European Parliament President Schulz 'Greek Voters Should Be Realistic'

Newly elected Greek Prime Minister Alexis Tsipras has promised to free his country from the strict demands of its European creditors. In a SPIEGEL interview, European Parliament President Martin Schulz says there is room for compromise, but warns Athens must tread carefully.
European Parliament President Martin Schulz visited newly elected Greek Prime Minister Alexis Tsipras late last week in Athens.

European Parliament President Martin Schulz visited newly elected Greek Prime Minister Alexis Tsipras late last week in Athens.


SPIEGEL: Mr. Schulz, if you look at the campaign promises that helped new Greek Prime Minister Alexis Tsipras win last week's vote, one has the feeling that the Greeks are hoping for a pink elephant that can play drums.

Schulz: Greek voters should be realistic. It is rare that all election hopes are fulfilled. And there is no such thing as pink elephants that can play drums.

SPIEGEL: What can Tsipras do to avoid looking like a liar when it becomes apparent that he won't be able to fulfil all of his promises?

Schulz: Tsipras promised the Greeks he would improve the situation in which they find themselves by negotiating changes with the European Union. He would be well advised to tell the Greeks: "I can try, but I can't guarantee you anything." That would be the truth.

SPIEGEL: He has said that he refuses to accept the conditions agreed to with his country's European creditors. He said he wants to "tear them up."

Schulz: The decisive question is: How do we approach Alexis Tsipras ? As the devil personified? Or as a head of government like any other? When I spoke to him for the first time three years ago, he had little idea how the EU worked. He told me: If the Greeks elect us, then it is their sovereign choice and our EU partners have to accept it. In response, I asked: And if the Germans elect a government that refuses all support to Greece, then that is their sovereign decision, right? He said: No, you have to show solidarity, you have obligated yourselves to do so. Now, he has to accept that Greece has to live up to the treaties that have been signed. Greece has received an enormous amount of help from the other euro-zone member states. Were he to terminate the conditions imposed, it would put his country in danger.

SPIEGEL: Is that what Chancellor Angela Merkel means when she says "market-conform democracy"?

Schulz: There is no such thing.

SPIEGEL: In Greece there is, because the newly elected government is unable to do what it has promised, not least because financial markets and investors wouldn't provide the funding to do so.

Schulz: The point is a different one. In a currency union like the one we have, member states have transferred sovereignty in a core area -- currency -- to a trans-national entity. Unfortunately, we failed to create the political instruments necessary to deal with such a situation at the same time.

SPIEGEL: How free can an election be when a country cannot choose certain alternatives because they cannot be financed?

Schulz: It's not like that. Of course there are other steps Greece can take in complete sovereignty. Hardly one of them hasn't already been mentioned: exiting the euro zone, for example, or leaving the entire EU. But politicians also have the responsibility to tell their people what would then happen.

SPIEGEL: Is that not a paradox of democracy? Greek voters have provided Tsipras with a strong mandate, but when he arrives in Brussels, he'll find that it is of little use?

Schulz: Syriza received 36.3 percent of the vote, meaning that two-thirds of Greeks don't share Mr. Tsipras' approach.

SPIEGEL: You are a Social Democrat. The SPD in Germany would be ecstatic where it to receive 36 percent. Or would you also say in such a situation that two-thirds didn't vote for your party?

Schulz: Were you to write in SPIEGEL that 36 percent for the SPD was a powerful governing mandate, I wouldn't contradict you.

SPIEGEL: Thank you.

Schulz: But that doesn't mean that you can throw international agreements over board at will. EU members have a limited sovereignty. The EU isn't a federation, but we are a union of state with a common currency. In such a system, it is essential that compromises be made -- by Alexis Tsipras but also with Alexis Tsipras.

SPIEGEL: What kind of compromises do you envision?

Schulz: I told Tsipras that it wouldn't help Greece were he to call the Greek reform program or loan paybacks into question. But we can certainly talk about how we can divert investments to Greece from the new €315 billion European Commission program.

SPIEGEL: Thus far, Greece has drastically cut spending, but has hardly made significant structural reforms.

Schulz: That is why we can't limit the debate with Tsipras to a debt cut. A debt cut would not solve the country's current problems, because interest and principal payments have largely been suspended. Greece has huge potential, but it is crippled by nepotism, bureaucracy and tax flight. Were Tsipras to focus on those problems, he would have all of Europe behind him.

SPIEGEL: Tsipras has promised Greek voters a debt haircut.

Schulz: Again: There is currently no majority for a debt cut.

SPIEGEL: What about a so-called "soft restructuring," wherein the interest rates are reduced further and the period is lengthened?

Schulz: The Greek state is currently bringing more money in than it spends, not including interest payments and debt pay-down. We should focus our energies on how to use this so-called "primary surplus" for investments or, where necessary, for social improvements.

SPIEGEL: So are you in favor of extending the loan periods?

Schulz: Currently, the last payment is scheduled for 2057. Moving that back by 10 years really doesn't make much of a difference anymore. The main thing is that Greece puts itself into a position where it can pay down its debt at all.

SPIEGEL: Tsipras wants to get rid of the troika, the body made up of the European Commission, the European Central Bank and the International Monetary Fund that monitors Greece's austerity and reform programs.

Schulz: I interpreted such demands as campaign rhetoric. The mandate of the Troika in its current form expires at the end of February anyway, along with the current aid package. It would be better had Greece thrown its support behind reforms early on. If we can achieve that with Tsipras more easily than with previous governments, I would wholeheartedly welcome it.

SPIEGEL: The idea behind the troika, though, was to create a kind of technocratic buffer between Brussels and the effects of its policies. Were the troika to disappear, the European Union will be made directly responsible for the effects.

Schulz: That is how it should be. If we want to create an EU that is also a political union, then those who make decisions must take responsibility. I am not one of those who wants IMF participation at all costs.

SPIEGEL: The German government wanted IMF participation at all costs because it didn't trust the European Commission to be strict enough with Greece and other countries needing aid.

Schulz: As far as I know, it was the other way around. It wasn't the IMF demanding a tough line, but the EU Commission under then President José Manuel Barroso. I don't think you can accuse the Barroso Commission of being too lenient with countries in deficit.

SPIEGEL: Do you think Tsipras' victory will call into question the entire euro rescue strategy followed in recent years?

Schulz: It's not like Alexis Tsipras' victory has suddenly enlightened us all. The fact is that the new European Commission has begun changing direction with the goal of combining budget consolidation and structural reforms with sustainable investments in growth and employment.

SPIEGEL: Commission President Jean-Claude Juncker has presented a new interpretation of the Stability and Growth Pact. Accordingly, those who violate EU deficit rules can buy more time to pay down new borrowings merely by announcing their intention to undertake structural reforms.

Schulz: The flexibility presented by Juncker represents the solidifying of the change in direction, and it is supported by Angela Merkel. She has accepted, after some hesitancy, that investments in infrastructure are necessary if we finally want more growth and jobs in the EU.

SPIEGEL: Tsipras' election victory in Greece, the European Commission's newfound understanding for Italy and France: Has the German model for Europe, a vision calling for rules to be more strictly followed than in the past, failed?

Schulz: The huge pressure exerted by net payers at the apex of the euro crisis had its effect, and it was largely a positive one. Without this pressure, countries would not have accepted that they had to get their budgets under control. It's just that limiting European policy to budget consolidation isn't enough.

SPIEGEL: The pressure was only exerted so long as Germany, along with other net payers, maintained it. Now, the European Central Bank, under President Mario Draghi, is following the path of cheap money. That reduces pressure and clears the way for a weakening of the Stability Pact.

Schulz: It was the one-dimensional focus on budgetary consolidation that forced Mario Draghi to take action. I believe that the measures taken by the ECB could create growth. But that isn't a call for budgetary laxness. The most energetic objections currently facing the new Greek prime minister are coming from those countries that pulled themselves out of crisis by way of draconian austerity and reform. Countries like Spain, Portugal and Ireland have no interest in granting Greece a rebate on its obligations.

SPIEGEL: But larger countries are also at issue. France has already twice received more time to get its deficit under control and Paris now needs more time yet again. Does it send the right message for the European Commission to weaken the Stability Pact?

Schulz: The reins have not been slackened: A vigorous discussion is currently underway between Brussels and Paris. Of course one can try to bring the Paris government to its knees and say: You have to do more, another cut in retirement benefits here, another tax hike there, so that the deficit slides below the 3 percent limit in 2015. But if France only manages it in 2017, it's not a huge deal. The point in time isn't so important as the question as to whether France takes its pledges seriously.

SPIEGEL: According to the new rules, certain investments can be deducted from the budget deficit calculation.

Schulz: That is overdue and should go much further in my opinion. France is a G-7 member state which cannot, for example, deduct the billions it makes available for European security from its deficit. The French operation Serval, which supported the Malian army in its fight against Islamists, served the security of all of us. The Stability Pact should consider such expenditures.

SPIEGEL: Still, the Stability Pact would appear to be the only instrument available to bring European countries in line when it comes to economic and financial policy. And it is necessary to prevent the euro from falling apart.

Schulz: That is the crux of our currency union: the fact that most decisions are made by the nation-states themselves, meaning that each individual country is granted an exception. Instead, we need a European economic government that is responsible for all forms of economic and currency policy.

SPIEGEL: Are you not afraid that Europeans would be opposed to such a plan because Brussels seems to them to be so far away and because they don't trust the European Parliament to exert sufficient control?

Schulz: It would no longer represent a significant surrender of sovereignty on the part of the nation states. We would merely provide a political framework to that which has already become reality. But of course it will be difficult. I am not under the illusion that we will be able to make treaty amendments on the short term.

SPIEGEL: The new Commission has almost been in office for 100 days. How do you see Jean-Claude Juncker's first three months?

Schulz: Jean-Claude Juncker is my political partner. It wasn't easy for him at the beginning ...

SPIEGEL: … because of the revelations pertaining to the lenient tax policies in Luxembourg, of which he was the prime minister for more than a decade.

Schulz: We are working together to bring Europe forward. He has undertaken important and correct preparations for the future. That is true of economic policy just as it is of the fight against tax dodging. Juncker recently said a very important sentence: "The country of profit must also be the country of taxation." That was the guiding light of my election campaign. If Juncker has now adopted it, then I am satisfied.

SPIEGEL: Mr. Schulz, we thank you for this interview.