SPIEGEL Interview with Gerhard Schröder 'Europe Needs to Wake Up'

Part 2: 'Great Britain Is Causing the Greatest Problem'

SPIEGEL: And what happens after that?

Schröder: The Commission will have to be turned into a government that is controlled, in parliamentary terms, by the European Parliament. That translates into a United States of Europe. (German Labor Minister Ursula) Von der Leyen is entirely correct in this regard. Conservative politicians and members of the administration are also calling for the same thing now.

SPIEGEL: But that's a Europe modeled after German ideas of fiscal, economic and social policy, which horrifies the other countries.

Schröder: It's a reasonable concept, not a German concept. I'm a member of a European think thank founded by Nicolas Berggruen, along with conservative colleagues from other European countries. If there is one thing we agree on, it is that we need a reasonable, transnational mix between stimulating growth, on the one hand, and austerity, on the other. This is not a German concept. Look at Scandinavia, where you see good Europeans, and look at the Netherlands and Austria. They're all good Europeans.

SPIEGEL: But that's more of a northern European and not a southern European idea.

Schröder: I don't know about that. The Greeks are currently forced to pursue an austerity policy at least as strict as what others are doing.

SPIEGEL: And if it isn't enough, the rich countries, especially Germany, will be footing the bill.

Schröder: If you look at the economic data, Germany, as an exporting and industrialized nation, has benefited immensely from the euro. That's just the way it is. We will have to explain to people the benefits we have derived from the euro, economically, socially and politically. We will have to explain that in a common currency zone, you accept a joint responsibility for this currency and relinquish sovereignty rights.

SPIEGEL: That's not what the Lisbon Treaty says.

Schröder: These treaties are relevant to specific historic situations. And when they change, the treaties have to be modified.

SPIEGEL: Lisbon has to be revised?

Schröder: Yes. Lisbon was a compromise. Our original goal was to create a political union with the European constitution, which was defeated in the referendums. We didn't get it right. But it's important to say that it wasn't Germany's fault. Now that the crisis has emphasized that the things that could not be done until now are necessary to overcome the crisis, we have to take advantage of the opportunity.

SPIEGEL: How is that supposed to work? The constitutional treaty failed because of referendums in France and the Netherlands -- that is, in EU founding members considered to be part of core Europe.

Schröder: The situation has changed. This crisis presents a great opportunity to create a real political union in Europe. I'm convinced that this has majority appeal in the member states. But the pro-European politicians also have to fight for it.

SPIEGEL: You and the euro -- it wasn't love at first sight. What turned you into a European when you were in office?

Schröder: I once referred to the euro as a sickly premature baby, because I felt that political union was needed. When I was in office, it became clear to me that the euro had created a new situation that, if terminated, would have catastrophic economic and political consequences. So while in office I had to learn that my assessment was untenable. Add to that the 2004 EU expansion to include 10 additional countries. It would certainly have been preferable to achieve deeper integration first. But this wasn't historically possible.

SPIEGEL: Why not? Why couldn't someone have said: You'll have to wait a moment. The house has to be stabilized first, before we build an addition?

Schröder: That would have been an untenable position vis-à-vis the Eastern Europeans, who suffered for almost five decades under the division of Europe and oppression. A German position of this sort would have been unthinkable, especially toward Poland. These are European countries, just as the Western Balkans are part of Europe. But we can't say to the Serbs today: Just wait a while. And the real problems aren't even coming from these new member states.

SPIEGEL: Then where are they coming from?

Schröder: Great Britain is causing the biggest problem. Great Britain is not part of the euro, and yet the British always want to have their say in the design of an economic zone. This is inconsistent. And besides, the British have been very skeptical about every integration step, and that's putting it very diplomatically.

SPIEGEL: In reality they've been obstructionists?

Schröder: Yes. I was originally of the opinion that Great Britain could be treated like France. But what was overlooked, also by myself, is that Great Britain still sees itself in a sort of middle position between the United States on one side and Europe on the other. In other words, it's in an "in-between" position. And that is unacceptable.

SPIEGEL: But if nothing works with Great Britain, what role can the British play in the future?

Schröder: The decision on the concrete configuration of the economic government can only be made by members in the euro zone, and not by the Council (the powerful EU institution comprised of European national leaders) as a whole.

SPIEGEL: The Poles and others won't stand for that. It will trigger shockwaves.

Schröder: The Poles and others will understand it. They'll have a say as soon as they have become members of the euro zone.

SPIEGEL: Then we'll finally have a two-speed Europe.

Schröder: But we've already had that for a long time with the euro zone. We should stop dithering and get serious with the idea of a core Europe. Otherwise Europe and its countries will sink into irrelevance between Asia under China's leadership, on the one hand, and a reinvigorated America, in which I believe. The Europe I imagine is a more integrated Europe, complemented by Turkey's membership, on the one hand, and association with Russia, on the other. This is the once chance to enable this Europe to operate on a level playing field with Asia and the United States. Otherwise I don't see the slightest chance for European countries to maintain their importance. Europe has to wake up.

SPIEGEL: Is it that drastic?

Schröder: Yes. If you need an example, just take a look at the 2009 climate summit in Copenhagen. What happened there, politically speaking? What happened is that neither the European Union nor the countries of the EU played a role there. The Americans didn't play a role, either. At the Copenhagen summit Asia, under China's leadership, said: This is what's going to happen. Then they graciously invited the American president to sign the finished document. Not a single European player, neither the climate chancellor nor Mr. Barroso, nor anyone else, played a role there.

SPIEGEL: Now that we're talking about global issues, are the financial markets running the world?

Schröder: We made some proposals to regulate those financial markets more effectively.

SPIEGEL: After the Social Democratic Party (SPD) and Green Party coalition government had initially done some deregulating.

Schröder: In Germany? This isn't a national problem. We tried to make headway at the 2005 G-8 summit in Gleneagles. The British and the Americans laughed at us when we said: We have to get a handle on these financial markets. No one was willing to do so, out of consideration for the financial centers on Wall Street and in London.

SPIEGEL: No one was laughing at the G-20 summit in 2009, but no one did anything, either.

Schröder: That's the problem. The world's new financial architecture can only be shaped within the framework of the G-20. The G-8 can't do this anymore.

SPIEGEL: Perhaps it's really true that the real globalized world is a world of money, but not of politics?

Schröder: That's too defeatist for me. Of course politicians have a difficult time of it, because they cannot simply make take-it-or-leave-it decisions without justifying them first.

SPIEGEL: And that's coming from you.

Schröder: (laughing) Sometimes it simply feels good to put your foot down. But of course I too am aware that democracy doesn't work that way. Democracy is slow, while the markets are fast. But that doesn't mean that politicians have to capitulate in the face of the markets. For instance, they set the rules through the G-20. Let's put it this way: The political system might be slower, but it has greater leverage. It just has to use it.

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

Interview conducted by Georg Mascolo and Christoph Schwennicke. Translated from the German by Christopher Sultan.

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