By Driss Ouazzani
Josep Borell, a Spanish politician of the Worker´s Socialist Party (PSOE), was President of the European Parliament from 2004 to 2007.
D.O.: In connection with the rise of the new Spanish political party Podemos, many observers believe that extreme left-wing parties in countries such as Greece, France, Italy, and others are the ultimate bulwark against the extreme right anti-Europe parties, after the classical political elites have been discredited because of their support for austerity measures. May we expect therefore EU-level developments to lead to a coalition between Podemos and PSOE despite the disagreement on national political issues ?
J.B.: Everything is open. The Socialists claim they will not make a coalition with Podemos because they have strong differences, but the results will decide. What I think is a mistake is to consider Podemos or Syriza as anti-European, which they are not. The Front National or UKIP are anti-European and are against the European Union. Podemos and Syriza are not opposing the EU, they just want a Europe based upon other bases. It would be a big error for socialist parties to reject them while they are trying to build a network of solidarity in Europe.
D.O.: Famous economists like Stiglitz argue that the adjustment cost of the Euro Sovereign Debt Crisis is unfairly placed mainly on the shoulders of debtor countries. Do you agree, and what could be done differently?
J.B.: We are in a very complex situation where clearcut statements fail to be completely right. However, the responses to the crisis have been based on the idea that the debtors have to pay. All crises in history have been solved by sharing the costs of the adjustment between the creditors and the debtors, but the EU has wanted to put entirely te cost of this crisis upon the shoulders of the debtors. It is, first, unfair and, second, it proves to be not efficient because we are not reducing the debt burden and because, historically, austerity has created downward spirals making economic growth so weak that the debt ratio is increasing despite all the efforts made to reduce it. Stiglitz is right on this point, we should look for a better deal between debtors and creditors. Moreover, most of the policies being implemented have been written, for instance in the case of Greece, not to help Greek people, but to avoid German and French banks bearing the cost of a Greek bankruptcy.
D.O.: Would you agree that the euro crisis is primarily political, with big decisions necessary on a fiscal union, lender of last resort and debt mutualization? How could we get EU decisions in this direction? Would Germany ever accept more inflation and less stringent budgetary policies, or France make sovereignty concessions to allow for a reformed institutional framework? What country coalitions would help bring about all this?
J.B.: The Euro crisis is for sure a crisis triggered by the fiscal indiscipline of a small country, but the roots of this crisis are different. The European Union as a whole is in an existential crisis due to a badly designed Monetary Union. The Euro was not a fully-fledged monetary union and when the crisis came, it was not strong enough to face it. I don’t think we are going to get out of this crisis and the future crises without amending most of the institutional elements of the Union. Some have been amended but there is still a lot to be done to build a political integration that will make a monetary union work, as in the United States. For that, countries will have to make concessions in terms of sovereignty while others will have to accept joining a monetary union. You cannot simply take advantage of it because you export and you have strong external surpluses and you have to invest your savings; then you have to offer financial solidarity if you don´t want this union to be broken, and this has to be accepted by Germany. In the past, we have lost a lot of opportunities to go further in this way. The crisis has made us improve, but we are still not convinced enough of the necessity of a political Union.
D.O.: Do you agree more with the position of Thomas Piketty asking for an alliance between Southern European countries and France to put pressure on Germany to accept more inflation and less stringent budgetary policies ?
J.B.: In the summer of 2012, there was a momentum created by Hollande in France, Monti in Italy, and even Rajoy in Spain going in that direction. And currently, people that are criticising the austerity in Europe are not supporting enough the Greek government, and one should understand that what is happening in Greece is an opportunity to shift the monetary and economic policy in Europe.
D.O.: Mrs. Merkel stated several times that “we need more Europe”, referring to a need of more political guarantees and sovereignty concessions. Don’t you think that a strategic shift in this coalition bringing together Germany and Southern countries to pressure France to accept more Europe would be more efficient ?
J.B.: This is even less possible. Frankly speaking, I don’t think that it will happen. There is a psychological attitude among German and Southern European countries that impede any shift of that kind to happen. The coalition of France and Southern countries has still more chances to bring more flexibility to the EU monetary policy.
D.O.: Two weeks ago, I asked Mrs. Malmström, the European Commissioner for Trade: Is a Free Trade Agreement as important as the TTIP not constituting a risk of widening the EU´s structural imbalances? Her response was negative. What would be yours ?
J.B.: I have a mixed feeling. This trade agreement is not about barriers, but about regulation, consumer’s protection or investments. In some sectors, these issues are treated differently due to cultural divergence, and this may decrease the standards of our welfare societies. The conventional reason says that it will drive growth…
D.O.: An Inclusive growth ?
J.B.: This is an issue. I have to recognize that it is a subject I haven’t been deeply involved in, but I still believe that we need to listen carefully to the voices opposing this project, so we can benefit as much as possible from it.
D.O.: Also, during this Eurozone crisis, the ECB started playing a preponderant role in the European political life, raising criticism about its lack of democratic legitimacy, leading many observers to ask for a greater role of the European Parliament, including monetary and fiscal issues, and ECB’s supervision. As a former European Parliament President, from 2004 to 2009, you were a privileged observer of this institutional life. Do you think that such an evolution of the European Parliament may lead to an institutional blockage?
J.B.: It may be one of the reasons we decided, as Europeans, to give that much independence to our Central Bank, nevertheless, it still constitutes a democratic issue. However, I don’t believe there is some change to be expected in that direction. It is a waste of time to think about this hypothetical situation that has nearly no chance to come to reality, and the absence of a common European seat at the IMF is one the facts supporting my prediction. Europe still does not have a consensual word to say in terms of monetary policy.
D.O.: Fiscal evasion is one of the major problems for many European countries, and “SwissLeaks” came as a reminder. Thomas Piketty argues that a deeper European integration would strengthen public enforcement power and efficiency in the fight against this problem. Do you think it is a realistic vision?
Josep Borell interviewed by Driss Ouazzani
J.B.: Yes it is. A deeper European integration is the only way to reinforce the control over capital flows and reduce fiscal evasion. FIscal evasion is so big because of the lack of cooperation between European public administrations, and because of some countries playing a free rider game, cheating and attracting fiscal advantages through unfair methods. The only way to stop this is an enhanced political union, and it is possible.
D.O.: Finally, as a former President of the European Parliament, you occupied the highest direct democratic position of the Union, and as such, you are sort of a Eurobarometer in person. What is your personal perception of the European Parliament’s popularity in Spain, and globally speaking?
J.B.: The European Union for the Spaniards was a kind of a good fair, and it is no longer a fair. It brought us good things: financial support, funding for public projects, financial credibility, low interest rates, and high capital inflows. Now, what is it giving us? It requires fiscal discipline, decreasing salaries, increasing taxes, reducing welfare state. So, the view of Europe has changed completely, but due to objective reasons. The public support of the EU has decreased a lot in Spain and all over Europe. Maybe we have saved the euro, but at the price of damaging the idea of Europe.
D.O.: If you have to describe, in one word, the future of Europe, what would it be ?
J.B.: Necessary.
