SPIEGEL Interview with Finance Minister Schäuble
German Finance Minister Wolfgang Schäuble believes that only further EU integration can save the euro. SPIEGEL spoke with him about how the currency can be strengthened, the hurdles presented by Germany’s constitution and what the 27-member club might look like in five years.
SPIEGEL: Minister Schäuble, the European Union is mired the worst crisis in its history with the euro threatening to break apart. What is at stake?
Schäuble: Our prosperity. The world, with its globalized economy, is changing at a rapid pace. Those who want to keep up cannot go it alone. It only works in collaboration with other European countries and with a European currency. Otherwise we would fall far behind, and that would lead to a substantial loss of prosperity and societal security.
SPIEGEL: Would the EU survive the collapse of the monetary union?
Schäuble: There is certainly the risk that, in the event of a collapse of the euro — which, by the way, I don’t believe is going to happen — much of what we have achieved and become fond of would be called into question, from the common domestic market to freedom of travel in Europe. But a collapse of the EU would be absurd. The world is moving closer together, and we’re talking about the possibility of each country in Europe going its own way? This cannot, must not and will not happen!
SPIEGEL: Was it a mistake to introduce the euro?
Schäuble: No. The monetary union was the logical consequence of the advancing economic integration of Europe.
SPIEGEL: Nevertheless, the euro is a miscarriage. The necessary political union was absent.
Schäuble: To call it a miscarriage is nonsense. But it’s clear that we wanted a political union at the time, but it wasn’t possible. Germany would have been prepared to relinquish powers to Brussels, because it was only through Europe that we received a new chance after World War II. But other countries had trouble with the concept, because of special traditions, for example, or because they had only recently regained their national autonomy after the fall of the Iron Curtain. As such, we faced a fundamental question: Do we introduce the euro without having the necessary political union, and do we assume that the euro will bring us closer together, or do we abandon the idea?
SPIEGEL: And in that situation you preferred to take the risk.
Schäuble: If we had always said we would only take steps toward integration if they would immediately work 100 percent, we would never have advanced by so much as a meter. That’s why we wanted to introduce the euro first and then quickly make the decisions needed for a political union. Luxembourg Prime Minister Jean-Claude Juncker was right when he said, at the time, that the euro would prove to be the father of future European developments.
SPIEGEL: In the meantime, however, the common currency has, above all, powers of destruction.
Schäuble: Now you’re exaggerating. Europe has always worked on the basis of two principles: What isn’t possible at first will happen over time, and what doesn’t work will be corrected over time. That’s why perfect solutions take so long in Europe. And that’s why we are now improving the architecture of the monetary union.
SPIEGEL: It almost sounds as if you had longed for the crisis so that you could finally correct the birth defects of the euro.
Schäuble: Well, it isn’t quite that bad, especially since I don’t have a propensity for despair or even resignation. But the more people see what’s at stake, the more they are willing to draw the right consequences.
SPIEGEL: What are the consequences that Europe now has to draw?
Schäuble: We need more and not less Europe.
SPIEGEL: You are clearly an advocate of the bicycle theory: Those who don’t move fall over.
Schäuble: Yes, of course.
SPIEGEL: But you also seem to suggest that the design is unstable.
Schäuble: Excuse me, but the desire for improvement is a basic condition of human existence. In “Faust,” Goethe writes: “If the swift moment I entreat: Tarry a while! You are so fair! Then forge the shackles to my feet, Then I will gladly perish there!” That’s how it is.
SPIEGEL: The call for more Europe has become almost as much a classic as “Faust.”
Schäuble: Perhaps, but that doesn’t mean it’s wrong. Unfortunately, Europe is complicated, and its structures are such that they inspire only limited confidence in citizens and the financial markets.
SPIEGEL: How do you intend to correct this deficit?
Schäuble: So far, member states have almost always had the final say in Europe. This cannot continue. In key political areas, we have to transfer more powers to Brussels, so that each nation state cannot block decisions.
SPIEGEL: You want nothing less than a United States of Europe.
Schäuble: Even though the term is used repeatedly, it doesn’t make it any better. No, the Europe of the future will not be a federal state based on the model of the United States of America or the Federal Republic of Germany. It will have its own structure. It’s an extremely exciting venture.
SPIEGEL: It sounds more like a new experiment, not unlike the introduction of the euro. And yet you want to transfer as much power as possible to Europe?
Schäuble: No, we must not and cannot ever make decisions in Europe that apply uniformly to all. Europe’s strength is precisely its diversity. But there are things in a monetary union that are done more effectively at the European level.
SPIEGEL: What, for example?
Schäuble: The most important thing is that we create a fiscal union, one in which the nation states give up their jurisdiction in terms of fiscal policy. In addition, the problems of the Spanish financial institutions reveal, once again, that Europe would bebetter off with a bank union. We need a European supervisory authority, at least over the major lenders, which can then influence the banks directly. Then we can also save them with joint funds.
SPIEGEL: For months, Germany has been under pressure to agree to joint government bonds, the so-called euro bonds. It would certainly be seen as a confidence-building measure if you complied with the wishes of the other European countries.
Schäuble: As long as we don’t have a fiscal union, we cannot assume joint liability for debts.
SPIEGEL: Why are you so uncompromising on this issue?
Schäuble: Because you can’t separate the responsibility for decisions and the liability. This applies to almost all areas, but especially to money. Someone who has the ability to spend money at someone else’s expense will do so. You do it, and so do I. The markets know that. And that’s why they too would not find euro bonds convincing in the end.
SPIEGEL: What would a fiscal union have to look like so that Germany could accept euro bonds?
Schäuble: In an optimal scenario, there would be a European finance minister, who would have a veto against national budgets and would have to approve levels of new borrowing. It would be up the individual countries to decide how to spend the approved funds, that is, how to answer the question: “Should we spend more money on families or on road construction?”
SPIEGEL: And you seriously believe that this could work?
Schäuble: It’s been working for a long time in competition policy. When the current Italian prime minister, Mario Monti, was the EU competition commissioner, he successfully tangled with major international corporations like Microsoft. A European finance minister would, should it become necessary, be forced to take on Italy, for example.
SPIEGEL: Or with Germany. Let’s assume the finance minister in Brussels rejected your budget. People here would be incredibly outraged.
Schäuble: There is certainly the risk that there would be national reactions, and that’s why all of this requires intensive discussion. But one thing is also clear: Those who want a strong Europe also have to be willing to surrender decisions to Brussels. But even then parliamentary responsibilities are needed.
SPIEGEL: Aside from fiscal policy, are there other areas that ought to be transferred to the European level?
Schäuble: In times of globalization, it’s imperative that economic policy be part of it. Besides, there are still too many national competencies in foreign and security policy. Europe should speak more effectively and clearly with one voice in the world.
SPIEGEL: You propose the transfer of many national competencies. What happens to democratic legitimation?
Schäuble: Some things would have to change in that respect, too, because nowadays everyone has a say: the European Commission, the Council of Ministers, which consists of the national representatives, and the European Parliament. This is hard to figure out, even for political buffs. First the Commission has to develop into a real government. To that end, it ought to be elected directly, either by the parliament or through the direct election of a Commission president. I favor the second option.
SPIEGEL: What gives you the hope that a directly elected president would unite and not divide Europe?
Schäuble: The direct election would be preceded by a large-scale mobilization, and it would electrify all citizens from Portugal to Finland.
SPIEGEL: A directly elected president would be strong, but would only be monitored by a weak parliament.
Schäuble: No, the European Parliament has to be strengthened, of course. That’s why it must finally be given the power to enact bills. It’s an anachronism that only the Commission has played this role until now.
SPIEGEL: In other words, there would be a directly elected president with his or her government and a parliament. What would happen to the member states, which currently make up the Council of Ministers and the European Council?
Schäuble: It would be best to have a body representing the countries that’s based on the model of the German Bundesrat or the US Senate, with each country dispatching a certain number of representatives to this body. Of course, all laws would require a majority in the body, as well as in the parliament.
SPIEGEL: There is a two-speed Europe. On one side we have the EU, with its 27 members, and on the other the group of the 17 euro countries. Do all structures have to be duplicated?
Schäuble: We should try to achieve all of this for the entire EU. Germany has always stood for an EU of the 27 countries. But in light of Britain’s continued resistance to further integration steps, as we saw with the fiscal pact, there are limits to my optimism in this regard. It’s quite possible that we will have to create the new institutions for the euro zone first. But it’s also clear that this would be an open club. Every member state of the EU would be more than welcome to participate. We certainly don’t want to divide Europe.
SPIEGEL: With all due respect to your vision, is there truly more willingness today among EU member states to give up sovereignty than there was in the 1990s?
Schäuble: The recognition that this is necessary, and the willingness to do so, has certainly grown due to the crisis, and not just in Germany. I would much prefer that we not have so many crises, and particularly not such severe ones. But every crisis also includes the opportunity to recognize what is necessary. That’s what led to the fiscal pact, in which 25 EU countries pledged to improve their fiscal discipline. And that’s also how the new Europe will come about.
SPIEGEL: In your euphoria, you overlook the fact that most people in Southern Europe tend to see Brussels as a threat.
Schäuble: I’d be careful with statements like that. In the most recent election in Greece, more citizens voted for parties that support the course that was agreed to with Europe than in the first election.
SPIEGEL: Although voter turnout was lower.
Schäuble: That may be. Of course, a lot of people in Europe are worried about the future. But as far as I can see, the vast majority of Germans and people in other countries are pro-European. Aside from relatively small movements, there are no nationalist tendencies.
SPIEGEL: In Germany, the Federal Constitutional Court has imposed tight restrictionson relinquishing further sovereignty. Given the German constitution, how much more European integration is possible?
Schäuble: If the things that I’ve just outlined were in fact implemented and we concluded that the limits of the constitution had been reached, the Constitutional Court would be correct in saying: There’s no problem with transferring more rights to Brussels, but the German people will have to make that decision.
SPIEGEL: Are you saying that we will soon have a referendum in Germany?
Schäuble: I don’t know when that will happen, and I doubt anyone does. But I assume that it’ll happen sooner than I would have thought a few months ago. At the EU summit at the end of this week, the heads of four European institutions plan to present concrete proposals for greater integration. We’ll see what happens after that.
SPIEGEL: You believe that the Germans will vote on a new constitution within the next five years?
Schäuble: A few months ago, I would have said: In five years? Never! But now I’m not so sure. Do you want to know why?
SPIEGEL: Yes, please.
Schäuble: Many in Germany said that (former US President) Ronald Reagan was crazy when he stood at the Brandenburg Gate in 1987 and said: “Mr. Gorbachev, tear down this wall!” And then it happened two years later. At the time, I too didn’t believe that German partition would soon come to an end. In the spring of 1989, I had just become the new interior minister in Bonn. The new US ambassador introduced himself to me and predicted that the Wall could come down in the next three years. I replied: “I would have doubted that a few months ago, but now I would say that with a little luck, it’ll happen in the next 10 years.” And how long did it really take? Less than half a year.
SPIEGEL: Minister Schäuble, thank you for this interview.
Interview conducted by Sven Böll and Konstantin von Hammerstein
Translated from the German by Christopher Sultan