10 June 2016

SPIEGEL Interview with Wolfgang Schäuble: 'Britain Is a Leading Nation'

[...] SPIEGEL: Polls show that the outcome of the June 23 referendum is completely up in the air. If the British vote against the EU, your project for achieving ever closer integration in Europe will be on the verge of failure.

Schäuble: I hope and believe that the British will ultimately decide against Brexit. The withdrawal of Britain would be a heavy loss for Europe.

SPIEGEL: Why is it better for the EU if the British remain? They have repeatedly distanced themselves from the EU in recent years.

Schäuble: Britain is one of the strongest economies in the EU, and London is Europe's largest financial centre. Britain plays a leading role in all matters of foreign and security policy. That is why Europe is stronger with Britain than without it. Besides, the UK consistently advocates market-based solutions in Brussels, which frequently makes it an ally of the German government. And, in my view, one cannot have enough British pragmatic rationality in Europe.

SPIEGEL: And why is it better for the British to remain in the EU?

Schäuble: Britain is economically very closely integrated with its European partner countries. Were these ties to be cut, it would be a huge step backwards for the country and would weaken it considerably. In the era of globalisation, "splendid isolation" is not a smart option.

SPIEGEL: But Britain could continue to enjoy the benefits of the single market without being an EU member, in the same way that Switzerland and Norway do.

Schäuble: That won't work. It would require the country to abide by the rules of a club from which it currently wants to withdraw. If the majority in Britain opts for Brexit, that would be a decision against the single market. In is in. Out is out. One has to respect the sovereignty of the British people.

SPIEGEL: The OECD and the IMF are warning that the British could see massive income and prosperity losses in the event of Brexit. Is this fear-mongering?

Schäuble: I do think the calculations are at least reasonable. The close economic integration offers advantages for everyone involved, so it would be a miracle if there were no economic drawbacks following a British withdrawal. But I do not know whether British voters will be convinced if international organisations weigh in too heavily on this issue.

SPIEGEL: Your British counterpart George Osborne warns the British will be creating their own recession if they vote against remaining in the union. Do you worry about the possibility of contagion?

Schäuble: If Brexit came to pass, it would of course have negative consequences and create risks for Britain's partner countries. But my counterparts in the eurozone and I will do everything possible to contain these consequences. We are preparing for all possible scenarios to limit the risks.

SPIEGEL: What exactly can you do?

Schäuble: The ECB is making preparations, just as the Bank of England is. The European commission and the governments of partner nations are also, of course, preparing for possible scenarios. No one knows how the markets would react on the day after a decision like this. Perhaps nothing would happen at all because investors have already factored everything in. If the British do actually vote to leave the EU, it will be important to remain calm and offer the markets some orientation on which way the road will lead. Then we would have to say: "We now have a decision that we did not want, but let's make the best of it". There would still be no reason for panic. This process of separation would take a while. A withdrawal of this magnitude does not take place overnight. It would be preceded by lengthy negotiations. But of course everyone hopes that these emergency scenarios will not occur at all.

SPIEGEL: The domestic policy consequences in the UK could also be dramatic. Do you believe Brexit would fuel renewed efforts towards Scottish independence, because the Scots are clearly more closely aligned with Europe than the English are?

Schäuble: The Scots want to remain part of Europe, and a vote against their will could reignite the push for independence. Northern Ireland is also important. The conflict there was contained by the fact that Ireland and Britain are both members of the EU.

SPIEGEL: As a dedicated European, you have been particularly vehement in advocating deeper European integration, also at the political level. What happens if the British example catches on and other countries decide they want less Europe or even to leave the EU? [...]

Schäuble: In response to Brexit, we couldn't simply call for more integration. That would be crude, many would rightfully wonder whether we politicians still hadn't understood. Even in the event that only a small majority of the British voters reject a withdrawal, we would have to see it as a wakeup call and a warning not to continue with business as usual. Either way, we have to take a serious look at reducing bureaucracy in Europe. And in some areas, we also need to find our way back to the member states assuming more autonomy, as the British are demanding. [...]

SPIEGEL: In the past, Britain has repeatedly blocked key decisions and obstructed integration.

Schäuble: No, Britain has never stood in our way. The British government has consistently given a free hand to those countries that wanted to move forward, on monetary union, for example. It's a little different in foreign and security policy. This is where, compared to other EU countries, Britain and France bear the greatest burden and make the biggest contribution. In that area, Britain is a leading nation. [...]

SPIEGEL: How dangerous would Brexit be for the EU? Would it fundamentally call the union into question?

Schäuble: Europe will also work without Britain if necessary. At some point, the British will realise they have taken the wrong decision. And then we will accept them back one day, if that's what they want. [...]

SPIEGEL: In the event of Brexit, Germany's dominance in the EU would further grow. Would Germany not then have to assume even more leadership?

Schäuble: The others are always calling for German leadership, but we are criticised as soon as it is exercised. One country alone cannot lead Europe, especially not Germany. We need France, and we need a stronger, more committed Poland. The EU is far better balanced with Britain than without it. And the more Britain gets involved, the better Europe works. [...]

Full interview

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