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  SPIEGEL Interview with ECB President Trichet: "You Can't Stop History"

SPIEGEL Interview with ECB President Trichet "You Can't Stop History"

Part 2

SPIEGEL: Does Turkey fit into Europe?

Trichet: We are part of an historical process. And the people of Europe will decide for themselves where their borders lie.

SPIEGEL: With all due respect for your enthusiasm, the European constitution failed miserably in France and the Netherlands. Five of 12 euro states currently fall short of the stability criteria established under the Maastricht Treaty. And the quarrel over the Brussels budget has made it abundantly clear, once again, what a madhouse this EU can be.

Trichet: Nothing is easy. That's clear. And we demand strict compliance with the Stability and Growth Pact. But the Brussels budget was just drawn up during the last EU summit meeting. And from a political point of view, Europe is in a mature phase. The ECB, for its part, will maintain confidence in the currency and prepare for the expansion of the euro zone as professionally as possible.

SPIEGEL: The public mood in Germany isn't exactly rosy ...

Trichet: ... and Germans perhaps tend to overemphasize the difficulties. At the same time, the public underestimates what your country has already achieved. Of course reunification was an enormous undertaking. But the Germans have come a long way since then. And since the introduction of the euro, the German economy's cost competitiveness has improved considerably compared to the EU average. This is partly reflected in Germany's export numbers. There is no reason why this improvement in the country's economic situation shouldn't eventually affect domestic demand and especially consumption.

SPIEGEL: Perhaps it's because we tend to be pessimistic?

Trichet: It's human nature to become anxious in the face of difficult challenges. But given the current German mood, this natural anxiety may also be developing into a sort of fear that isn't really justified.

SPIEGEL: We also have a chronic problem with deficit spending. Besides, you can't possibly approve of the new German government's plan to raise the value-added tax by three percentage points in 2007. This is also likely to drive up the risk of inflation.

Trichet: I see the value-added tax move as the result of an agreement that crosses party lines, and it's something that we have already taken into account in our own medium-range projections.

SPIEGEL: What do you see as more dangerous -- too much pessimism, as is the case in Germany, or too much optimism, as the United States chronically demonstrates?

Trichet: One must find a happy medium between these two extremes. Optimism is systematic in the United States. For the Americans, the glass is always half full, whereas it's always half empty in the euro zone and in the current German culture. The fact is that our glass is both half full and half empty. We continue to face tremendous internal challenges. But they are surmountable, because we have already demonstrated that we can do it. We Europeans simply have to believe in ourselves more strongly.

SPIEGEL: The United States continues to dominate the global economy. How much of a threat is the American double deficit?

Trichet: There are two opposing trends. First, the United States is very flexible, which makes it both more capable of making adjustments and more resilient. This is a very important advantage for the US. But the Americans also have a significant burden to contend with: a very low savings rate, which results in a high trade deficit. We have the opposite problem on this side of the Atlantic. On the one hand, our economy is far less flexible, which prevents us from taking advantage of current opportunities. On the other hand, we have a satisfactory savings rate. Fortunately, everyone agrees that both sides must address their weaknesses. Unfortunately, neither side is going about this task comprehensively, actively and efficiently enough?

SPIEGEL: Meanwhile, both sides have a new player to contend with in the global marketplace: China. Do you see the People's Republic as more of an aggressor or a competitor? Does it present more of an opportunity or a risk for Europe?

Trichet: First of all, China's path serves as confirmation of the success of the free market economy. Many have already forgotten that a complete and totally inefficient planned economy prevailed in China until recently. Besides, it has been our goal, even since World War II, to see China, India and several other very poor countries gradually catch up with us.

SPIEGEL: But at this pace?

Trichet: That's why I also say that the pace of change in China and India also presents a challenge for our society and the rest of the world, because it leads to lasting and rapid changes in the structure of the global economy. But this too is a task we must address. We have no other choice.

SPIEGEL: Is that your central message, as Europe's top-ranking protector of the currency?

Trichet: Together with the desire to use the successes of the past 50 years to store up enough energy for the future, so that we can take advantage of the many opportunities the world offers us today. This is not necessarily an easy undertaking, but it's certainly worthwhile. Imagine telling Europe's founding fathers that the European Union now comprises 25 nations, representing a total population of 459 million, that we now have a parliament that is responsible for the dispensation of justice throughout the EU, and that we have a uniform currency for 311 million people. Jean Monnet would most certainly be thrilled.

SPIEGEL: You recently began actively learning German. Is it necessary to learn a nation's language in order to understand its soul?

Trichet: No, but it is extremely helpful. The structure of a language reveals a great deal about patterns of argumentation. It's no coincidence that Germany has produced so many great philosophers. Your language is very well-suited for deep reflection. It certainly isn't just suited for daily communication, but also for personal reflection and contemplation.

SPIEGEL: Let's hope that "fear" doesn't become one of your favorite German nouns.

Trichet: (laughs) No, certainly not, nor will it be "nightmare."

SPIEGEL: Monsieur Trichet, thank for speaking with us.

Interview was conducted by Sven Afhueppe and Thomas Tuma.

Translated from the German by Christopher Sultan

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