Interview With Volker Kauder 'Europe is Our Future'

Volker Kauder, 62, is the head of the parliamentary group of Chancellor Angela Merkel's conservatives. In a SPIEGEL interview, he defines his party's red lines in the euro bailout efforts and warns against hasty changes to the constitution in response to the euro crisis.

SPIEGEL: Mr. Kauder, the center-left Social Democratic Party (SPD), the largest opposition party, is telling Germans that the euro crisis can't be resolved without shared debt liability. Why don't Chancellor Angela Merkel's Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU) -- have the courage to tell people the truth?

Volker Kauder: The reason is very simple: With us (in power), there won't be this kind of liability. Euro bonds don't solve a single problem. In order to re-establish the confidence of the markets, each euro-zone member country needs to put its budget in order by itself. Incidentally, I doubt whether this is the Social Democrats' last word. They were first for euro bonds, and then against them. Now they're apparently for them again.

SPIEGEL: It's not just the SPD. Even Finance Minister Wolfgang Schäuble of the CDU has indicated that he could imagine having euro bonds as long as there were shared EU fiscal policies, as well. Is he right?

Kauder: It worries me that the answers we must now find for solving the crisis in the short term are mixed up with questions about the future that must be answered somewhere down the road. Of course one could talk about euro bonds if the European Union were to become a state like Germany someday. But in that case, those would also be sovereign bonds and not euro bonds. But that isn't our vision for the European Union, and things won't reach that point, either.

SPIEGEL: Are you saying that your vision for the European Union differs from that of the finance minister?

Kauder: No, I'm an ardent supporter of the European Union. The EU is the greatest project of my generation. Our key goal was to not have any more wars. Thanks to the EU, we've achieved that. Today, Europe is also our future. For future generations, in particular, a strong EU can be a kind of life insurance policy -- in a world in which the emerging countries of Asia are becoming more powerful competitors. But, at the same time, I say that it's not enough to simply call for more European integration as the answer to the crisis. The steps leading to a strong EU have to be well thought-through.

SPIEGEL: In the fall, the heads of the main EU institutions will present reform proposals. These state that if a euro-zone member country plans on making new expenditures that will increase its overall debt, the euro-zone finance ministers must first approve them.

Kauder: I have my doubts about that. In the EU, we won't get to this centralized budget planning for all members so quickly. However, we need to reiterate yet again that national budgets must adhere to strict stability rules. And, more than anything, I can imagine seeing an independent authority monitoring whether these rules are observed.

SPIEGEL: Who could assume this job?

Kauder: A special chamber of the European Court of Justice, for example, or the European Court of Auditors. That would entail a tightening of the now agreed-upon fiscal pact that could considerably strengthen faith in EU solidarity.

SPIEGEL: There have also been other proposals, such as ones calling for the direct election of the European Commission president or creating the position of an EU finance minister.

Kauder: But that doesn't solve the problems we have right now. It's not about transferring more power to Brussels. We need to strengthen the EU where the defects are. After all, the problem is that many in the EU have not adhered to what was agreed upon. Just take the example of the Stability and Growth Pact, which we Germans were regrettably the first ones to break.  In order to prevent that from happening in the future, we have to transfer control functions to the EU. However, every time we shift competencies -- toward the Commission, for example -- we are always forced to answer one key question: How can we guarantee parliamentary control?

SPIEGEL: Do you have an idea of how this could be done?

Kauder: Of course, we could leave it up to the national parliaments, as we have been doing. But then we reach the limits of our possibilities. A two-chamber system would also be conceivable. In that case, in addition to the European Parliament, there would also be a second chamber made up of representatives of national parliamentarians. Or we make a proper parliament in which, unlike now, the vote of a German will finally have the same weight as a vote from Malta.

SPIEGEL: All of these proposals touch upon the core of the Basic Law, Germany's constitution. Will Germany be forced to hold a referendum?

Kauder: I would advise against casually changing the Basic Law in the midst of the crisis. We need to proceed with caution. We have an outstanding constitution that has stood the test of time. It still offers all sorts of leeway for pushing forward European integration in the medium term. I don't want any United States of Europe. If we now want to transfer some more individual competencies to the EU, that also works with the constitution.

SPIEGEL: However, even more control won't solve the euro zone's central problem. It does nothing to alter the fact that the euro zone unites 17 national economies that vary far too much in terms of their productive capacities.

Kauder: Let's not get ahead of ourselves. Greece is a major problem, but also a special case. Spain has a strong economy, but problems with its banks. Italy, on the other hand, is being plagued by a problem that's been around since the founding of Italy: the major differences between the industrially strong north and the poverty-stricken south.

SPIEGEL: In an interview he gave in mid-July, German Economy Minister Philipp Rösler said that a Greek exit from the euro zone had "lost its horrors."  Is that also the case for you?

Kauder: We should do everything possible to keep ourselves together. One doesn't throw one's children out of the house right when the first problems arise. For now, I'm waiting for what the troika reports. (editor's note: Inspectors from the troika -- made up of officials from the European Commission, the European Central Bank and the International Monetary Fund are preparing a report on Greece's progress on reforms)

SPIEGEL: Decisions might already be necessary before the troika releases its report. On Friday, Greek Prime Minister Antonis Samaris will travel to Berlin to meet with Chancellor Merkel. He will reportedly try to persuade her to ease the strict austerity measures  on his country. German Foreign Minister Guido Westerwelle has already signaled that the Greeks should get more time to implement them. 

Kauder: The Greeks must abide by what they've agreed to. There isn't any more wiggle room on this issue, either in terms of the time frame or the issue itself. That would be yet another breaking of agreements -- which, of course, is exactly what led to this crisis.

SPIEGEL: Can you imagine there being a third bailout package for Greece?

Kauder: We need to wait for the troika's report. But I see little chance of a third aid package (finding support) in the coalition. Granted, there would also be costs for refusing to provide additional help; a Greek bankruptcy would be expensive for Germany. But agreements must be kept. Otherwise, even with the best will in the world we won't make progress in Europe. There can't always be new (aid) programs or watered-down conditions. At some point, the Greeks have to answer the question: Are we perhaps going to try a bit harder, or do we abandon the euro?

SPIEGEL: Was it a mistake to introduce the euro at all?

Kauder: Germans have greatly benefited from the euro. But looking back doesn't do any good. We have the euro now; it's our currency. We'll do everything to defend it. And it also doesn't help to constantly feel sorry for the Greeks, as is currently the case. Money presses can't create competitiveness; only hard work can do that. Germans could say at thing or two about that since the Hartz reforms (editor's note: social and labor market reforms introduced under the center-left government of Chancellor Gerhard Schröder in 2003). Of course the most beautiful part of going into rehab are the massages, because one only has to lie there. But whoever wants to get healthy mostly needs physical therapy. And, with that, nothing happens without one's own exertion.

SPIEGEL: Mario Draghi, the president of the European Central Bank, also intends to do "whatever it takes to preserve the euro." His recipe for doing so is having the ECB buy up sovereign bonds of ailing euro-zone countries. In doing so, is Draghi still following the Bundesbank's traditional focus on monetary stability?

Kauder: We Germans pushed it through that the central bank is independent. For that reason, I won't interfere with Mr. Draghi's work.

SPIEGEL: Draghi essentially plans to use the money-printing presses to finance cash-strapped euro-zone states. But that isn't part of the ECB's mandate.

Kauder: Americans have always said that the central bank is also there to print money. That works for them as long as China is willing to buy dollars on a large scale. If it ever happens that this is no longer the case, there will be the threat of inflation. If the crisis in Europe were only about cheap money, it would have been over long ago. After all, there's a lot of cheap money (available) for our banks. But the markets are waiting for something else: a clear pledge from the Europeans that they are going to increase their competitiveness and put their budgets in order.

SPIEGEL: Mr. Kauder, thank you for speaking with us.

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