25 June 2012

SPIEGEL interview with Finance Minister Schäuble: 'We certainly don't want to divide Europe'

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.

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 be better 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 eurobonds. 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 eurobonds convincing in the end.

SPIEGEL: What would a fiscal union have to look like so that Germany could accept eurobonds?

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: 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 eurozone 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.

Full interview

© Spiegel Online