The French finance minister discusses the 'Panama Papers,' how to cut deficit, the eurozone economy and the future of Europe.
French Finance Minister Michel Sapin has been quick to react to the ‘Panama Papers,’ a massive leak of documents belonging to a Panamanian law firm specialised in setting up offshore companies.
Sapin spoke to journalist David Jacquot in Paris.
Michel Sapin: biography
- French Finance Minister Michel Sapin was born on 9 April 1952.
- A member of the Socialist Party since 1975, he was elected MP for the Indre département, in central France, in 1981, then for the Hauts-de-Seine, West of Paris, in 1986, and again for Indre in 2007.
- Under the presidency of François Mitterrand, he was Deputy Minister for Justice (1991-1992), then Economy and Finance Minister until 1993.
- Under the presidency of Jacques Chirac, in the cohabitation government of Lionel Jospin, he was Minister for the Civil Service and State Reform, from 2000 to 2002.
- He was also Chairman of the Regional Council of the Centre region from 1998 to 2000 and from 2004 to 2007.
- Under the presidency of François Hollande, he was Minister for Labour, Employment, Vocational Training and Industrial Relations, from 2012 to 2014.
- He became France’s Minister for Finance and Public Accounts in April 2014.
David Jacquot, euronews:
Let’s start with the worldwide tax evasion scandal revealed by the ‘Panama Papers’. The allegations concern political leaders from around the world: Iceland’s prime minister, Argentina’s president, Ukraine’s president, the Saudi king, and the entourage of Vladimir Putin and the Chinese president… If the fraud is confirmed, what would you have to say about the behaviour of these foreign leaders?
Michel Sapin, French Finance Minister:
“Sorry to answer this way, but I will not interfere in these countries’ internal political or judicial issues. It’s up to them to shed light on these activities. Were they legal or not, it’s not something I should be meddling in.
What I find important about these revelations, is that they make everyone realise that these are not just national phenomena piling up alongside each other, but a truly global phenomenon. And, to fight this global phenomenon – as we’ve been doing for several years now – what matters is international cooperation.”
Panama has agreed to automatic exchange of information with other countries from 2018. But isn’t it dragging its feet, not being cooperative? Isn’t that the truth?
“The truth is it’s playing hide and seek and that’s no longer tolerable. Some countries, often very small ones, are, after all, consistent in their intention to serve as tax havens: a few islands here, some territories there…”
Shall we name them? The Bahamas?
“Actually the Bahamas are now playing the game…”
“The Seychelles are also playing the game. So you have tiny islands here, there…”
“Guernsey is now in the game. So you see, things have changed. We used to name Switzerland, but now that’s over. Actually, now you see very clearly, in some of the processes described in these documents, that many of the schemes set up in Panama are designed, in a way, to flee Switzerland where it’s no longer possible to hide your fortune or your income.”
Now let’s talk about French public finances. France has cut its public deficit in 2015, to be precise by half a percentage point to 3.5 percent of GDP. That’s good news. But the European Commission’s vice-president was quick to highlight that this drop was largely due to ‘cyclical’ factors – so basically that it wasn’t thanks to your efforts. Is he wrong?
“He acknowledged in front of me that he used the wrong terms. I saw him a few minutes afterwards, and he told me his comments had been misinterpreted. The Commission knows the truth, which is that France has made considerable efforts to tame its deficits. In 2015, it fared better than expected and than what the Commission itself had expected. And that’s under conditions that are not that easy to meet: bringing down deficits faster than planned, while bringing down taxes, as that’s another clear fact that in 2015 taxes went down.
And that’s while facing, as we all know, additional spending on emergencies. 2015 was the year we suffered two waves of attacks. The year we increased our spending on security. It’s also the year we decided, again, to significantly increase spending on our national defence, because the Army is present on our territory to protect the French, and it’s present abroad to strike international terrorism at its roots.”
Let’s now talk about the European Central Bank. Mario Draghi rolled out his ‘monetary bazooka’ a few weeks ago with new unconventional measures to revive inflation and economic growth. What do you think of his moves? On the one hand, the euro and interest rates have dropped. But on the other, inflation is not exactly close to Draghi’s target of two percent, and bank lending is still sluggish. That’s a rather mixed bag…
“We face an extraordinary challenge. The problem now is this extremely weak and even negative inflation, for reasons you know, as the prices of commodities are collapsing, including in agriculture, which can cause major difficulties to those working in the sector. And given this extraordinarily challenging context, we have a central bank that is relevant, courageous and determined. And that’s a great chance for us.”
That’s it? There’s nothing it should be doing differently?
“It’s a great chance for us. Had the ECB not been there these past two, three years, where on earth would we be now? The only thing I can say, and in fact it’s something Mario Draghi keeps repeating, is that monetary policy cannot fix everything. It can do a lot, and even more – the ECB is totally determined to use all the monetary tools it has to rekindle inflation and growth – but it cannot fix everything. It’s also up to each of us to work on the smartest policies and budgets.”
But should the ECB maintain this stimulus as long as inflation hasn’t returned to the 2 percent comfort zone?
“It’s not up to me to say what the ECB should do. But I hear it, and it’s saying it has the means to go even further and will do so as long as the inflation target – of around 2 percent – has not been reached, and therefore as long as growth in Europe has not sufficiently picked up.”
Michel Sapin, you’ve just published ‘Never without Europe!’ with your German counterpart Wolfgang Schäuble. You’ve always been a fervent advocate of European integration. The problem is, fewer and fewer Europeans believe in Europe, as we can see with the rise of populist and xenophobic parties. How can we rekindle desire for Europe, when, let’s face it, it no longer inspires people?
“As it happens, by facing reality. By facing the facts of the rise of populism. By facing the real concerns of our times. These are: I want growth for my country, I want economic growth, I want jobs. And I want my country to be shielded from a certain number of international issues, particularly in terms of security, terrorism or migratory pressure. But can we manage that each in our own corner? Can we succeed by shutting ourselves away? Of course not. Of course not.
You cannot have economic growth anymore unless you have a big enough space for it. And there’s no real protection if it’s ‘every man for himself.’ Can you imagine if we had to close all the borders around France? Can you imagine what we would lose in terms of freedom, fluidity, for people but also for business – it would be huge. We must also face that reality, and highlight what’s at stake here in Europe. And not just for the European ideal. We won’t find solutions to the big problems each of our countries face if we leave Europe on the sidelines. There are solutions – not immediate ones, no miracles – that we must build, if we manage to help Europe regain its momentum.”