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Greek debt crisis - Euro Area/federalism – European economic government

Published on October 3, 2011
Excerpts from the interview given by Alain Juppé, Ministre d’Etat, Minister of Foreign and European Affairs, to “France 2”

Paris, September 29, 2011

Greek debt crisis

Q. – A few days ago, an austerity plan was passed – €12 billion in savings, if I remember rightly – and the same day in parliament, an aid package for Greece to the tune of €15 billion was also passed. It’s quite an interesting coincidence. I want to ask you quite simply and bluntly why, as a French taxpayer, I’ll be paying taxes to help people who don’t pay taxes?

THE MINISTER – I don’t know this figure of €15 billion. There’s an aid package to Greece which is much larger than that.

Q. – Your words, not mine. And that day, €15 billion was passed.

THE MINISTER – There are various payments, but this money isn’t coming from French taxpayers’ pockets.

Q. – Where is it coming from?

THE MINISTER – It’s money that is borrowed and will be repaid – we hope so, at any rate – with a guarantee, it’s true, from the main European countries, in particular France. (…)

Q. – The Greeks will never pay it back; everyone knows that.

THE MINISTER – I wouldn’t be so sure.

We must look at what’s in our interest. Is it in our interest for the European Union, and more specifically the Euro Area, to collapse? I’m quite clear on that score: no. It would be a disaster for France. So we must strengthen the Euro Area.

Q. – We can talk about it.

THE MINISTER – Let me continue, because you’re asking me a question that mustn’t be taken out of context.

Why are we doing this? We’re not doing it just for the sake of it: we’re also doing it in our own interest. It’s in our interest for the Euro Area to remain what it is today, and even be strengthened, because, for us, it’s a factor of stability and security in the world. So we’re going to do everything necessary to ensure the Euro Area is strengthened, and I’m totally confident. There’s strong determination on Germany’s part: the Bundestag passed, by a very large majority, the package we put in place precisely to strengthen the Euro Area and help Greece.

Q. – But do you really think Greece will pay back in full, despite all the sacrifices? There’s no real taxation system; shipowners and the Church don’t actually pay taxes, as you know.

THE MINISTER – There are also people in France who don’t pay taxes.

Q. – The Church pays taxes.

THE MINISTER – We’ve asked Greece to make efforts to put her finances back in order, and we’re examining this very closely. There’s even what’s called a troika, comprising the International Monetary Fund, European Union and European Central Bank, which will regularly ensure the Greeks stick to their commitments. We must help Greece, and in exchange we must ask her to carry out the necessary reforms; that’s what we are currently doing.

Q. – Shouldn’t we share some of her losses, as Dominique Strauss-Kahn says? Resign ourselves to the fact that Greece can’t pay everything back?

THE MINISTER – We’ve decided to help Greece face up to her commitments. Measures have been taken, in particular to create a solidarity fund, which will be set in motion following the Bundestag vote and ratification by all the European countries; I think we must stick to that line. That doesn’t mean we mustn’t demand considerable efforts from Greece, to put her public finances back in order and, in particular, ensure the Greeks pay taxes. Letting the Euro Area unravel today would be a heavy responsibility in the eyes of history. (…)

Euro Area/federalism

Q. – I already know you’re in favour of defending the Euro Area at all costs.

THE MINISTER – I happen to think France’s future lies in Europe. I think that in the world we’re living in, retreating to within France’s borders (…) and leaving the Euro Area makes no sense for France today. We’d be saddled with considerable debts that we’ve built up in euros and would be obliged to pay back in that currency; and I think above all it would be a disaster on the political level. On the contrary, we must go further in reinforcing solidarity in Europe. I’m in favour of a real European federation, because in the world we’re living in we – our 65 million inhabitants - can’t tackle the challenges we face and the reshaping of the global landscape. So we must do everything to save and strengthen the euro; it’s in our interest.

Q. – Just before we talk about federation, do you think the euro’s track record is 100% positive for France?

THE MINISTER – I think that it’s broadly positive and that the Euro Area today isn’t alone in experiencing financial difficulties. What happened in 2008 was a real global shock whose epicentre was in the United States, not the Euro Area. Today the United States has growth that’s not much higher than in the Euro Area and difficulties equal to ours. (…)

So I think there’s no future for France today other than to try to strengthen the Euro Area and strengthen her solidarity with Germany; that’s the direction we must move in.

If we’re not in the euro, we’re outside the euro. Britain today is outside the euro; is she in a much better economic and financial situation than the countries in the Euro Area? Doesn’t Britain have the same problems of growth, budget deficit and debt? So I think that to bring everything back to the Euro Area is facile and a distortion. On the contrary, I think the Euro Area is a strength for us, and I think we must take a step further in our solidarity.

Q. – A step further? Are we talking about federalism?

THE MINISTER – The following step is indeed a federal system.

Q. – You’ll have to explain what that is, because the people listening to us don’t necessarily know.

THE MINISTER – A federal system would means precisely that we pay for the Greeks and the Germans pay for everyone. So there’s solidarity, and you make up for the competitiveness problem: the Greeks have a real competitiveness problem, and so do we compared to the Germans. It’s the same mechanism as is applied in the United States between the states of the Union, or in Germany in relation to the Länder.

Yet, the French, the other Europeans and the Germans don’t want this federal European state; the Constitutional Court in Karlsruhe bans it.

Q. – So in fact, you have a choice between taking your federalist steps forward and disrespecting democracy.

THE MINISTER – We’ve taken a lot of steps forward with the support of the people. The Euro Area was ratified by a referendum. So it can’t be said to have been created against the people’s will. (…)

European economic government

Q. – And does federalism, for example, mean a European economic government that decides on our budgetary policies?

THE MINISTER – That exists already. We’ve decided to create it. We’ve made considerable progress in that direction. Today, we plan the Euro Area member states’ budgets jointly. They’re examined in Brussels, and we discuss them to try and move in the same direction. (…)

The only future lies in moving forwards, and we propose, for example, creating a single corporation tax in France and Germany. That’s what we have decided to do. And we’re going to take this extra step to harmonize our economies. (…)

That means shared power. What else does it mean? Destroying everything we’ve done since 1958 and going back on the European enterprise? You have to take things to their logical conclusion. It means you’ll see France on one side, Germany on another and Britain on another. We know what that created on the European continent in the recent past. I think it’s a mortal danger.

Calling the Euro Area into question will mean calling the European enterprise into question. Calling the European enterprise into question is irresponsible today, when we see the rise of extremism and political tensions in Europe; where will that lead us?

I’m profoundly European. I believe solidarity between the European countries, solidarity between France and Germany will enable us to exist in a world where China has 1.3 billion inhabitants and India 1.2 billion. Are we going to climb back into the French tent? Really? That makes no sense.

We must go further with European solidarity. I believe in it profoundly, and that’s why I get a bit passionate about it. I think it’s a fundamental issue. (…)./.

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