French Finance Minister 'Good News that Merkel Has Now Reacted'

In an interview with DER SPIEGEL, French Finance Minister Bruno La Maire, 49, demands that eurozone reform be pushed forward quickly. Otherwise, he fears, Europe won't be able to stand up to U.S. President Donald Trump.

French Finance Minister Bruno Le Maire
Maurice Weiss/ DER SPIEGEL

French Finance Minister Bruno Le Maire

Interview Conducted by and

DER SPIEGEL: Minister Le Maire, next Tuesday, France and Germany are set to present their plans for reforming the eurozone. How many of the proposals from President Emmanuel Macron's speech at the Sorbonne will survive?

Le Maire: We are not discussing a scoreboard with boxes to tick. We have to keep reminding ourselves what this is really about.

DER SPIEGEL: And that is?

Le Maire: We have to make the eurozone weatherproof, to prepare it for the next economic or financial crisis as well as ensuring it is a zone of growth and prosperity. President Macron's proposals would be big stepsin the right direction. A key element is his idea of a specific budget for the eurozone to help increase convergence and competitiveness and stabilize the eurozone in case of a recession by helping countries affected absorb such a shock. All the changes we want to see are about ensuring the currency union can become a genuine economic union.

DER SPIEGEL: Why is a discrete eurozone budget necessary?

Le Maire: Imagine a situation in which a country falls into a downturn through no fault of its own, due to an economic shock such as Brexit, for example. Even though other countries in the neighborhood are still experiencing economic growth, this country finds itself in a tricky situation. Since it is a member of a monetary union, it can no longer devaluate its currency to stimulate its economy. Of course it can use its own budgetary resources, but only within the limits of the currency union's deficit criteria. But we think the country would be better off and the crisis would be less severe if it could count on the support of a common budget. This instrument would help absorb such a crisis and counteract such instances.

DER SPIEGEL: That would serve to stabilize the economy in the short term, but your president also wants to be able to use that budget for long-term investments.

Le Maire: EU economies are no longer converging - they are moving apart. The investments are intended to promote growth and convergence, which is critical for a well functioning monetary union.

DER SPIEGEL: It took Angela Merkel months to respond to these proposals. Are you disappointed that the chancellor left Macron hanging for so long?

Le Maire: It is good news that Angela Merkel has now reacted. Her statements show that Germany and France are following the same line in many respects. We were also pleased that she specifically mentioned an investment budget for the eurozone.

DER SPIEGEL: With the tiny difference that your president envisions a volume of 300 billion euros for such a fund but the chancellor is only offering an amount in the low double-digit billions.

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Le Maire: When it comes to reforming the currency union, Germany and France are often at odds at the start of negotiations. That makes a compromise in the end all the more valuable. Once our two countries pull together, it paves the way for an agreement in the eurozone. It is also of matter of time: the budget should increase over time progressively.

DER SPIEGEL: With all due respect to your hopes, countries like the Netherlands also feel that there are already plenty of funds available in the EU. Just look at the so-called Juncker fund for greater investment in the EU. The European Commission is having trouble spending all that money.

Le Maire: Our proposal is geared toward the 19 eurozone members, not all EU members. But it will benefit both the eurozone and the EU. And that is essential. Currency union member states have relinquished some of their monetary policy competencies, which is why we need an instrument to replace the lack of possibilities for responding to crises. This is also a form of practical solidarity. And this is important to me in the German context: This is not a transfer union.

DER SPIEGEL: Why not? The country in question receives money from a collective fund. It's difficult to find a better description of a transfer union than that.

Le Maire: No. Just because we provide support to a country in times of crisis does not mean that we release it from its responsibility for the stability of its government finances and the competitiveness of its economy. These efforts still have to be made.

DER SPIEGEL: You are constantly emphasizing that the point is to create a fund for the eurozone and not for the EU as a whole. Does it still make sense to make this distinction? After all, following Britain's withdrawal from the European Union, 85 percent of the total EU economic output will be generated in the eurozone. Many claim the currency union will then develop a whole new appeal for countries that are not yet a part of it.

Le Maire: I'm familiar with that argument.

DER SPIEGEL: We also know who it came from: German Finance Minister Olaf Scholz.

Le Maire: You have got the cart before the horse, I told him. We are creating a new instrument for the eurozone that will make it stronger and more efficient. When the countries that are not yet members of the euro eventually join, there will already be a well-functioning framework. They will join a club that is in a better and stronger position than it is now. That is how you make the eurozone more attractive.

DER SPIEGEL: German considerations focus primarily on upgrading the euro bailout fund, the European Stability Mechanism (ESM). Chancellor Merkel is proposing a new financing instrument to help countries experiencing an economic downturn in the form of repayable loans.

Le Maire: That is an interesting idea that we can build upon. To be clear, though, alone it is not enough. This proposal does not make a eurozone budget superfluous. We also welcome the German comments about an investment budget. We need to think about how we can draw on the different proposals the Chancellor, Olaf Scholz and President Macron have made to create a coherent and sensible package that achieves both convergence and stabilization of the eurozone. We are at a crossroads. Either we disappoint the member states of the currency union and the rest of the world, all of whom are hoping for a strong eurozone and an agreement now, or we face up to the challenge and make history.

DER SPIEGEL: German Finance Minister Scholz proposes a joint European unemployment insurance scheme specifically to help countries that find themselves in economic crisis. That is certainly a concession. What do you think of the idea?

Le Maire: I think it's interesting. It could help out in times of crisis. It isn't a specific budget as such, but we could think further along these lines. I welcome the fact that both the chancellor and the vice chancellor have presented new ideas in recent days. That shows that we now have a real debate. It's not just France alone insisting on solutions, both countries are now discussing ideas so that we can make progress. That is a good sign.

DER SPIEGEL: Is the eurozone finance minister proposed by your president also part of this grand project? This idea seems to no longer be a focus of the discussion.

Le Maire: This new euro finance minister would only be created at the end of the process. It's the final piece of a puzzle. The job now is to draw up proposals by the end of June that form the basis of a wider agreement among the eurozone member states.

DER SPIEGEL: But the differences are still there. It seems to us that the well-established fronts are once again clashing in this debate: The Nordic camp surrounding Germany on the one side, which pushes for individual responsibility, and the southern countries with France at their helm, which demand deeper integration and sharing of risks.

Le Maire: I do not see the conflict as a simple north-south divide, and we should be careful not to artificially drive a wedge into the eurozone. There isn't one side that aims to reduce the risk of a new financial or banking crisis and another that wants to impose all the risks on the stronger countries. The truth is that these are two sides of the same coin. Countries are only capable of solidarity if they have their budgetary and banking risks under control. That is why it is wrong to suggest that everything divides France and Germany.

DER SPIEGEL: Your president himself revived these old clichés during his acceptance speech when he received the Charlemagne Prize speech in Aachen, which honored him for the work he has done on behalf of deeper European integration. With a view to Germany, he spoke of a "permanent obsession" with a balanced budget.

Le Maire: But the President also talked about French obsessions - every country has some! And you should recognize that France, under Emmanuel Macron, is determined to get its budget in shape. This year, for the first time in 10 years, we are adhering to the Stability Pact and reducing our deficit to below 3 percent of gross domestic product. We want to show that collective agreements are important to us. Most importantly, a sound budget puts us in a position to invest in the first place. And that is the only way we can eliminate the economic disparities between our countries which, in the long term, when they are too big, threaten the very existence of the eurozone.

DER SPIEGEL: Germany enjoys boasting about its balanced budget. On the other hand, though, Berlin largely relies on the U.S. and France for its defense needs. Is Germany a freeloader?

Le Maire: I wouldn't say that. I am a friend of Germany's. I have sought to strengthen the Franco-German friendship throughout my entire career. I believe that our German friends think similarly to us: If we want the entire eurozone to be strong, then every member state must first solve its own problems. In France, it is a high budget deficit and debt that is too high. One may argue that Germany's weaknesses include low defense spending and a trade surplus that is too high. But things are not static - France is reducing it deficit and Germany's defense budget is currently growing significantly.

DER SPIEGEL: Isn't it a problem that the situations in which the two governments find themselves are so different? Emmanuel Macron was elected to change Europe. Angela Merkel has no such mandate. On the contrary, the German parliament is now home to more euro-skeptics than ever before.

Le Maire: I never thought that a right-wing populist party like the Alternative for Germany (AfD) would receive more than 10 percent in federal parliamentary elections. It should ring alarm bells for us all. We must also constantly bear in mind that our countries have different political cultures. France is a centralized state whereas Germany is organized federally. In Germany, rules are often the decisive basis for political policy while in France, political visions play a greater role. And finally: Our president is elected directly by the French people. That makes him very powerful. The German chancellor is also very powerful but she must pay heed to her coalition partners and to the parliamentary majority.

DER SPIEGEL: As Germany and France are arduously trying to forge a compromise on euro reform, Donald Trump is destroying the international order. And Europe is left watching from the sidelines, as happened last weekend when Trumptorpedoed the G-7 summit with a tweet sent after he had already left. How can Europe stand up to Trump?

Le Maire: That is exactly the question. If we don't want to see the U.S. and China divide up the future between them, then Europe must take the stage as a true global power. Europe must not only become a global economic power, it must also be in a position to be able to defend its values and rules.

DER SPIEGEL: That sounds good, but it seems to us that many Europeans secretly agree with Trump when he criticizes Germany's trade surplus. Do you feel a certain amount of schadenfreude now that Trump is echoing a critique France has long leveled at Germany?

Le Maire: I like to be happy, but not at the expense of others. I don't understand President Trump's decision to levy punitive tariffs on European steel and aluminum - and threaten some on automobile imports as well. Many German cars that are sold in the U.S. market are produced in the United States. President Trump's tariffs won't help at all. Plus: We are close allies of the U.S. How are we supposed to then accept that the U.S. suddenly sees us as a threat to its national security?

DER SPIEGEL: Trump isn't interested in such considerations.

Le Maire: That could be, but that doesn't mean that we are defenseless in the face of his decision. The European Commission was right to have announced countermeasures that will go into effect on July 1. Europe must strive for its own economic sovereignty and independence. We have to have the financial ability to become independent of U.S. financial institutions. That would, for example, allow us to support those European companies that are selling their products legally in Iran but against the will of the U.S. and which now must fear sanctions. But Europe is not currently in a position to make such sovereign decisions. We have to build these instruments of sovereignty.

DER SPIEGEL: Instead of working toward that goal, Europeans are bickering with each other over how to approach the trade conflict. Concerned about the German automobile industry, Berlin is pushing for hasty negotiations with the U.S. while France wants to stay tough.

Le Maire: I don't agree. Listen to the outcome of the G-7 in Charlevoix. I heard Chancellor Merkel and President Macron speaking with one voice. It's normal there might be differences of views within the EU but the most important thing is that we have a united front towards the outside world. And that has been the case systematically during these difficult times. I have often discussed this issue with Economics Minister Peter Altmaier ...

DER SPIEGEL: ... and those talks, it is said, have often become rather loud.

Le Maire: That is the result of our differing standpoints: German exports to the U.S. are extremely robust and the automobile industry could be in danger. As friends, we cannot ignore that. At the same time, we expect our German friends to also take our concerns seriously, such as regarding their defense budget and the need to invest more. Ultimately, what matters is that Germany and France are on the same side - united in opposition to unilateralism.

DER SPIEGEL: As external threats are on the rise, Europe is in danger of disintegrating from within. Italy has a government made up of right-wing populists and euro-skeptics who don't want to adhere to the Stability and Growth Pact. Are we witnessing a return of the euro crisis?

Le Maire: We respect the decision made by Italian voters, and we as politicians must hear their concerns and respond to them. We will evaluate the Italian government on the basis of their actions. I will meet the new Italian finance minister in a few days - I am confident we can work well together. If joint rules are to make us stronger, then everyone must abide by them.

DER SPIEGEL: You sound almost like a German finance minister.

Le Maire: I am the French finance minister, and that is enough for me! Rules aren't everything, but they are a starting point to make us stronger. I have never opposed rules to solidarity: we need both. If the eurozone is to become the most successful economic region in the world, we can only do it together. That is what is at stake. Europe can only meet the challenge presented by President Trump together.

DER SPIEGEL: Mr. Le Maire, we thank you for this interview.


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delia 06/17/2018
Minister le Maire is right. It's high time the EU got its financial act together. If I were king for a day, I would command that all Western heads of state read Stephen Walt's latest article at Foreign Policy. Here's his final paragraph: "Kim Jong Un seems to have demonstrated that one gets more respect from Trump by defying him than by trying to get along. If other leaders reach the same conclusion, they will devote less effort to remaining on good terms with the United States and concentrate instead on building cooperative arrangements with each other.' [I am assuming that "each other" includes Russia, China, Iran, and any other states that Washington prefers to think of as "enemies". Leave the US alone to complete its decline-and-fall. That is clearly what Trump appears to want.]
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