15 February 2013

Peer Steinbrück on the eurozone crisis and the future of the European Union

Would you change the current austerity policy that is widely viewed as the main reason for Europe’s bad economic performance?

Absolutely, yes! Fiscal retrenchment and reforms aimed at increasing competitiveness are undoubtedly right, especially in the European crisis countries. But the austerity programmes now being imposed on these countries are misconceived and dangerous. The current crisis strategy is clearly too one-sided. The consequence is recession in the countries affected, rapidly rising unemployment, a widening gap between rich and poor and social tensions that could also threaten the future of democracy in these countries. So as well as promoting sound fiscal discipline, I want to see Europe doing more to encourage growth, innovation and employment, and making available the necessary financial resources.

But if you are asking me what I would do differently if I were German Chancellor, then there is another aspect to this that matters greatly to me. This has to do not so much with specific political initiatives, but rather with the general stance adopted by Germany in its political engagement in and for Europe. What I believe is this: if Europe does not want to be broken apart by this crisis, and is not prepared to settle for a sticking-plaster solution that simply seeks to avoid the worst, then its political actions must be guided by a sense of solidarity and an acceptance of collective responsibility. That means that Germany’s policy towards Europe must have larger aims in view than simply pushing its own short-term national agenda at the European level. Instead, such a policy must serve the higher interest that Germany has in the creation of a strong Europe. Unfortunately this is a consideration that the present German government loses sight of all too often.

Angela Merkel often talks about the need for eurozone crisis countries to adjust their competitiveness, i.e. prices and wages. A balance of payments crisis is often regarded as the key underlying structural problem of the eurozone. But in this context both deficit and surplus countries play an important role. What do you think surplus countries such as Germany need to do in order to help overcome the eurozone crisis? Are higher wages and a legal minimum wage in Germany part of the solution?

The basic problem is this: Mrs. Merkel takes a one-sided view of the crisis in the eurozone, seeing it as something that in truth it only is in part – namely a debt crisis affecting individual countries. As for the underlying causes of the crisis – the excesses on the financial markets, the deficits in the European banking system and the structural weaknesses in the European Economic and Monetary Union – she more or less blanks them out. And this is precisely why far too little is being done about stricter regulation of the financial markets and the banking sector, and about improving coordination of economic policy between the EMU Member States. I know we’ve had a whole series of resolutions and agreements, not to mention several growth packages, an EU 2020 strategy and the Euro Plus Pact; but there has been little concrete progress on any of this, let alone any sensible coordination designed to ensure that the desired economic incentives translate into more jobs.

What Europe still lacks is a consistent and definitive coordination of economic, fiscal and social policy with the clear aim of securing growth and prosperity for the long term. As I see it, that entails not only a commitment by deficit countries to improve their competitiveness, but also an acceptance of responsibility by surplus countries such as Germany to contribute something towards the correction of economic imbalances within the Eurozone. This is one reason why fair wage settlements and a legal minimum wage are important and sensible steps, which my party wants to see introduced in Germany.

The British Prime Minister David Cameron has recently given a speech in which he demanded a special deal for the United Kingdom in the changing European Union. What is your reaction to his speech? Can there be a special deal for a single country? Or would this be the beginning of the end for the European Union as every Member State would then seek to opt-out of the aspects the Union they don’t like, making the EU effectively ungovernable? What solution for this problem do you see? Could the future of the EU be a multi-speed Europe with the eurozone at its core and a second tier of non-euro Member States?

Europe is a political community. As such it can only function if all the Member States are willing to embrace a certain degree of solidarity, and if they share the belief that this European Union possesses a value from which all of them collectively benefit. But if one country thinks only of itself and asks how it can extract the maximum possible advantage from the EU, and is not willing to put something back into the European community, then it weakens the EU as a whole and damages its own long-term interests. The value of a strong and united European Union for us all is self-evident in my view: in the 21st century, when ideas and values, politics and economics have become global commodities, Europe can only hope to compete successfully as a united whole. Neither Germany nor France nor the United Kingdom will be able to promote their interests in the global arena more effectively on their own than if they stick together. And this is precisely why it is so important for the United Kingdom not to leave the European Union, because it brings a political and economic weight to this community that we really need going forward.

Full interview

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