Otto Graf Lambsdorff

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Otto Graf Lambsdorff

One of the most controversial politicians in Germany, Otto Graf Lambsdorff (born 1926) served as minister of economics and spokesman on economic affairs for his party, the liberal Free Democratic Party. In both capacities he was an outspoken champion of free enterprise and an opponent of government intervention in the economy.

Otto Graf Lambsdorff, Count von der Wenge, was born December 20, 1926, in the German city of Aachen; he was the scion of a Rhenish noble family. Lambsdorff served briefly in World War II, returning to civilian life as a severely disabled veteran. (He walked with a pronounced limp, and his collection of walking sticks became something of a personal political trademark.) After his release from military service, Lambsdorff studied law at the Universities of Bonn and Cologne, obtaining his bachelor of law degree in 1950 and a doctorate five years later. After graduation he did not pursue the traditional German careers in private law practice or civil administration. Instead, he became a corporate lawyer. Beginning in the early 1950s Lambsdorff held a number of executive positions with leading West German banks and insurance companies and served as a member of the boards of directors of several leading insurance corporations.

In political circles Lambsdorff's name first became widely known in 1968 when he was elected treasurer of the Free Democratic Party (FDP) organization in North Rhine Westphalia, Germany's largest state. Three years later he was in the national limelight as well. The FDP's leaders appointed him to the intra-party committee that drafted the so-called "Freiburg Paper" (Freiburger Thesen). The "Freiburg Paper" was an effort to adapt the principles of classic liberalism to conditions of the post-industrial society that was emerging in the 1970s. The "Freiburg Paper" called for the "second phase of a reform movement which stems from the middle class revolution." Liberalism was to be "no longer just democratic, but also social." The authors of the report endorsed the preservation of the free enterprise system and equality of opportunity (especially in the areas of vocational and educational choices), but they rejected affirmative action programs. The report that Lambsdorff and his colleagues submitted to the FDP's leadership in October of 1971 was adopted by the party's 1972 national congress as part of the official party platform.

This same congress rewarded Lambsdorff's contribution to the ideological debate within the FDP by electing him to membership in the party's national executive committee and nominating him for a seat in the Bundestag. In the fall of 1972 Lambsdorff became a member of West Germany's national parliament.

Lambsdorff was not destined for a legislative career. Almost simultaneously with his election to the Bundestag he was appointed minister of economics in the cabinet of Willy Brandt. The Liberal leader retained his ministerial position after Helmut Schmidt became chancellor, but increasingly differences over fundamental policy questions developed between him and his Social Democratic colleagues in the cabinet. Especially after the West German economy began to stagnate in the wake of the 1979 oil shock, Lambsdorff became convinced that only a radical change in economic policy in the direction of what would later be called "Reaganomics" could bring West Germany out of its recession. In a series of books and articles, Lambsdorff called for massive reductions of the West German federal indebtedness, severe curtailments of the cost of social services, and tax cuts—especially for upper-level incomes—in order to stimulate private investment.

Lambsdorff was convinced that the program he advocated could not be carried out as long as the Social Democrats and Liberals remained coalition partners. As a result, he became an early and persistent advocate of the Wende—that is to say, the breakup of the Social-Liberal coalition in favor of a new alliance between the FDP and the CDU/CSU (Christian Democrats/Christian Socialists). The Wende came in 1982 when Helmut Kohl replaced Helmut Schmidt as chancellor, and few observers doubted that it had been Lambsdorff's behind-the-scenes influence that was decisive in persuading Hans-Dietrich Genscher, then the national chairman of the FDP, to agree to the switch in political partners.

Lambsdorff at first retained his seat in the Kohl cabinet, but he soon came under a cloud as a result of the so-called Flick Affair. In late fall of 1983 the economics minister was indicted on bribery charges. These accusations stemmed from allegations that in his capacity as minister of economics he had arranged special tax benefits for the multinational Flick Corporation in return for campaign contributions from the firm. In a second, but related, affair, Lambsdorff, as the FDP's treasurer for North Rhine Westphalia (along with the treasurers of most major West German parties), was also charged with accepting illegal campaign contributions from a number of businesses, including, once again, the Flick Corporation.

Although he maintained his innocence, Lambsdorff resigned as minister of economics. (The trial, which began in 1985, ended in 1987 with his acquittal except for the charge of tax evasion, for which he was fined $100,000.) He was succeeded in that position by Martin Bangemann, then head of the Free Democratic Party.

The Liberal leader left the cabinet, but he retained his seat in the Bundestag and remained an influential figure in the Free Democratic Party. Lambsdorff still served as his party's official spokesman on economic affairs. Even more important, he became an effective, albeit often abrasive, voice of those right-wing elements in the FDP that opposed the concept of cooperation with Social Democracy and the further evolution of the welfare state. Instead, Lambsdorff and his supporters argued that the primary function of government is not to provide social services, but to create the conditions in which the free enterprise system can grow and flourish. After the trial, Lambsdorff resumed full political activity for the FDP.

Lambsdorff continued to be an important figure in the party, serving as honorary chairman, but the FDP became less important after unification of East and West Germany in 1990. The pro-ecology Green Party and the former East German Communist Party (known as the Party of Democratic Socialism) soon overtook the Free Democrats as the main competitors to the big two parties. While Kohl won the first election after reunification, this did not stop the decline of FDP. By the mid-1990s the Free Democrats were in serious trouble. Faced with rumblings by dissident Liberals that they might bring down Chancellor Kohl's government, Lambsdorff warned, "Whoever does that knows perfectly well that he will have given this party a death blow," as quoted by Rick Atkinson in The Washington Post. In the 1994 elections, the Free Democrats suffered substantial losses, declining from 79 seats to 47 and running fourth behind the Greens. Although the coalition supporting Chancellor Kohl held onto a narrow majority. The FDP faced an uncertain future.

Further Reading

Literature in English on Lambsdorff is scant; no full-scale biography of the former economics minister has appeared. Lambsdorff himself vigorously defended his ideas in two works: Zielsetzungen: Aufgaben and Chancen der Marktwirschaft (Aims: Tasks and Chances of the Free Market Economy, 1978); and Bewährung: Wirtschaftspolitik in Krisenzeiten (Test: Economic Policy in Times of Crisis, 1980). The best English-language account of the workings and problems of the West German economy during Lambsdorff's tenure as minister of economics is Andrei S. Markovits, editor, The Political Economy of West Germany: Modell Deutschland (1982). The difficulties of the Free Democrats after reunifications are the subject of "Kohl's 10-Seat Majority Suddenly Looks Fragile," by Rick Atkinson, The Washington Post (October 25, 1994.)" □