“The total volume of the EU budget framework must be reduced further”, said Minister of State Michael Link, underlining the Federal Government's position shortly before the second extraordinary European Council meeting on the EU budget for 2014-2020. In an interview with EurActiv.de published on 5 February 2012, Link said that by eliminating the “scattershot approach” when distributing future funds, the EU budget could be limited to one percent of the EU’s GDP.

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At the second extraordinary European Council on the EU budget for 2014 – 2020, EU leaders want to finally find a compromise this week. In advance of the meeting, European Council President Herman Van Rompuy has encouraged all countries to make compromises. Where will the Federal Government give up previous positions? Where are the red lines?

All the member states and the European Parliament must give their approval so that we can reach an agreement on the new EU budget framework. Germany is working to see this agreement come about and supports Herman Van Rompuy in his work as President of the European Council. It is necessary to finish negotiations on the EU budget through 2020 quickly in order to establish a secure basis for planning, but also to prove that the EU is capable of action. By doing that we would strengthen people’s confidence in Europe, something which is urgently needed.

Unanimity presupposes a great degree of willingness to compromise on all sides, of course. All partners in the Council must thus be flexible. The total volume of the budget framework must be reduced. All EU member states are trying to consolidate their budgets on the national level at the moment. At the same time, we want to have a modern budget that places a clear emphasis on growth and improving competitiveness. The “scattershot approach” to distributing funds is outdated. If we invest existing funds more intelligently in a more targeted manner, we can limit the EU budget to one percent of the EU’s GDP and make it into a real growth programme for Europe.

The European Parliament made its position on the EU budget clear a long time ago. The main demand is the expansion of so-called own resources, that is to say the funneling of taxes collected at the national level to the EU level. The parliamentarians also want more flexibility to move funds between individual budget items. Will the German Government agree to these two demands?

The points you mention, own resources and flexibility, certainly require further discussion. It is well known that the German Government rejects the introduction of new own resources for the EU. From our point of view the EU budget does not have a funding problem. On the contrary, new own resources would only make the already Byzantine EU budget with various sources of income-customs duties, contributions from the member states based on VAT and GDP, to name just a few – even more complicated. In any case, that would not be a step towards the budgetary principle of transparency.

For a budgetary framework covering seven years, we definitely must include sufficient flexibility. That is the only way we can react to unforeseen situations. This requirement is however not new. We already have good rules to ensure this ability to react. We should not forget that the financial framework is tied to political priorities and planning security. This cannot be made arbitrary by possibilities for later intervention.

Eleven EU countries, including Germany, will introduce a tax on financial transactions by way of enhanced cooperation. According to the German Institute for Economic Research, Germany can expect around 10 billion euros in additional tax revenues. Should that money flow into Germany’s federal budget or into the EU’s coffers?

The income from the financial transaction tax has already been planned into Germany’s federal budget. As I have already said, from the German Government’s point of view, the EU budget does not need new own resources.

Prime Minster David Cameron has announced that he wants to repatriate certain EU powers. From the German point of view, which EU powers might be considered for repatriation?

Germany and Britain share the goal of a better, more competitive and democratic Europe. For the German Government, the financial and economic crisis showed very clearly that we must work together more closely in the European Union and at the same time make the EU more effective and stronger. This is especially true for the economic and monetary union. Germany cannot accept cutting corners on this point. We need to increase the depth of coordination on economic policy and make that coordination effective. Of course we will make sure that there are no distortions in the single market of the EU-27, but no partner outside the euro area can be allowed to block this movement towards sound policy.

At the same time, it is also the case that Brussels should only be given more rights to intervene in areas where there is an added value for Europe. Europe is a continent of diversity. The national level remains the key focal point for society’s debates. Here, the principle of subsidiarity must be upheld. I see no reason why Brussels should tell Germany’s small and medium sized enterprises how many women should be promoted to leadership positions.

Cameron wants to give the British the opportunity to vote “in or out” in a referendum on leaving the European Union. Other countries could choose to do so as well. Are we in danger of seeing the European Union crumble around us soon?

The important thing is for us to discuss these questions together with all our European partners and for all partners to implement the European acquis equally. The treaties already provide for various accepted instruments to differentiate the level of integration. However, there cannot be a Europe “à la carte” with permanent exceptions for individual states. The euro area did not break up last year despite all the swan songs, and likewise the European Union will not fall apart. The European Union is our answer to the challenges of globalization and still a peace and prosperity project that Germany very much wants to advance.

Germany and France celebrated the 50th anniversary of the Élysée Treaty a few days ago, but both governments are having a hard time finding a joint response to the economic and social crisis in Europe and a joint position on reforming the European Union. Has Franco-German cooperation lost significance in the context of Europe?

The opposite is true. The harmony on display during the celebration of the anniversary of the Élysée Treaty especially underlined the will of both sides to put Franco-German friendship in the service of Europe. In a joint article, Foreign Minister Guido Westerwelle and his French counterpart Laurent Fabius made an unequivocal commitment to seeing Germany and France work together to ensure that Europe is fit for the future. That includes making reforms that modernize our societies. My French counterpart, France’s Minister Delegate for European Affairs Bernard Cazeneuve, and I are in extremely close and very friendly contact, also on the entire spectrum of topics on the European agenda. Of course our countries often have different traditions and points of view, but it has become part of the Franco-German DNA to search for and find common ground. We were successful on the topic of the banking union, for example, and we will also be successful with other key decisions on Europe to be taken this year.

For the first time since President François Hollande took office, Germany and France want to have coordinated their negotiating position going into the European Summit in June. What elements of such a joint position for the Council in June have already been agreed on with your French colleagues? What details still need to be worked out?

It is both important and right that France and Germany put much effort into preparing for the European Council this June, because we intend to nail down the future course on strengthening the economic and monetary union together with all the member states. Before we get there, there are still several intermediate steps that must be taken. Right now, I do not want us to get ahead of ourselves. The crucial thing is that we have entered the new year with the firm intention of working together through the various stages between now and June.

At the European Council in June the roadmap for much stronger integration in the euro area is to be laid out. Parallel to this new dimension of political integration, France and other EU countries as well as the European Commission and the European Parliament want to see the debt of all euro countries mutualized step by step. Will the Federal Government announce to citizens before the Bundestag elections that eurobonds, even if they are called something else, will be introduced in the near future?

The Federal Government leaves no doubt that the current crisis can only be overcome for good if we confront the underlying causes. The problem of run-away deficits cannot be solved by taking on more and more debt. The only thing that works for that is fundamental structural reform. Mutualizing debt – no matter what you call it – always creates false incentives. It only makes it easier to take on debt. This Federal Government will not accept eurobonds or any other form of joint and several liability. Germany has already demonstrated its solidarity beyond doubt. We bear the greatest burden in both euro rescue mechanisms, the EFSF and ESM, but we will not allow faulty solutions at our taxpayers’ expense.

Questions: Michael Kaczmarek. Reproduced with the kind permission of http://www.euractiv.de