:00:03. > :00:13.died in 2004 -- to be exhumed. Now on BBC News, it is time for
:00:13. > :00:16.
:00:16. > :00:20.Europe's politicians resemble the cast of a third raged disaster
:00:20. > :00:26.movie, trapped in a eurozone crisis from which there is no obvious
:00:26. > :00:33.means of escape -- third rate. Can the Continent's leaders stay calm?
:00:33. > :00:43.All will rising panic consumed L? One member of the Brussels elite is
:00:43. > :00:44.
:00:44. > :00:54.here today, Karel De Gucht -- all will rising panic consume them? --
:00:54. > :01:04.
:01:04. > :01:08.Commissioner Karel De Gucht, welcome to HARDtalk. Good morning.
:01:08. > :01:12.Let me at start with something you said two months ago, you told a
:01:12. > :01:16.Belgian newspaper that the endgame had begun, how it will finish, you
:01:16. > :01:22.do not know. Are you any more confident now that you know where
:01:22. > :01:25.this crisis is going? Yes. But that is not what I meant, that I feared
:01:25. > :01:30.it would be a disaster. What I meant is how we were going to
:01:30. > :01:34.resolve it, what will be the procedures, the means and so on. I
:01:34. > :01:39.have always been very confident we will sort it out. There's no
:01:39. > :01:45.alternative. Maybe you don't... your population don't completely
:01:45. > :01:49.understand this. But the European Monetary Union is not only about
:01:49. > :01:52.monetary affairs, economic Affairs, it is a political project. It would
:01:53. > :01:57.mean the end of the European Union, it would mean the end of deep
:01:57. > :02:01.political projects of our era. There's no alternative. We will
:02:01. > :02:05.sort it out whatever it takes. keep saying there's no alternative,
:02:05. > :02:10.but of course the financial markets create their own dynamic, don't
:02:10. > :02:15.they? They look at every attempt by European leaders to solve the
:02:15. > :02:18.problem, or to offer a long-term solution. They examine it for a few
:02:18. > :02:22.days and then they decide it is not credible. That is what we have seen
:02:22. > :02:30.again in the last week. We have seen the interest rates on debt in
:02:30. > :02:35.Spain and Italy belong to be on 7% again in Spain's case, because the
:02:35. > :02:40.markets don't believe in any solution the Union is offering.
:02:40. > :02:44.can offer a short answer, the markets will be exhausted before
:02:44. > :02:54.politicians are exhausted. Looking into Spain, we have been deciding a
:02:54. > :02:58.couple of weeks ago that we would lend directly to the Spanish banks,
:02:58. > :03:07.up to EUR100 billion for recapitalising their financial
:03:07. > :03:10.institutions. We decided last evening that we would send the
:03:10. > :03:16.first EUR30 billion before the end of the month. This makes sense.
:03:16. > :03:19.What we really have to do is split the sovereign debt crisis from the
:03:19. > :03:25.banking crisis. By recapitalising directly the banking system in
:03:25. > :03:30.Spain we are doing the right thing. But the problem is every single
:03:30. > :03:35.step taken involves massive dispute, argument, within the European Union.
:03:35. > :03:41.You talk about the clear political direction. Tell that to the Germans,
:03:41. > :03:46.the Finns, many northern Europeans who are increasingly determined
:03:46. > :03:50.that whatever outcome is achieved, it will not involve debt
:03:50. > :03:53.mutualisation, the prosperous northern countries guaranteeing the
:03:53. > :03:58.debt of the southern countries, unless there is a full political
:03:58. > :04:02.and fiscal union. That will probably take decades to sort out.
:04:02. > :04:06.Some of these economies can't survive for decades in their
:04:06. > :04:10.current state. Obviously not, but that is also not what Europe is
:04:10. > :04:13.saying, not watch Germany and others are saying. What they are
:04:13. > :04:17.saying is if you are doing this then we need to be sure these
:04:17. > :04:22.countries put order in their house, that is why we have this very tough
:04:22. > :04:25.programme with a country like Greece, and you have recently seen
:04:26. > :04:31.in the elections that those who took the defence of those measures,
:04:31. > :04:36.nevertheless won the elections, have now been making a pledge to
:04:36. > :04:41.continue the programme. It is a quid pro quo. I understand these
:04:41. > :04:49.countries cannot carry on without guarantees that they are going to
:04:49. > :04:53.be served. But there is tremendous sense of solidarity in Europe.
:04:54. > :05:01.job is to tell you that I look around Europe, and I look at public
:05:01. > :05:07.opinion in Germany, and I read senior commentators who say a
:05:08. > :05:11.crucial point has been reached in Germany. One has said an important
:05:11. > :05:15.threshold has been reached in Germany. A narrow majority is in
:05:15. > :05:20.favour of the euro but a clear majority is now against further
:05:20. > :05:24.rescues, further bail-outs. I am not a commentator. He is a very
:05:24. > :05:29.intelligent man but he is a commentator. I am a politician, I
:05:29. > :05:35.have responsibilities. Looking at Germany, I would not say a tiny
:05:35. > :05:44.majority because a couple days ago there was a two-thirds majority for
:05:44. > :05:48.the rescue fund, a new rescue fund, the European safeguard mechanism.
:05:48. > :05:52.That was a two-thirds majority in the German parliament. At the same
:05:52. > :06:00.time as Angela Merkel was telling her people, whatever you hear in
:06:00. > :06:06.the rest of Europe, they will not not be a debt mutualisation. --
:06:06. > :06:11.their will. What she said is that she is not going to put into danger
:06:11. > :06:18.her own population. I think that is her right to do so. What you also
:06:18. > :06:23.have to take into consideration is that happily so we are a democracy.
:06:23. > :06:27.We are 27 democracies. By the way, you are one of the 27. When we have
:06:27. > :06:30.to decide we have to decide it in a democratic way, which means you
:06:30. > :06:35.have to take into account Parliament thinking about it, you
:06:35. > :06:39.also have to take into account what the German constitutional court is
:06:39. > :06:43.thinking about. There's a lot of cases before the constitutional
:06:43. > :06:47.court, whether or not this is in line with the treaty of Lisbon.
:06:47. > :06:51.There are questions about this, but the determination to sort it out
:06:51. > :06:55.will overcome all of these. How can you say that with such certainty
:06:55. > :07:00.when you just told me it is ultimately a democratically driven
:07:00. > :07:03.process? You are a member of a political elite, you have always
:07:03. > :07:07.believed in this process and you desperately want it to work. But in
:07:07. > :07:10.the end you have to be held to account by voters. If they want to
:07:10. > :07:15.go in a different direction in countries like Germany you will
:07:15. > :07:23.have to accept that. That is the task of a politician to convince
:07:23. > :07:29.Parliament. Sure. Mrs Merkel got a two-thirds majority for the
:07:29. > :07:33.assembly. My point is a larger one. It seems the elites in Brussels
:07:33. > :07:39.still insists there is no alternative. But of course you can
:07:39. > :07:43.fail. You yourself realise that there was Amy Chua to be a bit more
:07:43. > :07:47.honest about the potentially difficult outcomes -- there was a
:07:47. > :07:51.need to be. You said a few months ago that you were making
:07:51. > :07:55.contingency plans for the departure of Greece from the eurozone. You
:07:55. > :07:58.got stamped on from a great height by others in Brussels for saying
:07:58. > :08:04.that. But it is the truth, you have to make plans for the potential
:08:04. > :08:09.breakdown of the eurozone. First I don't like the word elite. If we
:08:09. > :08:13.are on a hill looking downwards to the population, I don't like that.
:08:13. > :08:18.We are citizens that have taken up responsibilities and we try to sort
:08:18. > :08:23.out the problems, that is what we are, not the elite. Secondly, when
:08:23. > :08:27.you are quitting what I have been saying, I think it is a task and
:08:27. > :08:32.the duty of for politicians to be prepared for everything that could
:08:32. > :08:37.happen. That is what I have been saying. But on the other hand we
:08:37. > :08:40.have no plans for Greece at all. We are happy that the outcome of the
:08:40. > :08:45.elections has meant we can continue with the programme in Greece.
:08:45. > :08:49.Surely you should have a plan B. What have you been doing for the
:08:49. > :08:54.past few months, when you have said that there are officials in the ECB
:08:54. > :08:59.and the European Commission, who are working on scenarios, in your
:08:59. > :09:05.words, in case Greece has to leave the eurozone. We need to have a
:09:05. > :09:09.scenario for everything. There is no plan B. Our plan is the plan to
:09:10. > :09:15.keep Greece in the European Monetary Union. They are scenarios
:09:15. > :09:20.in which that does not happen, though. -- there are. You said "The
:09:20. > :09:25.Greek exit does not mean the end of the Euro" so you have imagined what
:09:25. > :09:31.could happen. We need to prepare for all possibilities. That is the
:09:31. > :09:36.task and the duty of a politician. On the other hand we have also a
:09:36. > :09:39.policy, and our policy is that Greece remains in the eurozone. I
:09:39. > :09:43.think also the Greek population has understood this because they got a
:09:43. > :09:48.majority for the parliament... from the parliament for a government
:09:48. > :09:52.that is going to support his plan. Let's look at this from the
:09:52. > :09:56.perspective of your own particular responsibility in the commission as
:09:56. > :10:01.a member of Trade, it seems to me that it is a very striking and
:10:01. > :10:04.ambitious notion that Europe can create this single economic space.
:10:04. > :10:08.Economic monetary union involving everything that goes with it,
:10:08. > :10:12.including of course completely open and free trade within that space.
:10:13. > :10:17.But if you are creek and looking at the way the European economy works
:10:17. > :10:23.today, it hasn't really worked in a way that makes sense to the Greeks.
:10:23. > :10:27.One tiny example, right now Greece imports literally thousands of tons
:10:27. > :10:32.of fresh tomatoes from northern Europe. Too many Greeks that makes
:10:32. > :10:38.no sense at all because they need grows some of the best tastiest
:10:38. > :10:43.tomatoes in all of Europe. But they can't do it as cheaply and in as
:10:43. > :10:46.sufficiently industrialised way as you can do it in Belgium or Germany.
:10:46. > :10:54.Surely it would be much more sensible if they ate their own
:10:54. > :11:00.tomatoes and did not get them from Bell Belgium? It makes a lot of
:11:00. > :11:05.sense because they taste better, yes. The real problem with Greece,
:11:05. > :11:09.it is about competition, and not having invested properly in the
:11:09. > :11:14.last decade. They should have invested in producing tomatoes in a
:11:14. > :11:17.way where they can be competitive with the rest of Europe. They have
:11:17. > :11:22.much better tools to the competitive introducing tomatoes
:11:22. > :11:27.because they have the sun, they don't have the sun in Belgium!
:11:27. > :11:32.seems like a trivial argument but it gets to a very important point.
:11:32. > :11:37.They grew tomatoes in a smaller scale in Greece, either locally
:11:37. > :11:41.with small farmers, or locally with small plots of land people have.
:11:41. > :11:48.Therefore the cost per tomato is much higher. They may be better
:11:48. > :11:52.tomatoes but the way in which the eurozone has worked... It must not
:11:52. > :11:59.have anything to do with the eurozone. -- does not. The reasons
:11:59. > :12:05.why Germans and Belgians' tomatos are so cheap is because Greece's
:12:05. > :12:09.currency has been fixed for so long, it is worth far more than it should
:12:09. > :12:16.be in real terms. You are really not understanding what the European
:12:16. > :12:19.monetary union means, you know? Even if we still had the drachma,
:12:19. > :12:22.Greece would have a competition problem for its tomatoes because
:12:22. > :12:26.they are not changing their production methods. They would get
:12:26. > :12:35.less unless money for their tomatoes. The idea in the market is
:12:35. > :12:42.you get a good price. If you're at your production methods, you could
:12:42. > :12:47.do it better. -- If you adapt. It seems right now because Europe
:12:47. > :12:53.seems to be dysfunctional... yellow it is not dysfunctional. The Greeks
:12:53. > :13:01.have not been investing in a proper way. You know the disbursements of
:13:01. > :13:08.the European budget to Greece under the funds, it is about 4% of Greek
:13:08. > :13:14.GDP, which is quite a lot. It is quite as much as the Marshall Plan.
:13:14. > :13:17.But they have not invested properly -- twice as much. There is a huge
:13:17. > :13:21.responsibility with the Greek political class for this, for the
:13:21. > :13:25.Socialists and for the neo- Democrats, they have to do their
:13:25. > :13:35.homework. If they do their homework there's no reason why they can't be
:13:35. > :13:38.
:13:38. > :13:44.It seems to me, when one looks at the vast differences within the
:13:44. > :13:48.European economic Space, between Germany draw example, which has a
:13:48. > :13:57.surplus of billions of euros, and then countries like the United
:13:57. > :14:07.Kingdom, which have a 120 billion euros deficit, you have again, come
:14:07. > :14:08.
:14:08. > :14:12.in the end. De deux --. By there is this Economics base that is
:14:12. > :14:16.supposed to be uniting all of Europe, and the easy not -- not
:14:16. > :14:23.uniting. And the union is not have been in.
:14:23. > :14:32.It is really not accurate that you would play in Europe, -- play in
:14:33. > :14:38.Europe, that your country has a deficit on your balance of payments.
:14:38. > :14:40.You have to adapt to that. Whatever space you are living in.Not a
:14:40. > :14:46.member of the economic monetary union.
:14:46. > :14:49.Of course we are not, but it gets to the heart of the issue. He was
:14:50. > :14:54.saying that in the economic monetary union, we're showing
:14:54. > :14:59.solidarity with countries. Your central bank has been putting in a
:14:59. > :15:06.lot of money into the in -- economic machinery, to get going. A
:15:06. > :15:13.lot. When we look a Europe today, there are many European politicians
:15:13. > :15:16.who are appearing to be toying with the idea of protectionism. You, as
:15:16. > :15:21.Trade Commissioner, Goran the world and tried to persuade the rest of
:15:21. > :15:26.the world to open up its world tour European goods. But when Uribe is
:15:26. > :15:31.talking protectionism, you have a problem. We are by far the most
:15:31. > :15:34.open, the economy in the world. And by the way, we are the biggest
:15:34. > :15:40.economy, the biggest traders in the world and we're not losing market
:15:40. > :15:48.share. We have a big trade surplus on goods of 250 billion. We have a
:15:48. > :15:52.surplus on services, of more than 50 billion. We have a balance in
:15:52. > :16:02.our outcome in the end, because we need to export a lot of minerals
:16:02. > :16:06.
:16:06. > :16:12.and energy, so we are healthy as a block. But there are a number of
:16:12. > :16:18.differences in compare to give s Inside Europe. -- competitiveness.
:16:18. > :16:24.But as a block, we're very strong. We are a very attractive market for
:16:24. > :16:28.example, China and the United States. But my point is that there
:16:28. > :16:31.are some in Europe than while looking at the way in which you are
:16:31. > :16:35.opening to all of their exporters and they are wondering whether it
:16:35. > :16:40.is time to change policy. For example, we have had proposals
:16:40. > :16:44.before the commission to bar foreign companies from winning
:16:44. > :16:48.contracts with public sector organisations across Europe, in an
:16:48. > :16:52.effort to retaliate for what is seen as the barring of European
:16:52. > :17:02.countries entering, whether it be the United States, Japanese or
:17:02. > :17:02.
:17:02. > :17:06.public sector markets. It is a proposal by myself, and when a
:17:06. > :17:11.country is in a systematic way, banning European companies from its
:17:11. > :17:15.public procurement markets, that we can take measures against that
:17:16. > :17:24.country, by, for example, forbidding a sector of our public
:17:24. > :17:28.procurement market to that country. So er, it is retaliatory. I am a
:17:28. > :17:38.very convincing free-marketeer, but I'm not naive. And I can assure you
:17:38. > :17:39.
:17:39. > :17:45.that in the other places, beat the United States. It is not that you
:17:45. > :17:52.can afford to be naive. So who is being naive? Are some people being
:17:52. > :17:57.naive, is it time for Europe to change tack in its bilateral trade
:17:57. > :18:00.with China? We need to show strength and make it clear to
:18:00. > :18:06.whatever partner that we're working with that we're not naive people.
:18:06. > :18:10.What does that mean in real terms? In trading relations with China,
:18:10. > :18:13.they have this massive trade surplus, with pretty much every
:18:13. > :18:18.other trading bloc in the world. Are you saying to the Chinese, this
:18:18. > :18:23.has got to stop and if so, how are you going to stop it? I am saying
:18:23. > :18:28.that they should respect the level playing field. That means that they
:18:29. > :18:32.should start subsidising, they should stop giving excessive export
:18:32. > :18:39.credit up to their companies, cheap loans and so on. That is what I am
:18:39. > :18:44.doing. But if they are buyers in Europe for the Chinese Braques, and
:18:44. > :18:47.they are produced in a fair way, there is no reason to cap this.
:18:47. > :18:52.Germans are somewhat worried about the tone that you are not striking
:18:52. > :18:56.-- that you are striking. The Germans are suggesting that this
:18:56. > :19:00.clause that you are talking about, that you have been discussing when
:19:00. > :19:04.it comes to public sector contracts, could send quite - a protection a
:19:04. > :19:10.single around the world and create an impression of Fortress Europe.
:19:10. > :19:14.am not sure what document you are citing, of course there will be
:19:14. > :19:20.commence. I'm a politician and I'm not a commentator or journalist. I
:19:20. > :19:25.am taking responsibility. I think that politicians should lead and
:19:25. > :19:29.make sure that they are followed. Very clearly, they need to draw the
:19:29. > :19:33.line as to what we have to do. People around the world will be
:19:33. > :19:38.watching this, not least in China, when you say - we will no longer be
:19:38. > :19:41.naive and draw lines, tell me specifically, what the EU, in trade
:19:41. > :19:46.terms, is going to change about the relationship with China. We have
:19:46. > :19:51.been doing a lot. We have gone to the WTO together with the United
:19:51. > :20:01.States. And we're getting raw materials. And they are trying to
:20:01. > :20:02.
:20:02. > :20:06.keep them for themselves. A couple of months ago, we won a benchmark
:20:06. > :20:12.case against them on a raw materials and as such, we have a
:20:12. > :20:18.new agreement. We are pushing them to start negotiations with us on a
:20:18. > :20:24.market access for companies and China. We had a very active
:20:24. > :20:34.dialogue with them. They have to understand that they must reckon
:20:34. > :20:38.with us. He must reckon with them. And one is the nation's tax that
:20:38. > :20:42.the European Union is imposing and not least on aviation. The Chinese
:20:42. > :20:47.have frozen a deal with Airbus to buy billions and billions of
:20:47. > :20:52.dollars worth of Airbus planes, because they are so infuriated
:20:52. > :20:56.about the EU's determination to tax Chinese planes that come into the
:20:56. > :21:01.European Union. Are you going to back down on that? This is a
:21:01. > :21:07.European legislation. And I'm not going to go into the details of
:21:07. > :21:10.that the decision making machine of Europe. But it is a decision that
:21:10. > :21:15.has been taken unanimously by the member states of the European Union,
:21:15. > :21:20.which means also, by your own government. And we are the
:21:20. > :21:24.executive, the commission is the executive. We must s -- execute
:21:24. > :21:28.what has been decided by the legislator. If people would like to
:21:28. > :21:34.do so, we cannot change anything about it. It is European
:21:34. > :21:37.legislation. And that has been employed at -- implemented by your
:21:37. > :21:41.own country for all stop the British Airways chief Willie Walsh
:21:41. > :21:45.has said that the commission has pursued this arrogantly and it
:21:45. > :21:49.would be crazy to pursue a trade war over emissions at this
:21:49. > :21:55.particularly difficult economic times. She will Lee has a point? No,
:21:55. > :21:59.not at all. We have always said that we want is to be resolved by
:21:59. > :22:04.the international civil over -- Aviation Organisation. And because
:22:04. > :22:07.we have got nowhere, we have taken this European legislation, decided
:22:07. > :22:10.by the member states, and now we must put this into practice and we
:22:10. > :22:16.hope that we can convince, not only the Chinese but also the English
:22:16. > :22:19.and the Russians. But the EU has neither the right nor the power to
:22:19. > :22:24.enforce its laws on non-European countries. This could escalate to
:22:24. > :22:28.the point where there are tit-for- tat sanctions. How far can this go?
:22:28. > :22:32.The vast majority of airline companies are respecting this. But
:22:32. > :22:37.what we continue to say and where the -- what I say wherever I go
:22:37. > :22:41.ease, we should find a multilateral solution within the international
:22:41. > :22:45.Civil Aviation Organisation. And we are still in favour of that. But we
:22:45. > :22:48.must also implement what has been decided by the legislature.
:22:48. > :22:52.Before the end, you made a point in this into the wall saying that
:22:53. > :22:57.Europe remains one of the biggest, perhaps the biggest trading bloc in
:22:57. > :23:02.the world. Almost 20% of world trade derives from the European
:23:02. > :23:06.Union. And it has been stable over the last decade. By a look forward
:23:06. > :23:10.to the next decade. It will not stay at 20% of world trade, will
:23:10. > :23:15.it? I don't know. Look at the trains around the world. Look at
:23:15. > :23:18.the way that the world is trading - - changing. Trade is Grade --
:23:18. > :23:24.growing exponentially. We have states that have been stable over
:23:24. > :23:28.the last decade, although there was a big push by the Chinese, they
:23:28. > :23:36.will certainly come down in the next decade. So I don't see why you
:23:36. > :23:40.would go down. The United States stayed stable. You say that
:23:40. > :23:43.everything that has happened in Europe and the eurozone are the
:23:43. > :23:48.last few months and years does not represent dysfunctional relations
:23:48. > :23:51.in Europe. Would you accept that the crisis is doing damage, it is
:23:51. > :23:58.doing damage to the way to Europe and its economy is perceived in the
:23:58. > :24:02.rest of the world? I would of course refer to that as
:24:02. > :24:07.a crisis. But what I am nominated for is to tackle the crisis and to
:24:07. > :24:11.find ways out of the crisis and I'm trying to do this in my job, which
:24:11. > :24:16.is being the Trade Commissioner and making sure that you can export