Faced with the imminence of a new financial crisis and the climate challenge, Pierre Larrouturou, a new Social Democrat MEP and French economist, initiator of the “Climate Finance Pact”, calls on the European Union to rediscover the audacity of the founding fathers and to take the time to establish an action plan focused on climate and social justice that really revises the European project (comments collected by Damien Genicot).
Agence Europe – You are often cited among the economists who predicted the 2008 financial crisis. Could a new crisis occur as we keep hearing?
Pierre Larrouturou – I am convinced that we are heading towards an even more serious crisis. In 2005, there were only a handful of us sounding the alarm, but now it is every month that the IMF or the World Bank warn that a new crisis can break out at any time and “could do ten times more damage than in 2008”.
Last year, in the United States, it took €2.580 trillion more debt to maintain the growth rate (https://bit.ly/2MF3ZBx ). It's something never seen before. It's like a car that needs a litre of oil every 300 metres. It's still running, but the engine could explode at any time. And the evolution of debt in China is equally worrying.
What can the EU do to avoid this crisis?
We can't avoid it. The crucial question is: will it do dramatic social and political damage like the 1929 crisis or is the EU able to protect its population? Let us not wait for the crisis to break out, but rather put in place a protection system. Progress must be made on the separation of deposit and investment banks to ease speculation. Above all, we need to set up a European employment shield, a system whereby, in the event of a recession, instead of laying off people, working time is reduced while maintaining incomes.
Could you clarify your idea?
When there is 30% less work because of the recession, instead of cutting 30% of the workforce, we keep everyone and reduce working time by 30%. Wages fall by 30% to remain competitive, but the State and the social partners maintain 98% of income. People keep most of their income and train in their free time. This is what Germany did with KurzArbeit: in 2009, 1,500,000 employees took advantage of this system, whilst 98% of income was maintained. Why is the EU not able to help all Member States set up this system of protection for employment?
It is now the role of the social democrats to say: warning, a crisis is going to erupt, but we can protect our social system. It is also up to us to say that Social Justice is not only an ethical requirement, but that, even from a purely economic point of view, it is THE solution to avoid going from one crisis to another. Look at the debt curve in the United States: for 30 years, until Ronald Reagan came to power (1981), there was no crisis and there was no need to increase the debt, because we held fast to the rules of social justice introduced by the Philadelphia Declaration in 1944.
It is because we have renounced social justice and a balanced sharing of added value that we need more and more debt.
Your priority is therefore for the EU to adopt measures to strengthen social justice?
Yes. In the coming weeks, we must negotiate a concrete action plan for the next 5 years, focusing on climate and social justice.
When Schuman and Adenauer decided to make coal and steel, they understood that a revolutionary decision had to be implemented after decades of war and millions of deaths. In just 2 weeks, without even knowing how many companies were involved, they made an historic decision! Today, our Heads of State have been saying for years that Europe needs to be rebuilt. But they're not moving forward. It is therefore up to the European Parliament to make progress on this re-foundation.
Ms von der Leyen gave a very fine speech in July, but now we need an action plan to make concrete progress.
You are not convinced by the Green Deal promised by Ms von der Leyen?
I absolutely want to believe it. When she says she wants a climate law within the first 100 days of her mandate, that’s brilliant! But, on the question of financing the Green Deal, we face the greatest uncertainty. During his hearing in Parliament before the Committee on Budgets, of which I am a member, Mr Dombrovskis, who will be responsible for financing the Green Deal with Mr Hahn, did not give us any concrete answers.
You have very concrete proposals to finance the Green Deal (see EUROPE 12351/10). Do you feel that they are being heard, especially by the next Commission?
The idea of a Finance-Climate Pact, which I have been developing for 7 years with Michel Rocard and Jean Jouzel, is now supported by hundreds of leaders from very different backgrounds, including five former French prime ministers (two from the right and three from the left), but also by Josep Borell, Spanish Minister for Foreign Affairs, Teresa Ribera, Spanish Minister for Ecological Transition, and Michal Kurtya, Polish Secretary of State for Energy and President of COP24.
None of us has all the solutions, but collectively we have a historical responsibility. Many of us in Parliament, among the ambassadors I have met and among the future Commissioners, believe that Europe is facing a civilisational challenge.
Together with others, I believe that the Commission, the Council of Heads of State and Parliament's four largest parties must take the time to negotiate an action plan to meet the challenges for the next 5 years.
This is very similar to the idea that the Greens/EFA group had of negotiating a roadmap for the future Commission among the four main parties. An attempt that failed (see EUROPE 12300/9).
It is not too late, and we Social Democrats are in a pivotal position. In fact, there were negotiations and then, as usual, the Heads of State wanted to move quickly and make it clear that they were the ones in control through the appointment process. But what's the point of going fast if you hit a wall?
Faced with such a civilisational challenge, are we able to take a few weeks to build a concrete action plan for climate and social justice? It is very good if we can do it by 27 November, the date scheduled for the investiture of the new Commission, but the world will not collapse if the agreement waits for the European summit on 12 December.
In Bretton Woods, they took 3 weeks to negotiate a new economic model. More recently, in Germany, they took 5 months to negotiate a very concrete coalition agreement. Let us take the time to engage in a dialogue together: the Commission, Parliament and the Council of Heads of State. The second Barroso Commission had to wait until 10 February for the green light from Parliament and the world did not stop turning.
What will you do on the day of the vote on the next Commission if you do not get more details on the Green Deal?
In conscience, I will not be able to vote in favour of this Commission and I hope that many of us will make the same choice.
Two thirds of the S&D group reportedly voted in favour of the appointment of Ms von der Leyen in July (see EUROPE 12297/1)...
We all want this Commission to succeed. Several members of the group said that they had given the green light, but that if Ms von der Leyen did not provide further details, they could vote ‘no’ for the whole college of Commissioners.
And many now realise that, in addition to being a fundamental problem, the climate issue could also become a major political problem for our group: it is our friend Frans Timmermans who is responsible for the Green Deal. Everyone knows his intelligence and work ethic. But if he does not have the means to act, in 2 or 3 years' time, we Social Democrats will be accused of not having done anything serious when there were ten Commissioners, including the one responsible for the Green Deal.
On two previous occasions, the chairwoman of our group has written to Ms von der Leyen to ask for guarantees on the financing of the Green Deal. The climate bank was one of our requests. So this is a first victory. But this bank must really have the means (equity) to act with compellingly.
The next few weeks are crucial. Now that the hearings are (almost) over, we absolutely must clarify our collective project and raise our ambition. Let us remember the words spoken by Schuman on 9 May 1950: "World peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it" and let us show that we are bold!