone countries that fail to stick to guidelines on cutting deficits and public debt.
Solbes is the natural gatekeeper of the stability pact, and will have an important say on budgetary and macroeconomic issues. But the extent of his actual power is difficult to pinpoint. Indeed his exact job description will depend to some extent on the continuing turf wars between the European Central Bank, the European Commission and member states over who is running exchange-rate and fiscal policy. “He has no power over monetary policy as far as I can see,” says Kitty Ussher, an economist at the Centre for European Reform. “He can’t tell governments what to do. He could confuse the market by speaking out of turn, but in a positive sense he has a roving role in coordinating member states in their policy responses to interest rates set by the ECB.”
Throughout his career Solbes has often been described as a technocrat and it is true that he has a solid background in economics and European affairs. But to suggest – as some recent comments have – that he is entirely without political ambition is perhaps misleading. “I would be surprised if he wasn’t ambitious,” says Cesar Molinas, who worked under Solbes as Spain’s director general of finance, and is now chief European strategist at Merrill Lynch. “Why else would he be doing his job? He’d be far better paid doing virtually anything else.” Solbes’ predecessor as Spanish finance minister, Carlos Solchaga, perhaps most accurately described Solbes as “a politician who on top of that knows about something”.
His perceived lack of political thrust perhaps stems from the fact that Solbes seems to have made no enemies in Spain, despite spending 12 years in Spain’s council of ministers. “It’s extraordinary considering the number of initiatives he’s taken during that time,” says Molinas. Equally the impression may emanate from his professorial tone as a speaker in the Spanish parliament, his unwillingness to use strong language and his instinctive refusal to fuel conflict. Jordi Ruiz Barcelo, senior analyst at Standard & Poor’s in London, says such traits will serve Europe well: “The great thing about Solbes is that he is not a pure politician. He knows the market well, and won’t adopt measures that go against it. He won’t go in for headline-making statements.”
Pedro Solbes was born in 1942 in Pinoso, a small town near Alicante in south-eastern Spain, where his father ran a small legal business. After reading law and political science at the University of Madrid, Solbes entered the Spanish civil service in 1968 as one of the elite corps of economists at the ministry of foreign trade.
Solbes first came to Brussels in 1973 as commercial counsellor at the Spanish permanent delegation to the European Economic Community, as it then was. That stint lasted five years, during which time he also took a diploma in international economics at the Université Libre de Bruxelles.
In 1978, Solbes was appointed special adviser to the minister for relations with the EC. The following year he became director general of commercial policy at the ministry of economics and trade, and in 1982 general secretary at the ministry of economics and finance. He has been credited with starting the process of cleaning up Spain’s public accounts that enabled the country to join the EU.
Solbes was a key figure in the negotiations for Spain’s entry into the EU in 1986, after which the Socialist prime minister Felipe Gonzalez named him secretary of state for European affairs. Even when he became minister of agriculture, almost everything he did revolved around Brussels. As minister of finance (1993-96), Solbes had a role in negotiating the second Delors package and during the Spanish presidency of the EU brokered the agreements on the single currency at the Madrid summit.
Domestically, meanwhile, Solbes succeeded in bringing in measures to reduce Spain’s public deficit and bring inflation down, and although he was no longer in office when Spain moved onto the fast track of European economic and monetary union in 1996, he is widely seen as the man who made Spain’s membership possible through the economic discipline he imposed.
Solbes says he sees the coordination of economic policy as “one of the crucial points for discussion” in the EU along with the question of the enlargement of membership. “We have to know what will happen with the union as a consequence, but more important we need to know what the candidates are doing to adapt themselves to be able to be competitive in the context of the enlarged European Union.”
His new job leaves little time for recreation. “For the time being the only hobby I have is to read papers,” he says, “but I do like to walk every day.” Having spent almost his entire career in public service, Solbes admits that doing something one day in the private sector might be interesting. But he says, “for the time being I am very well here. I will stay here initially for five years and afterwards we’ll see”. Philip Eade
