Finance Minister of Germany Wolfgang Schaeuble is also called the father of the most drastic programs of economic consolidation of the European Union, being proposed recently. The EU is still suffering from debt and general economic crisis, and the Union keeps holding heated discussions on further anti-crisis measures. In particular, the EU authorities have already formed the European Financial Stability Facility and European Stabilization Mechanism. Recent October Summit of EU leaders have taken new steps regarding unification of financial and budget policies of country-members.
Thus, Germany stands for giving Brussels maximum control over all financial spheres of European zone. According to experts, EU members used to form national budgets and foreign loans programs independently, and only interior governments followed the observance of European Union norms within the countries (budget deficit - less than 3% of GDP, state debt - less than 60% of GDP). As a result, the euro zone has become misbalanced, and the tasks on recovery of euro positions have fallen on the strongest members, first of all Germany. Now Germany is lobbying strengthening of centralization in order to improve control over financial and economic processes.
ForUm has had a talk with Wolfgang Schaeuble to learn about taken steps and challenges to meet for Europe to overcome the crisis.
- Mr. Schaeuble, how is the economic situation in the EU developing?
- We have reached significant progress to re-establish trust in the eurozone. The European countries observe their obligations on reduction of budget deficits, and the cumulative index of budget deficit in eurozone has reduced by 50%, down to 3.2% of GDP of a region, since 2009.
At the same time, Europe should avoid creating false expectations and misunderstanding, which may lead to disappointment. To solve the problem of state debts all over the world and come back to stable economic growth we must work on the problem root cause, not to take short-tem decisions, conflicting with the long-term goals.
-What can you say about the state of German economy?
- It is in a good state, though the growth may stop based on the results of the second year half. In 2012-2013, we expect 1% annual growth. The correction process has already started, but we are still at long last beginning. Moreover, governments of EU countries should not expect that European Central Bank would solve all the problems. Monetary policy is not a secret remedy. It can provide liquidity, but the root problem of the crisis can be solved by combined actions of the governments only.
- And what are these combined actions?
- The main step to take is to form a financial union, in which separate country-members will give up their jurisdiction in fiscal policy. Besides, problems of Spanish banks prove that Europe would be better with an EU banking union governed by a single supervisory mechanism. We need this supervisory mechanism to control banks directly. In the best-case scenario, we must introduce a position of European Minister of Finances, who will have veto powers over national budgets and new loans issues.
Until we have a financial union, we cannot take joint responsibility for the debts of weaker countries. We understand that those who intend to spend money at others' expense will keep doing this. That is why markets are not so convinced regarding Eurobond policy.
- As far as we understand, you also suggest introducing the position of European budget commissioner.
- Such position is an important step forward regarding budget and fiscal consolidation. The commissioner would enjoy the power to control national budgets and make legally binding decisions against individual national governments if country's national budget does not meet fiscal rules of eurozone. First we must introduce control measures, and then to start helping separate countries, suffering from the crisis the most. Most probably, this issue will be on the agenda of the next meeting of European leaders, planned for December 13-14.
- Does it also mean political consolidation?
- Till now EU country-members have had the last word, but it cannot last forever. Brussels must get broader powers regarding key political spheres, so separate countries cannot block taken decisions. Those who want stronger Europe must be ready to follow decisions of the center. It is important that we show joint position on foreign policy, as well as security and economic policies. We need to form an agency, representing all countries, an agency, based on the model of German Bundestag or US Senate.
Every crisis is a possibility to admit and agree on what must be done. Plans to improve financial discipline have already been agreed by 25 European Union members.
No, the European Union will not become a federal state, like US or Germany. It will have its own structure, and it will be an interesting venture. We will never take decisions applicable to all members equally. The strength of Europe is in its diversity, but there are things, which must be done centrally and at the All-European level.
- And what about Greece? As far as we know, it may receive additional 20 billion euro for anti-crisis programs.
- Yes, it may happen to recover country's budget, but the fact is that the next tranche of funds from its first bailout has not been transferred in full yet (30 billion euro), and it won't happen until Greece carries out declared reforms.
Debt reorganization or any direct debt forgiveness for Greece is not possible. As a possible solution of the problem, European Central bank may buy out Greek debt securities, while they are being sold at low price at the secondary market. It's not some kind of a trick, but a working draft variant.
- In connection with the financial crisis in Europe, rumors say euro currency may collapse. What do you think about it?
- I don't believe it. Collapse of euro, as well as dissolution of the European Union, would be absurd. The world is uniting in its parts, and what you are saying is leaving every European country on its own. It cannot happen, it should not happen and it would not happen.
Introduction of euro as common currency was a logical continuation of economic integration of Europe. We wanted to introduce euro first and then take decisions on political union. And it worked. Euro was the genitor of future development of the EU.
- However, many experts do not believe the EU will come to an agreement on needed economic and political measures.
- We do have difficulties, but belief is one thing and unbiased necessity is another one. I'll give you an example. Many people of Federal Republic of Germany believed US President Ronald Reagan was crazy when in 1987 he said in Berlin "Mister Gorbachev, break this wall!". I also did not believe it could ever happen. In spring of 1989, I just became the new Interior Minister. When American ambassador presented himself, he told me the wall might fall in three years. I doubted his words and responded we would be lucky if it happened in 10 years. And do you know how long we had to wait? Less than half a year!
Andriy Boyarunets, Dusseldorf
Thus, Germany stands for giving Brussels maximum control over all financial spheres of European zone. According to experts, EU members used to form national budgets and foreign loans programs independently, and only interior governments followed the observance of European Union norms within the countries (budget deficit - less than 3% of GDP, state debt - less than 60% of GDP). As a result, the euro zone has become misbalanced, and the tasks on recovery of euro positions have fallen on the strongest members, first of all Germany. Now Germany is lobbying strengthening of centralization in order to improve control over financial and economic processes.
ForUm has had a talk with Wolfgang Schaeuble to learn about taken steps and challenges to meet for Europe to overcome the crisis.
- Mr. Schaeuble, how is the economic situation in the EU developing?
- We have reached significant progress to re-establish trust in the eurozone. The European countries observe their obligations on reduction of budget deficits, and the cumulative index of budget deficit in eurozone has reduced by 50%, down to 3.2% of GDP of a region, since 2009.
At the same time, Europe should avoid creating false expectations and misunderstanding, which may lead to disappointment. To solve the problem of state debts all over the world and come back to stable economic growth we must work on the problem root cause, not to take short-tem decisions, conflicting with the long-term goals.
-What can you say about the state of German economy?
- It is in a good state, though the growth may stop based on the results of the second year half. In 2012-2013, we expect 1% annual growth. The correction process has already started, but we are still at long last beginning. Moreover, governments of EU countries should not expect that European Central Bank would solve all the problems. Monetary policy is not a secret remedy. It can provide liquidity, but the root problem of the crisis can be solved by combined actions of the governments only.
- And what are these combined actions?
- The main step to take is to form a financial union, in which separate country-members will give up their jurisdiction in fiscal policy. Besides, problems of Spanish banks prove that Europe would be better with an EU banking union governed by a single supervisory mechanism. We need this supervisory mechanism to control banks directly. In the best-case scenario, we must introduce a position of European Minister of Finances, who will have veto powers over national budgets and new loans issues.
Until we have a financial union, we cannot take joint responsibility for the debts of weaker countries. We understand that those who intend to spend money at others' expense will keep doing this. That is why markets are not so convinced regarding Eurobond policy.
- As far as we understand, you also suggest introducing the position of European budget commissioner.
- Such position is an important step forward regarding budget and fiscal consolidation. The commissioner would enjoy the power to control national budgets and make legally binding decisions against individual national governments if country's national budget does not meet fiscal rules of eurozone. First we must introduce control measures, and then to start helping separate countries, suffering from the crisis the most. Most probably, this issue will be on the agenda of the next meeting of European leaders, planned for December 13-14.
- Does it also mean political consolidation?
- Till now EU country-members have had the last word, but it cannot last forever. Brussels must get broader powers regarding key political spheres, so separate countries cannot block taken decisions. Those who want stronger Europe must be ready to follow decisions of the center. It is important that we show joint position on foreign policy, as well as security and economic policies. We need to form an agency, representing all countries, an agency, based on the model of German Bundestag or US Senate.
Every crisis is a possibility to admit and agree on what must be done. Plans to improve financial discipline have already been agreed by 25 European Union members.
No, the European Union will not become a federal state, like US or Germany. It will have its own structure, and it will be an interesting venture. We will never take decisions applicable to all members equally. The strength of Europe is in its diversity, but there are things, which must be done centrally and at the All-European level.
- And what about Greece? As far as we know, it may receive additional 20 billion euro for anti-crisis programs.
- Yes, it may happen to recover country's budget, but the fact is that the next tranche of funds from its first bailout has not been transferred in full yet (30 billion euro), and it won't happen until Greece carries out declared reforms.
Debt reorganization or any direct debt forgiveness for Greece is not possible. As a possible solution of the problem, European Central bank may buy out Greek debt securities, while they are being sold at low price at the secondary market. It's not some kind of a trick, but a working draft variant.
- In connection with the financial crisis in Europe, rumors say euro currency may collapse. What do you think about it?
- I don't believe it. Collapse of euro, as well as dissolution of the European Union, would be absurd. The world is uniting in its parts, and what you are saying is leaving every European country on its own. It cannot happen, it should not happen and it would not happen.
Introduction of euro as common currency was a logical continuation of economic integration of Europe. We wanted to introduce euro first and then take decisions on political union. And it worked. Euro was the genitor of future development of the EU.
- However, many experts do not believe the EU will come to an agreement on needed economic and political measures.
- We do have difficulties, but belief is one thing and unbiased necessity is another one. I'll give you an example. Many people of Federal Republic of Germany believed US President Ronald Reagan was crazy when in 1987 he said in Berlin "Mister Gorbachev, break this wall!". I also did not believe it could ever happen. In spring of 1989, I just became the new Interior Minister. When American ambassador presented himself, he told me the wall might fall in three years. I doubted his words and responded we would be lucky if it happened in 10 years. And do you know how long we had to wait? Less than half a year!
Andriy Boyarunets, Dusseldorf
Спасибі за Вашу активність, Ваше питання буде розглянуто модераторами найближчим часом
1271
