Interview with Euro Group President Juncker 'Athens Is Not Broke'

Part 2: 'So Far, No European Taxpayer Has Had to Pay a Cent for the Rescue'


SPIEGEL: That's why you have argued for a "soft restructuring." What exactly do you mean by that?

Juncker: First Greece will have to fulfill its consolidation program, as promised. Once that has happened, we can think about extending the terms of public and private loans and reducing interest rates. That is what I mean by a "soft restructuring." It would be the very last step in a very long process.

SPIEGEL: European Central Bank President Trichet doesn't even want to consider that. Can you understand why he is strictly against any form of debt restructuring?

Juncker: Trichet is very cautious when it comes to debt restructuring, because he is afraid, and rightfully so, that the crisis could then spread to other countries. That is why a soft restructuring can only be an option in specific cases and only under certain conditions.

SPIEGEL: Could you be more specific, please?

Juncker: It has to be ensured that the rating agencies will not treat a soft restructuring as a default. Otherwise the banks would have to write off billions in claims, with incalculable consequences for the capital market.

SPIEGEL: With all due respect to your restraint on the question of restructuring, what happens if we're sitting here again next year and conclude that Greece is still not on a stabilization course?

Juncker: If the donkey were a cat it could climb a tree. But it is not a cat. Nevertheless, this is a question that worries many people. My answer to it is almost a little theological: I do not believe that this question will ever be asked.

SPIEGEL: Many people are not as firm in their convictions as you are. They fear that billions in tax revenues will soon be sent to other countries, which is why there is growing resistance across Europe against further aid programs and the planned European Stability Mechanism (ESM, which is intended to go into effect in mid-2013 as a permanent bailout fund for the common currency if it heads into troubled waters).

Juncker: So far, no European taxpayer has had to pay a cent for the rescue of debt-ridden euro countries. On the contrary, Greece is currently paying a substantial amount of interest to the donor countries, whose tax revenues have not been needed yet.

SPIEGEL: But it could happen. German essayist Kurt Tucholsky once said that the man on the street cannot understand the truth, but he can often sense it very well.

Juncker: It is true that people usually have a healthy gut feeling, and that also applies to the risks of the bailout packages. I just thing it is wrong to completely indulge one's gut feeling.

SPIEGEL: There are growing demands within the parliamentary groups of Germany's ruling parties to consult the parliament before a euro country receives assistance from the ESM. Could you accept this?

Juncker: There are few central bankers who are troubled by the notion that we need unanimity on central issues in Europe. But even in times of crisis, we cannot undermine democracy. I completely understand that parliamentarians want to be part of the decision-making process in cases that affect the parliament's budgetary authority.

SPIEGEL: Europe isn't just in a financial crisis. Governments in many places, spurred on by populists, are dialing back European integration. Italy, France and Denmark are challenging the freedom to travel. How do you explain this return to small state regionalism?

Juncker: As a Luxembourger, I do not like to hear that word. After all, we are confirmed regionalists. But it is true that the achievements of European integration are being questioned for short-term political reasons. People have been asked to accept quite a few changes in the last 20 years, from globalization to the reorganization of Europe. If we do not structure the European project in such a way that people can accept it, we run the risk that it will fail.

SPIEGEL: Skepticism about Europe pays off at the polls, as the example of the "True Finns" shows.

Juncker: We should not confuse politics with opinion polls. I have noted with concern that there is a growing sense, even within Europe's major parties, of having to yield to these moods. I warn against imitating populists. In politics, you have to be willing to accept criticism from time to time. If you want to have a discussion with people, sometimes you have to stand in their path and say: "Stop. It does not work this way." Those who simply run after voters can never see them from the front.

SPIEGEL: Mr. Prime Minister, we thank you for this interview.

Interview conducted by Michael Sauga and Christoph Schult. Translated from the German by Christopher Sultan

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