Brussels, 04/05/2012 (Agence Europe) - The head of the S&D Group at the European Parliament, Hannes Swoboda of Austria, believes that a victory for the Socialist candidate in the presidential elections in France this month would make it possible to make changes to the European response to the sovereign debt crisis, as he explained in an interview with this newsletter at a conference organised by the European Progressive Studies Foundation (FEPS) in Rome on 2-3 May. Swoboda said that Europeans are prepared to accept tough reforms as long as they are fair. (MB/transl.fl)
Agence Europe - What is your assessment of the response to the debt crisis in Europe?
Hannes Swoboda - More and more we are seeing the disaster of current policies. Unemployment is rising, it has never been as high in the eurozone and in Europe. Youth unemployment is extremely high. In Italy now it is 36%, and in some countries it is over 50%. Imbalances between countries are probably rising. Overall, it is a disaster. If you have cancer, it is not good enough to simply take an aspirin.
Agence Europe - Is the European social model at risk?
Hannes Swoboda - It is at risk, yes. Draghi showed how it is at risk; there are people who want to bury it. It is absolutely crucial that we defend it. This doesn't mean that we don't need reforms. All countries have to cut some budgetary expenditure. That is obvious. All countries have to do something on pension reforms. That is obvious. The question of fairness is essential. If somebody, like in France, has already worked and contributed to the social security system for 40 years and still has to work until he is 65 years old, it is not fair! In Romania, the government fell because of unfair social security measures. The question is about the fairness of the sharing of sacrifices among the population.
Agence Europe - How could the French elections change EU politics?
Hannes Swoboda - The times are changing, a new wind is blowing but it is not blowing strongly enough. The French elections will change the climate. It will change because other forces that have similar intentions or ideas to François Hollande will be strengthened. It is not only about France. Other people will say: We now have another ally so we can go a different way. If you are more or less alone against Merkel, it is difficult. There are allies who are moderate, they don't agree with everything like Monti. Then there are allies that are more in agreement with Hollande. The web of cooperation at EU level will change. This includes the European Council, which might become more courageous to come forward with some ideas that until now they have been hiding.
Agence Europe - What are the main measures you advocate for growth stimulus?
Hannes Swoboda - One element is to reduce disparities between countries. As Stiglitz said, you have to use the room of manœuvre for expansionist economic and wage policies in Germany and some other countries. Secondly, you have to have a tax policy which gives money for investment and correcting the wrong redistribution of wealth over the past years. It is not about having new deficits, but having enough budgetary expenditure covered by taxes so you have a redistribution effect. The discussion on the raising of capital of the EIB is important as well. The role of the ECB has to be strengthened by making clear that the ECB has full support in its expansionary policy. It is also important to give more time for countries like Spain and Greece to balance their budget because if they stick to the current timings, they will never do it. First you have to undo over-restrictive measures and then put in active growth measures. If you add these elements, you get a holistic approach.
Agence Europe - Is the EUROPE 2020 strategy failing?
Hannes Swoboda - Nobody takes it seriously, apart perhaps from the Commission. None of the governments take it seriously. If you have a growth agenda and at the same time you support an extreme austerity policy, it does not work. EUROPE 2020 is in part a growth agenda, but with no money. It is being torpedoed by the Commission itself, especially by people like Rehn. I like him, but it's this philosophy that has been put on him or accepted by him from the European Commission departments. The Commission's support for this austerity policy is destroying EUROPE 2020.
Agence Europe - What can we expect from the Growth Summit?
Hannes Swoboda - I fear it may be some fake “bling bling” event. All of a sudden people say we are in favour of growth and everybody is happy. The message is good, but you have to look at the content. There must be a comprehensive and serious concept. It may be better to leave some time and have a better initiative instead of scenery, something that you see but behind which there is a void.
Agence Europe - How can Germany be convinced to move on the role of the ECB?
Hannes Swoboda - By saying: OK, the structural deficit should not be bigger than 1% if you exclude growth investment. You don't change the treaty but you have an interpretation of a very vague expression of structural deficit.
Agence Europe - What investment could benefit from a more flexible interpretation of the Stability and Growth Pact?
Hannes Swoboda - We do not need to define it now. We can leave it to the Commission. We could have a ceiling, for example. Certain investment in infrastructure or research could be done. I remember a discussion with a Polish minister saying research is long-term, but we need infrastructure now. The idea is to have room for manœuvre. We have postponed discussions until after the French elections. The EP has agreed not to be in a rush.