We can’t solve the debt crisis with more debt” (Interview)

17.10.2011 - Interview

Federal Foreign Minister Guido Westerwelle talks about the euro debt crisis, the plans for an Israeli-Palestinian prisoner swap and the US claim that Iran is behind a plot to murder the Saudi Arabian Ambassador to the US.

Federal Foreign Minister Guido Westerwelle talks about the euro debt crisis, the plans for an Israeli-Palestinian prisoner swap and the US claim that Iran is behind a plot to murder the Saudi Arabian Ambassador to the US. This interview was published in the newspaper Bild am Sonntag on 16 October 2011.

Minister, we all have the feeling that time is running out in the crisis facing Greece and the euro. It isn’t just the markets which lack confidence; the majority of ordinary people also don’t think the politicians will be able to sort things out. What needs to happen now?

We need to be determined in combating the current crisis, and, at the same time, we need to make changes to ensure that we don’t end up back in a similar situation somewhere down the line.

That means doing three things. We have to turn the EU into a stability union worthy of the name. Secondly, we need tough sanctions for countries whose budgeting is continuously unsound. And thirdly, the EU states need to be made more competitive.

Two years after the first crisis hit the financial markets, everything is pointing to European banks needing to be rescued with tax-payers’ money once again.

Everything we have done and everything we are going to do has one purpose: to protect our currency, our economy and, with that, our prosperity. I can only advise against even toying with the thought of leaving the EU and the euro. That would be nothing but a programme to make us all poorer.

The thing is that we don’t have any natural resources to speak of; what sustains us are the imaginative people here and an economy that’s integrated into global markets. Without a unified Europe – without the huge internal market with its 500 million Europeans – even a big, robust country like Germany would not be up to the challenges of globalization and competing with the world’s new heavyweights in, say, Asia or Latin America. That’s why the German Government will be sticking to its policy of protecting our currency and safeguarding our prosperity.

A clear majority of people in Germany are opposed to another tax-funded rescue for the financial sector. For how long can policy carry on contradicting the will of the majority of the population?

Our task, as a Government, is to protect our currency steadfastly and to do what’s right. We need political leadership, now more than ever.

Can you sympathize with the people protesting around the world against the power of the banks?

It’s clear that we need viable and fair solutions that don’t put the whole burden on ordinary people and that prevent excesses in the banking sector effectively.

The German Government is making the banks take responsibility and cover a share of the costs. But let’s not forget that the current crisis was caused by public debt being to high not just in Europe but also around the world. With that in mind, I don’t understand how our American friends can criticize our policy of reducing debts.

There is speculation in the financial pages about the banking sector facing meltdown and the euro collapsing. How much danger is our currency really in?

I believe in being realistic, but I don’t believe in spreading panic – so I don’t go in for that sort of disaster scenario.

There really is no call for that sort of speculation in Germany. As a matter of fact, Germany is better off economically that it has been for the last 20 years. More people than ever are in employment, and the unemployment rate is low and still sinking. Net salaries are finally going up again – and that’s good for pensions too.

More and more politicians, experts and ordinary people think it is time to relieve Greece of a considerable part of its debts. Will the debt be cut before the end of this year?

I refuse to speculate about that. There’s too much speculation around anyway, and that’s one way of frittering away people’s confidence.

What do you suggest we do – just not talk about it?

No, I propose that we make decisions once we properly know all the facts. Important as it is to have open debate, I won’t be saying a word about the Troika report on Greece until it has actually been presented.

Some say the rescue package ought to be much bigger, that it actually needs 1.5 to 2 trillion euro. Doesn’t that mean the worst is yet to come?

At this point, Germany has played its part in three measures to stabilize the euro. In my view, the financial risks we have taken there are perfectly justifiable. It would cost Germany and the German people far more not to protect the euro. Besides, only a small proportion of the guarantees in the rescue package have been used so far.

It’s obvious, after all, that you can’t solve a debt crisis by accumulating even more debt. That’s one of the main reasons why I am opposed to the eurobonds that the opposition are so keen on. We mustn’t make it easier to run up new debts at this point. On the contrary, the situation calls for sound budgeting and debt reduction. When the German Government agreed the biggest austerity package in history, more than a year ago now, there was a lot of criticism, particularly directed at us in the FDP. Today, it is clear to everyone that we did the right thing and were acting with foresight.


What are your feelings about the idea of the people directly deciding about the new Europe?

The discussions about the new Europe need to be held publicly, not in ministerial councils behind closed doors. That is why I am in favour of convening a European Union Convention under Article 48 of the EU Treaty, for representatives of the EU member states, the European Commission and the European Parliament to debate and decide on the road towards a stability union and the future of Europe.

That will enable us to take a huge leap forwards together and in step with the people of Europe.

In the Middle East at the moment, there is reason to be hopeful, with Gilad Shalit, the Israeli soldier kidnapped by the Palestinians, about to be freed. What part has Germany played in this?

I very much hope that Gilad Shalit will be back with his family very soon, and, having met the family myself, I am personally particularly glad of the turn of events over the last few days. It is good that Germany was able to help. What’s important now is that this young man, after five dreadful years in complete isolation, finally be held close by his family again.

Should the prisoner swap lead to new peace talks and negotiations about Palestinian statehood?

It is high time to get the Middle East peace process moving again with direct talks between the Palestinians and Israel. Every bit of momentum that arises should be made use of. I call on both sides to refrain from anything that might jeopardize the resumption of direct talks or the success of peace negotiations.

The United States has accused Iran of being behind a plot to murder the Saudi Arabian Ambassador in Washington, DC. Does that worry you?

The US deciding to go public with a murder plot like this is something that everyone should take seriously. We are engaged in talks on the subject with our American and European friends and allies.

Might the exposed plot result in tougher sanctions for Iran, a country set on becoming a nuclear power?

First things first – now is the time for talks with allies.


This interview was conducted by Michael Backhaus and Martin S. Landeck and reproduced by kind permission of Bild am Sonntag.

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