Europe is seeing signs of recovery but still faces many external and internal risks as it seeks to secure sustainable growth across the bloc.
Point of view
Don't underestimate European economies, European societiesGerman Finance Minister
Euronews was at the European Business Summit in Brussels and Maithreyi Seetharaman spoke to German Finance Minister Wolfgang Schäuble at the closing plenary session.
Maithreyi Seetharaman, Euronews: “Let’s start from the basic premise of where you think we are on the world’s stage today, and where do we need to go?”
Wolfgang Schäuble, German Finance Minister: “I think we are at a crossroads. And I would define it in the way that on the one hand expectations towards Europe from all over the world are increasing. On behalf of a lot of reasons. Geopolitical risks and so on… On the other hand doubts inside of Europe have also increased the last couple of years. Maybe there has been some turnover (turnaround) since the Brexit decision of the UK, but until the Brexit decision in the UK we suffered in a lot of member states from increasing Eurosceptic movements. We have to think about how we can strengthen the support in European constituencies, in the European population or the European integration.”
Maithreyi Seetharaman, Euronews: “This is not anything new that we have to worry about, like the International Monetary Fund talking about protectionism, trade wars potentially, because you sound almost like Mr Mario Draghi at this point – that you are not that concerned.”
Wolfgang Schäuble, German Finance Minister: “I think In Europe, especially in the European Union, growing over the decades we have been very successful in building an integrated common market. And that is an achievement that is not really disputed by now – except by the British, the strange British people in this regard. But the rest of Europe is fine with a common market. What we did not really achieve was to do, in parallel, what is needed to make a common market sustainable for the future. And then we discussed: can we build a monetary union without having a political union? And we decided… if we waited until we have a political union, we would wait for another century, possibly. The problem is: you need amendments to the treaty, to the Lisbon Treaty. And if you look at the Lisbon Treaty, how you get an amendment to the treaty, good luck!”
Wolf_Schauble</a> says <a href="https://twitter.com/hashtag/EU?src=hash">#EU</a> has been successful in building a common market and no one can argue that <a href="https://twitter.com/hashtag/EBS2017?src=hash">#EBS2017</a> <a href="https://twitter.com/hashtag/E_Room?src=hash">#E_Room</a> <a href="https://t.co/cDGln88Vnh">pic.twitter.com/cDGln88Vnh</a></p>— EBSummit (ebsummiteurope) May 23, 2017
Maithreyi Seetharaman, Euronews: “Post-elections with (French President) Macron, the world seems to be expecting at some point a very strong Franco-German alliance. What is it going to be like, this new relationship, and most importantly, is it going to be good for both the people and businesses of Southern Europe?”
Wolfgang Schäuble, German Finance Minister: “I think it must be good for all parts of Europe… Any European integration will have to work in the direction that the gap between those actually doing well and those having problems will not increase but will be reduced. We need risk-sharing, but if we introduce only risk-sharing without risk-reduction, and if we introduce risk-sharing without incentives to do yourself something in the right direction, we have to think how can we do it: whether we have the competence to implement decisions from a central institution, Europe, or whether we find incentives. If everybody was doing as well as Spain did in the last couple of years, everything would be fine in the Eurozone. But Spain is an exception.”
Maithreyi Seetharaman, Euronews: “And Greece…”
Wolfgang Schäuble, German Finance Minister: “Greece has a little bit more problems. Greece is not to be compared with everyone else, that is a very unique case, we knew it from the very beginning. If you compare with the United States of America, I am very confident, Europe is not doing so bad. Don’t underestimate European economies, European societies, they spend double in relation to Gross National Product (GNP) compared to other advanced economies, like Canada, Australia, US. And I think there are a lot of advantages. There may be some disadvantages, but I prefer the European model. By the way, the euro crisis started with a bank, it was called Lehman Brothers. And this bank was located not in Germany, not in Belgium, but in the United States.”
Maithreyi Seetharaman, Euronews: “With the G20 presidency, what are you seeing: is there some sort of a rollback, because Mr Trump’s administration and the US Treasury Secretary would love to roll things back to the way they were. How do you deal with that?”
Wolfgang Schäuble, German Finance Minister: “Until now I can’t see… that the new administration in the US has destroyed all the regulations we have achieved there for financial markets. There has been a lot of talking in that direction and the other direction as well, but in substance… I think protectionism is not the danger in Europe.”
Maithreyi Seetharaman, Euronews: “But it is around the world, would you say?”
Wolfgang Schäuble, German Finance Minister: “It is around the world, but Europe is fighting against protectionism and I think we have good chances to remain convincing that open markets, competition are much better… Of course if you look at what’s going on in China, in India, in the emerging economies: we’re moving in this direction. We must not underestimate the attraction of the values and the principles of the European Union. With all the problems we suffer in Europe – and protectionism, fighting nationalism is a challenge for every one of us – maybe the Brexit decision has been for some people a wake-up call. People say ‘oh European integration is not so bad’. You have even seen Madame Le Pen, quite interestingly, between the first and second round in the French Presidential elections, she declared she wouldn’t leave the monetary union because she got polls that said 75 percent of the French population is in favour of staying (in the eurozone).”
Maithreyi Seetharaman, Euronews: “So is the biggest risk at this point a strengthening euro for the Eurozone and for the EU overall? Because the sterling doesn’t look like it’s going to head in any other direction.”
Wolfgang Schäuble, German Finance Minister: “Everyone has to care about their own challenges and I think the British will learn that the decision for Brexit was a mistake.”
Maithreyi Seetharaman, Euronews: “What does it mean for European businesses who are dealing with a strengthening euro? Can Europe, especially Southern Europe, afford that?”
Wolfgang Schäuble, German Finance Minister: “Yes, of course. Spain is also part of Southern Europe. Italy, they have some political problems. I think the problems of Italy are mostly caused by political reasons. Too many people in Italy don’t really trust any political leader or movement and the result is that they trust a figure, a man who is a clown or something. But Five Stars, Grillo [The anti-establishment Five-Star Movement founded by Beppe Grillo] – that is proof that Italy has a problem with confidence in political leaders. But I think they will overcome. They will do it in other member states, even Portugal is doing much better than expected.”
Maithreyi Seetharaman, Euronews: “But can they sustain that strengthening euro?”
Wolfgang Schäuble, German Finance Minister: “I think the growth will be higher than we expect. In Germany we expected 1.6 percent for this year, in the first quarter we had already 0.6 percent and therefore there is a dynamic in the economic recovery. That is (the case) for Spain, for Portugal and I hope it will be for Italy and of course for Greece.
“The main discussion on a global level for me is “what does sustainable growth mean?” The geopolitical risks are the increasing gap between rich and poor! If we do not succeed to bring the gap a little bit closer; and if we do not succeed to help the Islamic world… if the Muslim world is not able to accommodate the Muslim religion within the modern world, we will suffer major dangers – terrorists and new kinds of war fare and so on – and that is the main challenge.
“If Europe is strong enough to deliver sustainable growth and to make its own free societies, in a way that people stick together and find the right balance between freedom and equality – then we can give an example to the rest of the world. And the nervosity of any dictator all over the world is the attractivity of Western or European values.”
What’s next for Europe? Comments from the European Business Summit https://t.co/fscrybx5QR— Seamus Kearney (@seamuskearney_) May 24, 2017