Euro Group President Juncker Discusses Path Forward in Euro Rescue

SPIEGEL: Prime Minister Juncker, are there now dual versions of European Union summits?

Juncker: What do you mean?

SPIEGEL: When referring to the most recent meeting in Brussels, some say that German Chancellor Angela Merkel made substantial concessions to the southern countries, while others claim that no concessions were made at all. Who's right?

Juncker: We achieved good results at the summit, results that we developed collectively and for which we are collectively responsible. I don't see that the chancellor quietly gave her blessing to everything that was presented to her. The German press's blanket interpretation of the results of the summit was completely wrong. Mrs. Merkel didn't fail; instead, she succeeded in cooperation with others.

SPIEGEL: But it's indisputable that Spain is getting more time for its austerity program. Besides, the chancellor agreed to a loosening of the requirements for European banks and governments to receive money from the European bailout funds in the future. She was opposed to that before the summit.

Juncker: I think it's a bad idea to compare the results of euro summits with earlier statements. The fact is that we were able to make our tools to rescue the euro more efficient. It's also a fact that there was no significant curtailing of conditions for aid to countries in crisis. This was particularly important to the Germans and, in that respect, Merkel did prevail.

SPIEGEL: It is odd, though, that Italian Prime Minister Mario Monti behaved like a winner after the summit and bragged that inspectors from the troika of the International Monetary Fund (IMF), European Commission and European Central Bank (ECB) would never be spotted in his country.

Juncker: The use of EU summits to frame political victories or defeats is an annoying habit. It's important to recognize that we in Europe will either succeed together or fail together. Everyone attending the summits assumes that Italy won't need the bailout funds in the first place. If it does happen, contrary to expectations, Italy will also have to submit to the established European monitoring procedures.

SPIEGEL: Apart from the German-Italian disputes, the summit didn't make much of an impression on the financial markets. After a brief respite, interest rates for Italian and Spanish bonds have returned to crisis levels. Why can't Europe find a way out of this vicious circle?

Juncker: I would caution against putting too much stock in the short-term assessments of the financial markets. The most important outcome of the summit was that Europe's politicians managed to agree, for the first time, on a long-term structure of the euro zone: joint banking supervision and enhanced cooperation in fiscal and budgetary policy. I'm confident that this realization will take hold in the markets sooner or later.

SPIEGEL: After two-and-a-half years of crisis policy, we see things differently. The number of troubled countries is growing, the bailout funds are getter bigger and politicians are divided. Are you seriously calling this progress?

Juncker: Absolutely. Contrary to your distorted portrayal, European politicians have actually proven to be capable of taking action and making decisions during the crisis to a degree that I wouldn't have expected. I've been in this business for 30 years, but I can't recall another time when Europe was capable of making such sweeping decisions as in the last three years. Do you want examples?

SPIEGEL: Yes, please.

Juncker: Europe got extensive aid and reform programs off the ground for Greece, Ireland and Portugal; we have established completely new foundations for cooperation in fiscal, debt and budgetary policy; and we are in the process of developing a sustainable solution for the Spanish bank problem.

SPIEGEL: You're whitewashing the situation. In the southern countries, the population is rebelling against austerity policies. And in creditor countries like Germany, people are unwilling to add to the existing liability risks of several hundred billion euros. Don't you have the feeling that we've reached the end of the flagpole?

Juncker: I'm an avid SPIEGEL reader…

SPIEGEL: ... which we like to hear ...

Juncker: ... and, as such, I didn't fail to notice that you placed an obituary for the euro on the cover page a year ago. That's why I'd like to turn the question around and ask you: Aren't you under the impression that SPIEGEL sometimes makes overly hasty judgments when it comes to the euro?

SPIEGEL: We warned that the euro could come to an end, unless politicians finally did something about it.

Juncker: As you can see, the euro still exists. So we can't have done everything wrong. Of course, I notice that people ask justifiable questions, given the amounts in question. That makes it all the more important to explain our actions to them.

SPIEGEL: German President Joachim Gauck said there are some shortcomings in this regard, especially when it comes to the German chancellor. Do you share his view?

Juncker: There's no way I'm going to get involved in the dialogue between German government bodies. It's true that all European politicians have to be more effective at explaining to people what's at stake. If the euro zone collapses, the expected losses would exceed the liability amounts you mention many times over. As far as I'm concerned, there is no question that we have to do everything possible to preserve the common currency.

SPIEGEL: It isn't just about money. Germany's Federal Constitutional Court is currently debating whether the bailout funds jeopardize democracy by excessively curtailing the scope of national politics. Is this concern justified?

Juncker: Of course it's justified. But the question doesn't just arise in Germany. The constitutional issue is also being raised in other euro countries. In Estonia, the country's supreme court reviewed and then endorsed the bailout fund. That's why I don't think that the Karlsruhe judges will stop it.

SPIEGEL: But it will certainly be delayed because the court wants to take until the fall to conduct its review. Will this create problems?

Juncker: It certainly isn't helpful. But who am I to criticize German constitutional court judges? They are the masters of the process, and I think they are aware of our time constraints.