Helle Thorning-Schmidt: Denmark's prime minister HARDtalk

Helle Thorning-Schmidt. Is that dream of a united Europe from

Scandinavia to the age Leigh-on-Sea well and truly over? -- the IAG in

Prime Minister Helle Thorning- Schmidt, welcome to HARDtalk.

you very much. Denmark's six months holding the European presidency has

been dogged by the eurozone debt crisis. How disappointed are you

that EU leaders have failed to find a common vision, a common strategy?

Obviously I wouldn't put it like that. When you look at the E u

during the last 10, 8, six months, what I see is a Europe that tried

to stem the crisis. Tried to keep things together. Tried and failed,

if I may say so? I wouldn't say so. There has been a lot of solidarity

between the European countries. Even though we have had a very hard

crisis to deal with, we have managed to take decisions at a

European level. Nevertheless this is also what the Danish presidency

is quite proud of. I do think there's been a big element of

solidarity between the countries. And also a certain robustness. We

have been able to take decisions even though it's been a very

difficult situation. Interestingly you focus on the taking of

decisions. It seems that what we have learned over the cost of this

crisis is that it is impossible for the 27 member nations of the

European Union to come together and take difficult decisions -- the

course of. I wouldn't say that. I think in terms of the euro

countries, I have a lot of respect for the euro countries' ability to

take hard decisions. If we had looked at the EU just a year ago,

he would have thought that we would have a lending mechanism for a

country that was basically in a We would have a physical

constitution, that we would have a lending package for the Spanish

banks. With respect who would have thought that you would have five

member states of the eurozone who have had to seek emergency

financial bail-outs. Who would have thought that France and Germany

right now would be at loggerheads over the next move in this crisis?

I think that's true. You have to ask the question whether this is

the failings of the European Union or the euro, or whether this is the

failings of the member states that have not had... What would you say?

We had a financial crisis which affected the world very hard. It

hit us all very heart. Then we had a certain element of the economy

not been in order -- very hard. The member states' economies were not

in order and that is why we have the difficulties we have now. It is

not the fault of the euro that they had problems in Greece. That is

their own responsibility. I think when you ask half the eurozone

countries, and the EU member states should have done something to stem

the crisis and tried to exit that crisis, the answer is clearly yes.

Talking about decision-making, I'm very aware that I'm talking to a

Prime Minister of a country not inside the eurozone. Considering

you have been holding the presidency for the last six months,

it has been very difficult. It was widely reported that when he made

an intervention in one of your early Riise re- reaching a fiscal

compact, and you said it was very important that everybody was

involved in the decision-making process, Nicolas Sarkozy said, "You

are an out country, a small out country. And you don't want to hear

from you." is that true? It is not quite true. I don't want to report

from the meetings in the European Council, it's not right to do that.

It is not true what you're quoting there. What did he say? I don't

want to give reports on what we discussed in the European Council.

These are discussions between European leaders and it should stay

that way. The most important thing in that context is that there have

been some very difficult decisions from the euro countries, but they

have not excluded none euro countries from taking part in these

decisions. Look at the fist the ball compact. The fiscal Compact is

not something that is only for the 17 European member countries --

euro member countries -- fiscal compact. This is why Denmark had

decided to be part of the fiscal compact, and we have recently

ratified the fiscal compact. have decided to go in that

direction, would you agree that the direction of travel for the

eurozone is Clear, it is going towards a massively increased,

ambitious, fiscal union that is going to be the end product of all

of the mess that we have seen in recent months and year. I think

there's a very clear understanding that the euro has got certain

shortcomings, and that we have to address these shortcomings. It's

been very clear over the last year that we have these shortcomings.

It's only natural that the countries in the eurozone are

asking themselves how can we strengthen the euro, how can we

avoid a situation from what we have been in two ever appear again.

These are the kind of discussions we will have at the European

Council at the end of this week. we're honest the most important

country, the dominant country in these debates, is Germany.

course. If we accept that, do you think it is time for Angela Merkel

and the German government to once and for all say that they will

accept a banking union, they will accept a neutralisation of debt.

And in return they will get a fiscal union which will impose

German-style discipline through a European finance ministry of sorts

right across the eurozone. Is that a deal that will have to be done

ultimately? There's no doubt there is a discussion going on in Germany

like this and I have a lot of understanding for that. It wouldn't

be fair in the long run to neutralise the debt without

neutralising responsibility. This is very clear. I agree with that.

We are not that far yet, though. You have to allow the discussions

on these issues to mature. Do we have much time? How quickly is

Germany going to have to accept the long run? This will take some time.

First we have to address the clear, there are shortcomings in terms of

the euro, and everybody agrees. That is why we are starting on this

discussion with the upcoming European Council meeting. It is not

my expectation we take decisions, but we're starting the discussion

among the 27 member states. There will be a time when it will be

needed to discuss certain treaty changes. It has got to the urgent.

In the last few hours and days Cyprus has announced it needs a

bail-out. The financial markets have no confidence any more. We

look at the bond yields in Spain, Italy, these are pressing issues.

Without dramatic intervention, a real signal to the markets, we

could be facing fragmentation and break-up. But we have done a lot of

things. The markets have and bought it. I hope the financial markets

are seeing what has been done -- haven't bought it. In the last two

weeks a bank package for Spain has been adopted. There's nothing

written in our rules that we have to do that. There's nothing written

about doing a fire Walk in terms of the Greek problems. Nothing written

about the Cyprus problems that have just come up now -- a firewall. We

are trying to sort it out. At the same time the Danish presidency has

pushed hard for harder regulation and more discipline, if you want to

use that word, in the other areas of our Corporation. We have now got

a directives about capital requirements, which is good for the

banks to avoid future crises. me stop you there. It is important

to recognise decisions have been taken in order to create more

disciplined, and in order to help one another in Europe. Some in

Europe, and I'm not just thinking about Nicolas Sarkozy, will say

it's a bit rich for Denmark to be talking about the need for more

centralised discipline and regulation, as you're not actually

inside the eurozone. You're going to face difficult decisions, and

this could also apply to Britain, another out nation, you will have

to decide if there's going to be some banking union in the medium

term, and regulation and running of the banks from

Brussels/Frankfurt/Berlin in the future, you're going to have to

decide where you stand on that. Would you be happy for the Danish

banks to be regulated by the ECB, the European Central Bank?

you're asking me if that decision would be easy, clearly know. I

don't think the Danish tax buyer is that interested in paying for debt

that they haven't created themselves -- Danish taxpayer. This

is something that would have to be discussed. I don't think that if

you just put it like that, the way we see it now, that the Danish tax

player would be that interested in paying for debt that they haven't

been par of. But' he is the problem, you're a country of 5.5 million

people been part of -- but here's. You stand to lose a lot. If a

European union creates an inner core of bound by a much closer

integrated fiscal union, and Denmark six outside of it, it will

deeply damage your economy -- six outside? Not necessarily. We have a

better economy in the Denmark and the UK right now. It is not the

case that euro countries have a bad economy and non- euro countries

don't. That differs quite a lot in the European Union. We are attached

to the euro and that is one of the reasons why I thought it would be

better for the Danish economy to adopt the fiscal compact, and that

is why we have adopted it. Of course we are very close to the

euro and that is why we follow these discussions and we want to

participate in these discussions, part of the euro because the Danish

population decided against it -- but we are not part of the euro.

What is the point? You don't have a seat at the decision taking table.

Your personal message to all people is that we have to accept in the

long run Denmark must be inside the eurozone. The problem is your

people aren't listening. The latest opinion polls show they are more

against the euro than ever. I would not discuss that at this stage.

Because you know you would lose? There is simply too much insecurity

about the euro project. We are talking about treaty changes now,

so it is not the time to talk about these things now. Personally I

think it would be difficult for the Danish taxpayers to be responsible

for debt made in other countries. Also you ask, why is it good for

Denmark to be attached to the euro? It is no doubt that it is extremely

good for the stability that it brings. Denmark is one of the

countries that has the lowest interest rates in Europe right now.

It is seen as a safe haven right now. You took over the presidency

of the EU saying you would push hard for your green environmental

agenda. It seems to me on a host of issues you have failed. If one

looks at the ambitions, the low carbon road map, the energy road

map, they have been drastically watered down because some member

states, like Poland, have refused I think we have succeeded in those

areas. We had the plan of creating more grit. We had a very difficult

agenda that we embarked on and recently we adopted the energy

efficiency directive. Again, water down. This is politics. But your

member states are not on the same page. It is often the case were

there is a proposal, you negotiate and find a solution. And I'm very

proud that in all these areas, we have agreements. But all of the

specific binding targets have been taken out. I would not say that our

energy efficiency is a meaningless agreement. He wanted a 20% target

set and George Osborne said we would not do what. He said, we will

not save the planet by putting our country out of business. There must

be a reason some countries decided to vote against this energy-

efficiency directive. This was a hard negotiation. I am proud that

we finalised the Danish presidency with an agreement on the -- on

Energy efficiency. It will make us more energy secured in the EU, but

commissioners also estimated that it would create 400,000 new jobs in

Europe. This is one of the bigger achievement. Is it watered down

from the first proposal? Yes. But do we have a proposal which will

work? We do. Despite your words on the green agenda, you have made

some major concessions. Enduro own country, you said you would impose

a congestion charge to change the way Danes use public transport.

Have you abandon that? Yes. Why? People were not interested in a

congestion charge. In terms of the green agenda, if we stick to that

nationally and in the EU, there is no doubt that we will be pushing it

forward. One of the things I am most proud of is the energy

efficiency directive. That will make a difference. In terms of the

National green agenda, we have adopted a climate and energy plan

for Denmark. One that goes to 2050 with a specific target to get to

2050. This is perhaps the most energy -- ambitious energy and

climate plan in the world. It took about the Danish economy and the

economic and social model your country has operated under four

years. Can Denmark continue to afford the scale of social and

welfare provision it has offered its people for the last seven

decades? Yes. I think we can. It will mean that we have to be very

serious about reforming certain parts of our economy. It does not

come easily and we have to really work hard to maintain a social

model like this. This is why my government has embarked on a very

tough reform programme from the outset. We need the Danes to work

harder, we need to tackle the Democratic charges we have because

we will not be able to preserve the welfare state that we all want

without reforming our economy. It is up to us to be part of creating

that welfare state and to be part of reforming it and so we can keep

it for our children. Do you need to slim it down, to make it very

specifically a safety net for those who are the poorest rather than

something people can live within the long-term? No, that is the

opposite of the way that I see the welfare state. I have had always

had the view that if you only have welfare for the poor, it becomes

Paul Welker. We help young people to get free education, free access

to healthcare, a benefits system for the unemployed and a mechanism

that is a safety net for if you meet a situation in your life that

is difficult. The dangerous, you make people dependent. To quote the

welfare minister in the UK, he said, there is no compassion in saying to

someone, we do not care what you were gone not. We don't care how

many children you have. Make yourself unavailable for work. A

system that sends those messengers -- messages is not compassionate.

don't know what he has said in this number of issues where I do not

agree with him. But I do think that in order to have a system like we

have, a benefits system which is widely spread, you also need to ask

people to do things. You should never accept that people do not

work because they do not want to work. Everyone should look for work

and be pushed into the labour market with different tools. This

is what we have done for a number of years. Opinion polls show that

the Danish people are not happy with the way this government is

conducting its business. I think your party is down 16% in the polls.

Why do you think that is? I think there are a number of reasons. One

reason is that we have tried to take difficult decisions to tackle

demographic challenge us. We have been talking about how will we want

to adjust and reform the economy so that it will be sustainable for the

next many years. We have this 2020 plan and it has been hard to take

these decisions. I have asked the Danish state to work harder, to pay

more tax, we have asked for them some pretty tough things. It is a

lot to last. Particularly when many people find themselves in a

situation where they can't find a job. In that situation, I'm

basically asking them to work harder and I think this is a

difficult message. I think people are reacting to that. It is

interesting you point to the rising jobless numbers. I see the number

of young Danes who were unemployed has risen almost 100% in the past

five years. It is terrible. It is. Yet, you message to Danes is that

there should be a relaxation of the immigration rules to make it easier

for family unification to take place. To allow people to get

permanent residency more easily. That is a difficult self. It is a

slight change to immigration laws. We had a situation where the last

two years with a former government, immigration laws were tightened

quite a lot. That was the price the former government had to pay to get

the budget through. We are adjusting the immigration policy

back to how it was. But it is a difficult sale when you see across

Europe a rising tide of concern about levels of immigration. Never

wear from France to Greece. It is not a big issue here because most

people know we still have very tight immigration rules. The

countries that have the tightest immigration rules in Europe. I

think we need to have these. We have relax them because they got

too tight a bit. Finally, what to do you think is the right balance

for Denmark in terms of population? I understand that about 90% until

population are of long-term Danish descent and about 10% is in the

current. Do you think it would be wrong for that balance to change?

do not see it like that at all. We have a country where we have

diversity, which is great, sexual diversity, ethnic diversity,

religious diversity. This is something we are proud of and

something we are capable of having in this country. We do not have a

lot of immigration to Denmark and we still have quite clear rules

that they will not be a lot of immigration. This has nothing to do

with ethnicity or religion. We just do not have a lot of immigration

into this country. Many other European countries have chosen not

to have a lot of immigration. you worried when you look across

Europe and you see the rise of far right political agendas, many using

the immigration issue as part of their platform? I think the most

important thing is to keep politics on the middle ground. It is the

healthiest. That is why I am healthy when we're capable of

adopting big plans for Denmark. A big economic plans or green plants