SPIEGEL Interview with Austria's Chancellor 'The EU as a Whole Must Feel Responsible'

Austrian Chancellor Werner Faymann, 48, discusses the impact of the economic crisis on his country, whose financial sector is deeply exposed to high-risk loans in Eastern Europe. He says the foreign media has been unfair and that hard facts "paint a very positive picture."

Austrian Chancellor Werner Faymann: We "must return to a stronger emphasis on government responsibility".

Austrian Chancellor Werner Faymann: We "must return to a stronger emphasis on government responsibility".

SPIEGEL: Mr. Chancellor, you don't seem to be able to please anyone at the moment. Some mock you as the cuddly chancellor of a Grand Coalition in a "land of smiles," while others refer to Austria as a "land of the wavering." What is going wrong?

Faymann: In this crisis, it is important that we mobilize our strengths primarily through cooperation and not by distinguishing ourselves at the expense of others. Of course, we have to know where we want to go -- how not to lose sight of social security and justice, and how to address unemployment with training guarantees or economic stimulus packages. Under these circumstances, teamwork is always better than confrontation, of the sort I experienced in the previous government.

SPIEGEL: Your predecessor, Alfred Gusenbauer, blamed his failure on the argument that grand coalitions (eds: Faymann, of the center-left Social Democrats, or SPÖ, shares power with the conservative Austrian People's Party, ÖVP) need big projects to succeed. Does this imply that the economic crisis comes at just the right time for you?

Faymann: We have plenty of big projects without the economic crisis. They include, for example, the bolstering of the social safety net and the rebuilding of the healthcare system, so that everyone can receive the same treatment, whether he or she has private or government health insurance. The Grand Coalition is also critical to achieving these goals. But the economic crisis is overshadowing all other issues.

SPIEGEL: As a result of its banks' costly involvement in Eastern Europe, Austria has lost its rating as a first-class borrower.

Faymann: Paradoxically, our economic indicators are more favorable on average than those of other European Union countries. If we compare ourselves with our neighbor, Germany, which we like to do, our prospects are still better, despite all losses. We are also in better condition when it comes to unemployment ...

SPIEGEL: ... which, however, rose by 24 percent in your country in February compared with the same month last year.

Faymann: Nevertheless, we are still the second-best in Europe, with just under 4 percent last year, which was practically full employment. Our national debt, at 60 percent of the gross domestic product, is not out of line with that of other countries, and we are disciplined when it comes to our budget. Indeed, the hard facts paint a very positive picture, so much so, in fact, that we sometimes ask ourselves why there is so much critical international reporting (about Austria).

SPIEGEL: Because the economic crisis has thoroughly muddied the picture and the value of Austrian banks' bad debts in Eastern Europe, at just under €300 billion ($396 billion), is almost equal to GDP.

Faymann: That's an exaggeration. It's closer to €200 billion ($264 billion) and about 70 percent of GDP ...

SPIEGEL: ... but only because you are not including Bank Austria, which is part of the Italian UniCredit Group.

Faymann: Well, we can't exactly define all banks that have been bought up by foreign companies as Austrian banks.

SPIEGEL: But they too want money from the Austrian government.

Graphic: Risks in the East

Graphic: Risks in the East

Faymann: Of course, we are asked to assist when the petitioner is not a 100-percent Austrian bank, but nevertheless employs close 11,000 people in Austria. The fact is that for many years, we were envied for being the hub for doing business with Eastern Europe. We were proud of that distinction. As long as we were gaining market share and played a role in the global export race, we were happy and satisfied. All of that cannot suddenly have been wrong. I am convinced that when the crisis ends, these countries will have the highest growth rates once again.

SPIEGEL: So all the bad news from Vienna, as a banking center, has been exaggerated?

Faymann: Even members of the European Council were saying at first: "What business is this of ours?" or "If they hadn't gotten themselves in so deep back then, they wouldn't have this problem today." But I am beginning to get the feeling that our common interest in greater stability is gaining the upper hand. And it's high time. The European Union as a whole must feel especially responsible.


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