Luxembourg’s PM warns current unrest parallels pre-WWI

Jean-Claude Juncker, right, playfully strangles minister Luis de Guindo, left. Or maybe he's just really strangling him for Spain's fiscal irresponsibility?

Jean-Claude Juncker, right, playfully strangles Spanish minister Luis de Guindo, left. Or maybe he’s just really strangling him for Spain’s fiscal irresponsibility?

In an interview with Der Spiegel, the Luxembourg Prime Minister and former Euro Group Chief said rising nationalism among EU members is a dangerous problem that mirrors the demons of the past, those demons being the ones that preceded one of Europe’s darkest conflicts: World War I.

Here is the complete text of the interview:

SPIEGEL: Mr. Prime Minister, it has been seven weeks since you stepped down as head of the Euro Group. Do you sometimes wake up in the middle of the night and think: I absolutely have to give another interview on the euro crisis?

Juncker: No, I’m not suffering from withdrawal symptoms. I would say that I have a balanced state of mind. My life is less hectic and I’m calmer and more relaxed.

SPIEGEL: For eight years, you were a kind of informal president of the monetary union. When you take stock of your accomplishments during this period, don’t you have to admit that Europe has tended to drift apart rather than become more close-knit?

Juncker: For my generation, the monetary union has always been about forging peace. Today, I notice with a certain sense of regret that far too many Europeans are returning to a regional and national mindset.

SPIEGEL: What do you mean by that?

Juncker: The way some German politicians have lashed out at Greece when the country fell into the crisis has left deep wounds there. I was just as shocked by the banners of protesters in Athens that showed the German chancellor in a Nazi uniform. Sentiments suddenly surfaced that we thought had been finally relegated to the past. The Italian election was also excessively anti-German and thus un-European.

SPIEGEL: You’re exaggerating. No one today seriously doubts peace and friendship in Europe.

Juncker: That’s true. But anyone who believes that the eternal issue of war and peace in Europe has been permanently laid to rest could be making a monumental error. The demons haven’t been banished; they are merely sleeping, as the wars in Bosnia and Kosovo have shown us. I am chilled by the realization of how similar circumstances in Europe in 2013 are to those of 100 years ago.

SPIEGEL: 1913 was the year before the outbreak of World War I. Do you seriously believe that there will be armed conflict in Europe?

Juncker: No, but I see obvious parallels with regard to people’s complacency. In 1913, many people believed that they would never again be a war in Europe. The great powers of the Continent were economically so strongly intermeshed that there was the widespread opinion that they could simply no longer afford to engage in military conflicts. Primarily in Western and Northern Europe, there was a complete sense of complacency based on the assumption that peace had been secured forever.

SPIEGEL: The young generation tends to tune out when Brussels politicians lecture them again about the trenches of Verdun.

Juncker: Indeed, we can’t completely rely on the aberrations of history to explain today’s European necessities. Future-related issues are no less pressing. By the middle of this century, Europe will comprise only a good 7 percent of the world’s population. Already today, over 80 percent of economic growth comes from other regions of the globe. A united Europe is our Continent’s only chance to avoid falling off the world’s radar. The heads of government of Germany, France and the United Kingdom also know that their voice is only heard internationally because they speak through the megaphone of the European Union.

SPIEGEL: The only problem is that a firm commitment to Europe and the monetary union doesn’t pay off politically because it demands unpopular reforms. At the height of the euro crisis, you even said: We heads of government all know what to do, we just don’t know how to get reelected when we do it. Does this still hold true?

Juncker: If I were to give a humorous response, I would say today: For a long time, we didn’t know what to do, and we still weren’t reelected.

SPIEGEL: And what is your serious answer?

Juncker: For starters, we have pushed through a series of far-reaching reforms in Europe. We have kept Greece in the euro zone, introduced bailout mechanisms for the monetary union and established a European banking union. Nevertheless, I am concerned that the temporary calm on the financial markets could weaken the will for renewal. It would send the completely wrong signal if the fear of reforms were to spread throughout Europe again.

SPIEGEL: You are presumably alluding to French President François Hollande.

Juncker: By no means. No one at the Elysée Palace is arguing that France does not need reforms. But the Socialist Party government in Paris objects to demands that it should copy the Agenda 2010 reforms (of the labor market and the welfare system introduced by former German Chancellor Gerhard Schröder one decade ago) — and rightly so. After all, not everything that works in Germany can be transferred one-to-one to France.

SPIEGEL: Following the recent election in Italy, it’s clear that the people of Southern Europe don’t approve of your reform initiatives. Doesn’t this worry you?

Juncker: The results of the Italian election are widely interpreted as an across-the-board rejection of the euro, but there are also other factors at work here. Beppe Grillo has primarily made a name for himself as a critic of his country’s political class, while Silvio Berlusconi has promised to lower taxes. By contrast, the party that ran the most vehemently anti-euro campaign, the Lega Nord, lost many of its voters. Consequently, I don’t see the Italian election result as primarily a vote against the euro and the European reform policy.

SPIEGEL: You always have an amazing ability to sugar coat the European plight. The reality is that the big loser of the election was outgoing Italian Prime Minister Mario Monti, whose Europe-friendly course was soundly rejected. Does that spell the end of the reform policy in Italy?

Juncker: That would be a serious mistake. The consequence of the Italian election result cannot be that we suddenly return to the policies that caused this mess. It is not possible to combat the financial and economic crisis by saddling an already heavily indebted state with new debts. There is no getting around a solid budgetary policy.

SPIEGEL: In other words, Italian politicians should pursue a policy that the majority of the population does not support.

Juncker: I’m going to make a bold statement: One shouldn’t pursue the wrong policies just because one is afraid of not being reelected. Those who intend to govern have to take responsibility for their countries and for Europe as a whole. This means, if need be, that they have to pursue the right policies, even if many voters think they are the wrong ones.

SPIEGEL: If push comes to shove, politicians should disregard the will of the people. Isn’t that a rather odd understanding of democracy?

Juncker: Of course politicians should respect the will of the people as much as possible, provided they adhere to the European treaties. If the Italians intend to roll back the real estate tax, then they will have to come up with some other way of meeting their commitments. In Europe, even more so than in national politics, we have to follow the principle laid down by Martin Luther: Use language that the people will understand, but don’t just tell them what they want to hear.

‘I Feel Very Close to the Chancellor’

SPIEGEL: You’ve always been good at giving other people lessons. You like to talk about European responsibility, but when it comes to Luxembourg as a financial center, you vehemently defend national interests.Juncker: That is grossly incorrect. The truth is that whenever progress has been made in Europe on common tax regulations, it happened under the leadership of Luxembourg — or, more precisely, under my leadership. On June 24, 1991 — I was a young finance minister at the time — at 7:45 p.m., we approved the harmonization of value-added and consumption taxes. In 1997, under my direction, the Economic and Financial Affairs Council (ECOFIN) adopted a European taxation on the interest earned on savings in combination with a code of conduct on business taxation to remove harmful tax competition within the EU.

SPIEGEL: This agreement was only reached after Luxembourg, along with other countries, blocked a harmonization of taxation of savings for years.

Juncker: Correct. But has it never occurred that progress was only possible in Europe after Germany changed its position? Breaking a taboo at home requires careful preparation. It took a great deal of persuasion on my part in Luxembourg to introduce a tax on the interest accrued on savings.

SPIEGEL: Recently, a large number of EU countries, including Germany and France, have come out in favor of introducing a tax on financial transactions. Why has Luxembourg voted against this?

Juncker: I was in principle a supporter of this tax. I was even in favor of only introducing this tax in the euro zone if we failed to convince the remaining EU members. But then a number of euro countries also rejected it, including Ireland, the Netherlands and a few others. It would put Luxembourg at a competitive disadvantage if we nevertheless accepted this tax.

SPIEGEL: After 18 years in office, you will run for the job of prime minister again in next year’s general elections in Luxembourg. Why are you making the same mistakes as your political mentor, Helmut Kohl, who missed the ideal moment to make his exit and was voted out of office after leading Germany for 16 years?

Juncker: I have known a great many politicians who have not managed to stay in power for 16 years. I have nevertheless already managed to remain at the helm for 18 years. I still want to achieve a great many things for my country. Experience is not a disadvantage here, especially as the head of government of a small country in a European setting that has become more difficult.

SPIEGEL: Could it be that you see yourself as irreplaceable?

Juncker: In the highest government office, you have to be ready to bow out at any time, otherwise you are not a free individual anymore. It’s not as if I don’t have a decent profession to fall back on. I am a lawyer, so I see myself as still capable of being reintegrated into society.

SPIEGEL: You are now 58 years old. Would you be tempted by one of the other top EU jobs?

Juncker: No. In 2004, I could have easily become the president of the European Commission since all member states were asking me to take this position. But I had promised the people of Luxembourg that I would remain their head of government.

SPIEGEL: What about succeeding Herman Van Rompuy as the president of the European Council (the powerful body representing the 27 EU leaders)?

Juncker: I told all the heads of state and government who asked me back in 2009 — and this was a sizable majority — that I would take the job, and I would have done so, but some people apparently didn’t want me …

SPIEGEL: You are referring to German Chancellor Angela Merkel and then French President Nicolas Sarkozy.

Juncker: Why should I become something today that I could have become in 2009? To be honest, that just seems silly to me.

SPIEGEL: You also announced on a number of occasions that you wanted to step down as head of the Euro Group, but then you extended your tenure in office at the request of the other members.

Juncker: You can consider this carved in stone: I rule out becoming Herman Van Rompuy’s successor.

SPIEGEL: This September, general elections will be held in Germany to elect new representatives for the national parliament, the Bundestag. Would you campaign for the conservative Christian Democratic Union (CDU) if you were asked to?

Juncker: I have already been asked, and I have agreed. I recently spoke with the governor of the German state of Saarland to arrange dates for Bundestag election campaign events. I have always campaigned for the CDU, very often together with the chancellor.

SPIEGEL: And what does your friend, SPD chancellor candidate Peer Steinbrück, say about that?

Juncker: I have also often spoken at SPD events and events organized by the Green Party, but I don’t intend to endorse the campaigns of the Social Democrats and the Greens.

SPIEGEL: Nevertheless, you are politically much closer to the European policy of the Social Democrats. For instance, you support euro bonds, which are rejected by top CDU politicians.

Juncker: This may sound presumptuous, but it is really up to the CDU and the SPD to position themselves with respect to me. Why do I have to say with whom I have more in common on individual issues?

SPIEGEL: If you are supporting Merkel’s CDU campaign, then you also have to endorse the chancellor’s policy on Europe.

Juncker: I feel very close to the chancellor and the CDU. But aside from that, I would like to challenge a few preconceptions during the German election campaign. As you know, it is a very widely held view in Germany that only the Germans are committed to the two-pronged approach of solidarity and solidity. I would like to point out that the European Commission has never initiated proceedings against Luxembourg for an excessive budgetary deficit, but it has done so against Germany.

SPIEGEL: During the upcoming election campaign, do you intend to quote Merkel’s oft-cited comment: “If the euro fails, Europe fails”?

Juncker: During our religious instruction in school, we always asked: How can one prove the existence of God? And I have learned that the Catholic Church, which is never at a loss for an answer when it comes to existential questions, responds as follows: This question simply does not arise. The question of whether the euro will survive does not arise either and, consequently, I won’t even attempt a theoretical answer to your question about the German chancellor’s comment.

SPIEGEL: Mr. Prime Minister, we thank you for this interview.

Translated from the German by Paul Cohen

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s