Lithuanian President 'Brussels Was Target Before, Now It's Merkel'
The Baltic countries have already moved on from their debt crisis, and are exhibiting healthy growth. In an interview with SPIEGEL ONLINE, Lithuania's President Dalia Grybauskaite explains that austerity is merely a question of political will -- and why her country wants to join the euro zone despite the crisis.
SPIEGEL ONLINE: In spite of the ongoing crisis, Lithuania wants to join the euro zone in January 2015. Why?
Grybauskaite: This is not a crisis of the euro zone, but a debt crisis. Some states, inside and outside the euro zone, have difficulties because of their irresponsible economic and fiscal policies.
SPIEGEL ONLINE: Still, this crisis does not seem to be going away. Have you considered not joining the euro?
Grybauskaite: No. For a small open economy that trades mostly with the euro zone it makes absolute sense to be part of the currency union. Our currency has already pegged to the euro since 2002. We don't have an independent monetary policy. We are regulated by the European Central Bank in Frankfurt, but we are not able to reap all the profits. Our businesses want to save the transaction costs.
SPIEGEL ONLINE: But why not wait a little longer to see how the situation develops? What if the euro zone implodes?
Grybauskaite: It is our duty not to allow it to implode.
SPIEGEL ONLINE: Really? Are Lithuanians looking forward to bailing out other countries?
Grybauskaite: Lithuania is a small country, so our contribution would not be that large. We are not afraid of our responsibility. We receive 25 percent of our national budget from the European Union. We understand the value of solidarity.
SPIEGEL ONLINE: It is one thing to receive money, but quite another to give money to others.
Grybauskaite: I don't think this would change our attitude to the EU. Some 70 percent of our people are pro-European.
SPIEGEL ONLINE: A new poll in six big EU countries shows that trust in the EU is declining rapidly. Are EU leaders taking this growing unease seriously enough?
Grybauskaite: This is the consequence of the crisis in Europe and people's reaction to the inability of the politicians to tackle the challenges.
SPIEGEL ONLINE: The president of the EU commission, José Manuel Barroso, said this week that austerity in Europe had reached its limit. The political and social acceptance is not there any longer. Is it time to relax the efforts?
Grybauskaite: There is not one rule you can apply to every state. In the Baltic states, after 2009 we had to implement very radical austerity measures. In Lithuania, we consolidated 12 percent of GDP in two years. We cut public salaries by 20 percent and pensions by 10 percent. Our adjustment was a lot deeper than what we see now in Southern Europe. And we saw growth return after 2 years.
SPIEGEL ONLINE: So Barroso is wrong?
Grybauskaite: Some countries need extra stimulus in specific areas. Something has to be done against high youth unemployment in Greece and Spain, for example. But in the end, there is no way around it: The debt levels have to come down.
SPIEGEL ONLINE: You say that reducing public debt is mainly about political will. Where do you see this will lacking in Europe?
Grybauskaite: I won't name countries, but reforms could be quicker in many parts. There are different mentalities and different ideas about political responsibility in the North and the South.
SPIEGEL ONLINE: Austerity is often seen as a diktat from Germany. From the perspective of a small country, is Berlin too powerful?
Grybauskaite: We need to understand the situation of the German people. They are largely responsible for paying for these bailouts. I cannot imagine a head of government whose country is paying for something not asking for certain conditions. It is legitimate that Berlin leads the way.
SPIEGEL ONLINE: How would you describe Chancellor Angela Merkel's leadership in the crisis?
Grybauskaite: In the council meetings where I see her there is no one around the table who knows the European facts better. She is interested in everything and feels responsible for everything. She knows exactly how much every policy move costs for Germany. For these critical times, she is very well placed. Also, in four years in the council, I have never felt she was ignoring the interests of the smaller states. That's how she works. She tries to find a consensus.
SPIEGEL ONLINE: Still, anti-German sentiment is on the rise everywhere in Europe, Merkel is pictured at demonstrations with a Hitler moustache.
Grybauskaite: I think the mood is not anti-German. It is anti-EU. Germany is now representing the EU, because it pays for the bailouts and sets the conditions. Before, institutions in Brussels were the target. Now it is Merkel. It is easier for local politicians who are themselves responsible for a national crisis to blame somebody from the outside. But one has to remember: If it wasn't for Germany, these countries would be bankrupt.
SPIEGEL ONLINE: This rift between North and South threatens to tear the EU apart. How can it be overcome?
Grybauskaite: During turbulent economic times, it is inevitable that these contradictions will appear. They will fade away once the economy recovers.
SPIEGEL ONLINE: On May 9, will be awarded the Charlemagne Prize for your contributions to European integration. You were budget commissioner in Brussels from 2004 to 2009. Will we see you again on the EU stage?
Grybauskaite: I am of an age where I don't plan my life. I will do whatever I have to do. In 2009, I came back from my commissioner job in Brussels to help my country in crisis. My term as president ends in summer 2014. I will decide in spring of 2014 whether to run for a second term.
SPIEGEL ONLINE: Would be ready for an offer next year, when Barroso and EU president Herman Van Rompuy retire from their posts?
Grybauskaite: I am focused on my job now and not yet thinking about 2014.
SPIEGEL ONLINE: Would Angela Merkel make a good EU president?
Grybauskaite: She would be good anywhere.
SPIEGEL ONLINE: President Grybauskaite, we thank you for this interview.
Interview conducted by Carsten Volkery in Vilnius.