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DER SPIEGEL: The ESM was set up during the euro crisis and the Greek debt crisis. In southern Europe, it is symbolic of cost cutting and austerity. Is the ESM's bad reputation justified?
Gentiloni: I don't think that everyone in Greece, Portugal or Italy see it like that. What is important to me is this: If mistakes were made in the past, and there certainly were some, we shouldn't blame the ESM, but ourselves, the decision-makers, the politicians.
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European Commissioner for Financial and Economic
Affairs
"The EU Cannot Afford to Get Bogged Down in
Past Discussions"
On Thursday, European leaders will discuss how to
navigate the block through the economic crisis triggered by the novel
coronavirus. In a DER SPIEGEL interview, European Commissioner Paolo Gentiloni
talks about what is at stake and the need to find at least 1 trillion euros.
Interview
Conducted by Peter Müller in Brussels
20.04.2020,
15:17 Uhr
The office
of Paolo Gentiloni, 65, is on the 10th floor of the Berlaymont building in
Brussels, the headquarters of the European Commission. He has a view out onto
the Rue de la Loi, the main traffic arterial of the European Quarter, but it is
completely empty on this day, as Gentiloni says over the telephone.
As
commissioner for economic and financial affairs, Gentiloni is responsible for
finding solutions to the question as to how economic reconstruction could look
following the corona crisis. That issue will be the focus of this Thursday's
video summit between European Union heads of state and government. The front
between southern and northern Europe has hardened on the issue of corona bonds
and Gentiloni, a former prime minister of Italy, would like to move beyond this
debate over the issuing of joint debt. But is that realitic?
In a DER
SPIEGEL interview, he speaks about the proposals that will be up for debate at
the Thursday summit and their chances for success.
DER
SPIEGEL: Mr. Commissioner, is the EU failing in the face of the corona crisis?
Paolo
Gentiloni: No, I don't think so. We did, of course, have significant problems
with coordination early on, with some countries even passing bans on the export
of medical supplies. The message of solidarity wasn't clear enough, not by a
long shot - something that European Commission President Ursula von der Leyen
correctly pointed out. But that has now changed. There have been impressive
decisions made – by the European Central Bank, by the Commission and by the EU
member states.
DER
SPIEGEL: As a former prime minister of Italy, you have an excellent feel for
the mood in your country. Can the frustrations from the early days of the
crisis still be mended?
Gentiloni:
I hope so. The coronavirus affected Italy earlier than other EU member states,
which is why the early lack of solidarity hit us so hard. My impression is that
people are now seeing that things have changed. But solidarity isn't just
needed on health-care issues, but also on economic reconstruction.
DER
SPIEGEL: And there is significant disagreement on precisely that point.
Countries in southern Europe are demanding corona bonds to finance the
reconstruction of the economy. But countries like the Netherlands and Germany
are opposed to the idea. Which approach is the correct one?
Gentiloni:
We have to see which tools help us reach our goals. What we need is a plan for
economic recovery. The question is how we are going to finance it. Our
economies are all currently being hit hard by the crisis – a crisis for which
nobody bears the blame. We must prevent a situation in which the inequalities
in the EU are larger after the crisis than they were before. And we can only
reach that goal together.
DER
SPIEGEL: French President Emmanuel Macron has spoken of a "moment of
truth." If the EU reveals itself to be just an economic project without
any solidarity, he said, then it would boost populists in southern Europe. Do
you share his view?
"Populists
don't just exist in southern Europe, they are also in the north."
Gentiloni:
Yes, I share his concerns. But populists don't just exist in southern Europe,
they are also in the north. They are exerting pressure on the governments of
all EU countries, sometimes with completely contradictory arguments. That is
why it is so important to find a sustainable compromise between the north and
the south.
DER
SPIEGEL: Given this need, does it even make sense to restart the discussion
over euro bonds, the joint issuing of European debt? It was an issue that
already divided northern and southern European member states during the Greek
crisis and the euro crisis.
Gentiloni:
And that brings us to the core of the problem: The EU cannot afford to get
bogged down in past discussions. To be clear: Nobody is proposing the issuing
of bonds to finance debts that were amassed in the last 10 years. What we need
is a joint instrument to finance the challenges of reconstruction. Otherwise,
we are risking a situation in which the differences between the economies in
the eurozone and the internal market will become too great and that both will
break apart. I don't have to tell you that that would be a huge problem for
Germany.
DER
SPIEGEL: The message from the Germans has consistently been that there is
nothing wrong with issuing joint debt as long as they are combined with
sufficient controls, such as giving EU finance ministers the power to monitor
how countries like Italy or Greece are spending the money. What do you think of
this argument?
Gentiloni:
If I may, that is exactly the same discussion that has taken place for 10
years. The arguments have all been presented. One side wants to reduce risk,
the other side wants to share risk. Enough already! If what we have all been
saying is true and this is the worst crisis since the war - and I believe that
the numbers confirm this assumption – then we need to look ahead. We need to
look at how to finance reconstruction.
DER
SPIEGEL: The question is also how large the task will be. The European economy
is currently in a kind of hibernation. On May 7, you will be presenting the
Commission's new economic forecasts. Do you already have concrete findings
regarding how great the economic damage to the EU might ultimately be?
Gentiloni:
We are currently working night and day on the problem, but the situation is too
volatile to say anything about the forecasts at this time. For the time being,
I would say that the forecast from the International Monetary Fund - a 7.5
percent plunge in economic output this year – seems quite realistic to me.
DER
SPIEGEL: The Eurogroup has proposed that countries like Italy could draw from a
special credit line from the European Stability Mechanism (ESM), free from the
normally strict conditions. Yet Italy is still reluctant to take money from the
ESM. Can you understand that?
Gentiloni:
ESM credit lines can be useful for helping member states, but of course every
government decides on its own if it wants to accept this aid. These credit
lines have a clear scope and a clear purpose: They are designed to finance the
costs that are generated by the health-care system. And they come with hardly
any strings attached. They are an offer from the Eurogroup to all European
Union member states.
DER
SPIEGEL: The ESM was set up during the euro crisis and the Greek debt crisis.
In southern Europe, it is symbolic of cost cutting and austerity. Is the ESM's
bad reputation justified?
Gentiloni:
I don't think that everyone in Greece, Portugal or Italy see it like that. What
is important to me is this: If mistakes were made in the past, and there
certainly were some, we shouldn't blame the ESM, but ourselves, the
decision-makers, the politicians.
DER
SPIEGEL: In the video conference on Thursday with the heads of state and
government, the debate will primarily focus on the so-called recovery fund –
the fund that is to finance the reconstruction. But it remains unclear where
the money for that fund is to come from. What is your idea?
Gentiloni:
Three points are under discussion: For the reconstruction we need, first of
all, a joint instrument which, second, is sufficiently large and, third, can be
made available quickly. From my perspective, the Multiannual Financial
Framework could be the path to reaching those goals.
DER
SPIEGEL: When it comes to this trillion-euro EU budget, the Commission is
planning on implementing financial instruments to enable borrowing for
investments. How much money are we talking about?
Gentiloni:
We haven't yet arrived at precise numbers.
DER
SPIEGEL: Could you perhaps provide an approximation?
Gentiloni:
Support of up to 1.5 trillion euros could be necessary to overcome this crisis,
as I've said before. The Eurogroup has presented proposals worth more than 500
billion euros to finance health care and short-time work (furlough) programs
and to help small and medium-sized companies. That leaves at least a trillion
euros. That is the broad outline of the task still facing us.
"Don't
forget, the money from the Marshall Plan only began flowing two years after the
end of World War II."
DER
SPIEGEL: Among the points you mentioned is that the money should be made
available quickly. Yet in February, initial attempts to reach an agreement on
the budget failed, and that was before the corona crisis. What makes you so
optimistic that things will suddenly move quickly?
Gentiloni:
The question is completely justified. We have often said that a Marshall Plan
is needed to confront the crisis. But don't forget, the money from the Marshall
Plan only began flowing two years after the end of World War II. That wouldn't
be helpful in the current situation. Reconstruction can't wait until we have
defeated the virus, it has to start now, this spring and summer. Why am I
optimistic? We are living in exceptional times and I hope that everyone
understands that.
DER
SPIEGEL: As commissioner for economic and financial affairs, part of your job
is also ensuring that members of the common currency union adhere to the
Stability and Growth Pact. Do you really believe that it will ever be possible
to return to the deficit rules that were in place prior to the crisis?
Gentiloni:
That isn't my greatest concern at the moment. The question will be addressed
once our lives have returned to normal, and we're not even close to that point
yet - not when it comes to the virus, not when it comes to our societies and
certainly not when it comes to our economies.
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