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