Jean-Claude Juncker on Saving the Euro 'It Would Be Wrong to Create Taboos'
In a SPIEGEL interview, Jean-Claude Juncker, 56, the prime minister of Luxembourg and president of the Eurogroup, criticizes the German approach to tackling the European debt crisis and says that there should be "no taboos" when it comes to the idea of buying back debt-ridden states' bonds.
SPIEGEL: Mr. Prime Minister, is German Chancellor Angela Merkel a good European?
Jean-Claude Juncker: Absolutely. I cannot detect anything in the chancellor's behavior that would be anti-European.
SPIEGEL: Then let's put it differently: Is she just as good a European as former German Chancellor Helmut Kohl once was?
Juncker: Angela Merkel doesn't like being compared with Helmut Kohl on European issues. I can understand this all too well, because no one in Europe can live up to that comparison at the moment. I can't, either. Let me put it this way: Helmut Kohl was good, and Angela Merkel is not bad -- although in this case "good" and "not bad" mean the same thing.
SPIEGEL: Nevertheless, the image of an obstructionist has stuck to Merkel during the euro crisis. When European Commission President José Manuel Barroso recently proposed beefing up the euro rescue fund, Angela Merkel promptly shot him down. Can you understand the chancellor's position?
Juncker: I see no permanent disagreement between Merkel and Barroso. I have more the impression that the two have been talking a bit at cross purposes on this issue.
SPIEGEL: That's a kind way of describing an argument that's being waged publicly. What do you mean by "talking at cross purposes?"
Juncker: Last May, the European Council decided that the bailout fund for highly indebted euro countries would consist of 440 billion ($598 billion). However, this sum is not fully available at the moment, because some of the guarantor countries do not enjoy the highest credit rating. That's why we are searching for solutions on how we can fully utilize the money that's been made available.
SPIEGEL: That's exactly what we thought Barroso meant when he said that the European Financial Stability Facility's "effective financing capacity must be reinforced and the scope of its activities widened."
Juncker: If that was what Barroso meant with his statement, he's correct -- and in that case, there actually can't be any conflict with Merkel. After all, European leaders are in agreement on this issue. We don't want to expand the bailout fund, but we do want to make sure that it reaches its intended size.
SPIEGEL: But Germany would have to take on more risk to make that happen. Many in the German government are not willing to do so.
Juncker: I have a hard time understanding that, because Germany wouldn't be carrying this burden alone. Contrary to the impression some tabloid newspapers are creating at the moment, Germany is not the only country in Europe with an excellent credit rating. To make the fund more efficient, countries like the Netherlands, Austria, Finland and Luxembourg must also do their part.
SPIEGEL: With all due respect, Luxembourg's contribution will not save the euro zone.
Juncker: But my fellow Luxembourgers make a particularly large contribution out of solidarity (with the rest of the euro zone). People in Germany don't like to hear it, but it's a fact: On a per capita basis, Luxembourg contributes more money to the fund than Germany.
SPIEGEL: But that doesn't explain why some countries are now supposed to contribute even more money to the fund. Portugal, Spain and Italy have just successfully issued new bonds on the financial market. Doesn't that show that the current bailout fund is completely sufficient?
Juncker: It shows that European politicians have visibly reassured the financial markets. However, we shouldn't misunderstand this as an invitation to sit back and relax. On the contrary, it's imperative that we now make the 440 billion we pledged last May available in real terms. I am confident that the German government will not turn a blind eye to this common European goal.
SPIEGEL: Barroso also proposed that the bailout fund buy up the debt of ailing countries in the future. Do you agree with this?
Juncker: It's something I am happy to discuss with representatives of the euro-zone members, but not in SPIEGEL. All I can say is this: It would be wrong to create taboos, but we also can't overburden the strong (countries). There is no solidarity without stability, and without solidarity we won't get anywhere in terms of stability.
SPIEGEL: The European Central Bank, the ECB, is currently buying up government debt, to the displeasure of its president, Jean-Claude Trichet, who is worried about the ECB's independence. How much longer can this go?
Juncker: I am pleased that the central bank was prepared to take unconventional steps in this unique emergency situation. But it's also clear that we cannot continue these measures indefinitely without compromising the ECB's capacity to act.
SPIEGEL: The debt crisis in the euro zone is still unresolved, and yet the EU countries keep on arguing. Why can't the Europeans agree on a joint strategy?
Juncker: There is a joint strategy. It's just that we're having trouble conveying it in a convincing way. There are 17 governments sitting at the table in the Eurogroup, representing a total of more than 40 political parties. It's no wonder there are occasional difficulties with coordinating things.
SPIEGEL: There aren't just difficulties with coordinating things -- there is a basic lack of consensus, for example over a common European economic policy. Everyone is calling for it, but everyone seems to have a different understanding of what it is.
Juncker: It's indisputable that we in the Eurogroup have to coordinate our economic policies more closely. For example, we paid too little attention to the competitiveness of countries like Greece, which exacerbated that country's budget problems. We also have to talk more about labor market issues, which are in turn central to competitiveness. And we cannot avoid closer coordination of wage policy.
- Part 1: 'It Would Be Wrong to Create Taboos'
- Part 2: 'Euro Bonds Have a Totally Inaccurate Image in Germany'