José Manuel Barroso - President of the European Commission HARDtalk

private jet from Monterrey to Toluca on Sunday after she had

performed in a concert. It is time for HARDtalk. This week HARDtalk is

in Oslo for the annual Nobel Peace Prize award ceremony. In 2012 the

prize has been awarded to the European Union which has, according

to the panel, for over six decades contributed to the advancement of

peace and reconciliation, democracy and human rights in Europe. Jose

Manuel Barroso has been President of the European Commission since

2004. Is Europe's economic crisis in danger of threatening its pace?

Jose Manuel Barroso, welcome to HARDtalk. Were you surprised when

you heard the EU had won the prize? We were very proud and humbled by

the prize. To be honest I was not completely surprised the stock in

2009 there were rumours we could be awarded this prize. -- surprised. I

think it is a well deserved prize because of everything the EU has

achieved in 60 years. When you think where Europe was and where it

is now, it is a large contribution of the EU. You will know the

reaction in some parts of Europe, not least in Greece, the main

opposition party, Syriza, saying the decision cheaper and the Nobel

institution. They say they are experiencing a war situation on a

daily basis. I will respond against those who brought Greece to this

situation. The people who do not pay taxes. If it was not the EU,

Greece would already be in default. They would not be added to pay for

their public services. The EU is not the cause of the problems of

Greece. We are trying to be the solution. It is partly as a result

of their efforts to be involved with the euro that have caused

these problems. Angela Merkel says the euro is more than a currency,

it is the symbol of unification. 50 years of freedom and peace. Trying

to get that project going has caused their problems. I do not

agree. I do not think the euro was the problem. Since Lehman Brothers

collapsed other countries have had very difficult fiscal policies.

They had to use huge amounts of taxpayers' money to save their

banks. There are specific challenges for the EU area, but it

is not a euro crisis we are going through. Some countries like

Iceland, not even in the EU, they have these difficulties. Some

countries in the EU like Latvia, they have these tough adjustment

programmes. It is completely false politically and philosophically...

We have the German Chancellor saying, it maybe Europe's most

difficult hours since World War II. Of course. It is not because of the

EU. It is a crisis in the eurozone. Yes, but not in the eurozone alone.

Britain is not in the eurozone. It is not a crisis of the eurozone. It

is a specific challenge for the eurozone. It is not a eurozone

crisis alone. That idea, that what the euro symbolises, the

unification of Europe, if Greece is forced out of the euro, would that

make you think you should hand the Nobel Peace Prize back? Not at all.

The Nobel Peace Prize is to honour the achievements of the EU. I am

completely sure it was extremely important the role of the EU

regarding peace. Not only... Parklea and encouragement to ensure

the euro survives? -- partly. it is an encouragement. Is it an

encouragement to keep Greece in the euro? Even without the Nobel Peace

Prize we are doing everything we can. Against many of the crisis,

Greece is still with us. I hope they will stay. Yet we have many

people, not least the chief executive of Kim -- PIMCO saying

there is insufficient commitment to keep Greece in the eurozone. They

say it is hard to find many officials who believe the revamped

Greek programme will restore jobs as ability. Senior economists

presuming that Greece will a said. They are saying that but so far it

has that happened. -- exit. I do not think it is going to happen.

People underestimate the level of integration we have in the EU. I

think there is a real determination. If you ask me, would you like to

have a stronger position in the EU? Yes. We are working on a three-year

crisis. The European Commission have been urging all the

governments of the EU, including the richest countries, to do their

part to support Greece as well. The EU is a union of democracies.

Sometimes decisions take a little longer. The EU Commission is

independent from our governments. There is consistent determination

to do everything to keep Greece on board. Your solution is greater

integration of the country's. only that. The first step of that

would be a banking union. The point of that is to allow the European

Stability Mechanism to pump money directly into Spain's banks for

example. The process of getting this union in place is taking time.

The most recent suggestion is that could not happen until 2014. Are

Spain's bangs going to be OK until then? I am sure we are going to

solve the problem. The banks are already being recapitalised. They

will not need much more than 45 billion euros maximum. The first

operations have been authorised. About the banking union I want to

tell you, it is a very important point, it is important for the

credibility of what we are doing in the euro area. We propose a single

supervisory mechanism. It will not be in a position where it can bail-

out banks until 2014? I cannot predict the timing. It depends on

the decisions of the member states. It could not be any sooner. Iron

Age in the governments to do it as soon as possible. -- I am urging.

When the mechanism is working and ready, it will be possible to make

the direct implementation through the supervisory mechanism. Does it

cover all banks? That is what France wants. Just the big ones

like Germany wants? It will cover all... The ECB cannot check on a

daily basis for the 6,000 banks of the euro area. When Germany's

finance minister says it will be very difficult to get approved by

the German parliament to have all German banks under Euro supervision,

no-one believes that will work. believe it will be adopted. It will

not be credible to have only the ECB making supervision of the big

banks. We have seen some of the systemic problems come from

relatively small banks. Look at Spain. It can have a systemic

impact. It needs to have the possibility to go, if needed, to

check the situation in any bank. There will be a division between

what the ECB can do at the central level with national supervisors.

The national supervisors will still be there. There is a problem with

it. It also applies to these other ways you intend to integrate the EU

countries. How do you reassure those who are outside it that they

are not losing out on the single market? That it is a level playing

field. That is a very important issue. We are a union of 27, very

soon 28. We have to make the union in a way that does not put in

question the integrity of the single market. It is possible to do

given there is sufficient political will. In fact, to be honest, the

British Government has been extremely clear on this. They say

they support further integration of the euro area. Britain, knowing the

market's... This is not just Britain. A lot of countries outside

the euro who may sign up to the banking supervisor, but they are

concerned about voting rights. If they are not able to have as much

as a say as those in the euro under the Banking supervision, it is hard

to see how you can ensure she have a level playing field. There is a

compromise. It is being discussed among the countries. For Europe's

long-term credibility it is important we have financial

stability in the euro area. We have to have reinforced governance in

the euro area with more integration. I think it is possible. We are

going to do it. We are very close to a compromise on that. You have

set out your blueprint, it is remarkable in terms of what you

have put together sovereignty, 2014, sharing decisions on national

budgets. In the next ten-year having a European Treasury that

would control the central budget and have powers over national

budgets. That sounds like a European federal government. In a

way you have been clear that it is. The euro area needs that. That is

quite clear. This is a matter where all the economists agree. We need

smart integration. The credibility of the currency relies on the

solidity of the political construct behind it. This kind of further

integration is indispensable. can you have a single market that

has 27, nearly 28, a European federal government that applies to

a smaller group within that? First of all, the euro is the currency of

the EU. Two countries have exceptions. All the others in

principle should join the euro. Most of them are working hard to

reach that goal. In fact, if we have some specific arrangement with

the other countries, but the way, that is what Britain has been

asking for, some kind of guarantee. I believe it is perfectly possible

to keep the integrity of the single market and have a deeper

Does this combined Europe have a seat on the European Security

Council, or is it represented by Europe and France? Not only Britain

and France, they are permanent members, guess, but there are also

other countries on a rotating basis. The whole point about Europe is

that it is more powerful, this is your argument, should it have a

permanent seat? It's not going to happen in the foreseeable future.

That is not my proposal for now. Not because Britain and France

would not give up their seats. thing is for sure, the European

Union.... Let's talk about one country who hears what you say,

this is the Czech Republic, it hears your ideas for pooling

sovereignty. Its president says, I firmly reject the idea presented by

you. He says the only thing he appreciates is that at last you are

being honest about the end goal. He says the opposite, he says, "We

should think about how to have our state could and sovereignty

restored". He is all very well known for his idiosyncratic views.

I respect him very much as the President of the Czech Republic.

But they are different positions. It is the original position, the

idea that climate change is the creation of the leftist Narine

Taliban. I very much respect him but I don't agree with him. Would

Europe be a happier place without the UK? My personal opinion, my

fundamental interest is to have written in the European Union. It

is bringing a lot to the European Union. Still? Still. There are some

debates going on. But if I look at the internal market, to a large

extent that there was a contribution from Britain,

including the... Now we are 27 countries. Britain was one of the

strongest supporters. You have a country, Britain, that has used its

veto a year ago, that is wanting. This is at a time when you're

talking about being in crisis mode for three years. I wonder how much

you see it as a distraction that doesn't allow you to get on perhaps

with what must be to you more serious matters. I very much

respect the debate in Britain. I follow the debate. I know there's a

debate there about the competencies and so on. You asked my opinion, it

is that it is good for Europe to have Britain on board, provided of

course Britain is comfortable with the situation. No country is

obliged to be in the European Union, we are a free association of free

countries. Now it's up to Britain to decide if it wants to keep its

position or not in the European Union. The reason I'm asking is

that in a sense it's not up to Britain, if Britain wants to

renegotiate its supplement how far with the you go to accommodate it?

It's a matter for the member states. -- settlement -- the EU. Do you

accept a renegotiation make sense at the moment? Not at the moment,

the idea of the British government is to put it later. But if one

country wants to renegotiate it has the right to do so. Let's move on

to the Budget, there were lots of comments made by Britain's prime

minister, David Cameron, who has said that because the commission

did not offer a single euro in savings, not EUR1, he said it was

insulting to European taxpayers. Do you think the commission has got to

come up with a better deal for the Budget? The commission is not to

vote, we have put forward the proposal. Do you have to improve

that? It is not up to me, I keep my proposal, it is a good proposal. To

have they could budget we have to have an agreement. -- to have a

good budget. The reality is, most of the member states were ready for

a compromise, but there were some governments... White including

Britain? That were not... Germany, Sweden, Netherlands, Finland,

Denmark, all of those that were net contributors to the European Union.

Not all, of course there was disagreement between these

countries. That is why we don't have the budget yet. Nobody more

than the or the commission wants the Budget, according to the

treaties we are the ones implementing the Budget. We want an

agreement. There are different opinions between the member states.

I think it is sensible to understand that Europe needs

investment. As those economies you were quoting as saying, austerity

alone does not solve the problems. You we need apart from the

correction of public finances, apart from reforms, we need

investment. The European Union budget is basically a Budget for

investment. The commission has made it clear that any country, a

country like Scotland, that would choose to be independent, would

need to reapply for EU membership. When you think about how that would

work, would it just been nodded through? I did not comment on

specific situations because I respect it is their sovereign right

to decide about their organisation. Now what I said, and it is our

doctrine and this is clear since 2004 in legal terms, if one part of

a country, I'm not referring to any specific one, wants to become an

independent state, of course, as an independent state, it has to apply

to the European Union membership according to the rules. That

soggiest. It has to renegotiate terms? Yes. -- that's obvious. Is

it doing that from inside as a member of the EU, or is it

effectively reapplying from outside the EU question yellow. We are a

union of states, if there is a new one they have to reapply. And using

the example of Scotland, I appreciate you're not using

specifics, if they choose independence, it is then might a

new State applying to the you. a legal point of view it is

certainly a new state -- to the EU. Yes. It has to negotiate with the

European Union. What about the rest of the UK that is left behind by

Scotland's independence? That is a contingency of the deal. Will it

have to renegotiate its stance? In principle, no. Let's go back to the

peace prize in Europe, Standard and Poor's says Greece's Independent

meltdown is more Syria in duration and scale than the depression in

Germany that led to the rise of Hitler. -- severe. When you see the

rise of far right parties now in Europe, do you fear that something

like that could happen again? think we have to be vigilant.

Against the extreme nationalism and xenophobia and chauvinism. This is

what we are against. The European Union is a construction against

extreme nationalism, to show countries that we can live together

sharing sovereignty and working together for a common good, at the

same time respecting the identity of each country. The honest answer

to your question is yes on concerned, I don't like it some of

the movements, optimistic movements that we have seen here and there in

Europe, even if it's quite clear that in member states the

mainstream parties are very committed to freedom, democracy and

European Values. Are they being fed, those extreme parties, by the

crisis? Yes. Precisely. It is a crash not just in Europe, it is a

more general problem with globalisation. People are afraid.

There's a kind of angst, a kind of fear about the future. We know well

that in this circumstances there are always people who try to make

simple answers to complex issues. The temptation of saying no to the

foreigner, saying no to Europe, is a very strong temptation. I wonder

how you reach out to people in Greece, who feel fury and rage at

other countries, that they see partly responsible for their

situation. But that's not true. It's not Germany, let's be honest,

that created difficulties in Greece. The excessive deficits and spending,

the tax evasion and tax fraud. it all their fault? It was mainly

the fault of irresponsible politicians in Greece, not of the

Greek people, they are making huge sacrifice is now. They suffered

from the euro and they Sea countries that benefited from the

euro, like Germany. If Greece was not in the euro it would already be

in default. The policy we have to be honest with... The situation is

very serious. I follow the Greek case on a daily basis over the last

few years, working with leaders to do my best to support them with all

the means available. We have to seek an alternative. What would be