Joaquin Almunia - EU Competition Commissioner HARDtalk

legislation. Now on BBC, its time for HARDtalk. Three EU officials in

Brussels insist the worst of the eurozone crisis is over. Is the

relief premature. The debt mountain still casts a long shadow, rising

unemployment is fuelling anger on the streets and Europe's because

nations are divided on the biggest questions, where next for the EU.

Amid the uncertainty, practical challenges remain. Not least for my

guest today, Joaquin Almunia. Short-term or long-term, is there a

reason to be confident about the -- EU. Joaquin Almunia will come.

Let me begin with some words from your colleague at the beginning of

this year. The president of the EU Commission said the perception of

risk at the has disappeared. The threat to the survival of the euro

has been overcome. Are you as confident as ham? The fact of the

matter is that since June last year when the important decisions were

reached at the European Council level, and the most and challengers

in Greece was solved with important decisions to continue to support to

the Greek public finances, I think the big uncertainties regarding the

euro security are disappearing. Many economies have important

problems but the general insecurity be up the existence of the euro,

I'm convinced is disappearing. is over? Haute fully. Nobody can

tell this will not emerge again at any time. The problems we had since

2010, regarding the existence of the euro is a group of 17 states

sharing the same currency has disappeared. Signals are important

and I get mixed signals. You're in the present state it is over for

the existential crisis but Angela Merkel says 20 getting will be a

more difficult year then 2012. The crisis is far from over. And Mario

trucky, the boss of the European Central Bank is contradictory. He

says he sees positives but the downside risks far outside --

outweigh the positives. Very next signals from Brussels. Let us

distinguish the existential crisis which has been overcome thanks to

important decisions. Then the economic problems of a number of

European economies, even Germany was waiting for the figures

regarding the fourth quarter of 2012, maybe their GDP will not be

positive. But one thing is to have a recession, and this creates a lot

of challenges for our economic policy decisions. The other thing

is to have doubts regarding the existence of the EU. But they are

connected? If you are to have a contraction, especially in your own

country Spain which will be 1.4%. But Greece it is worse. We are

talking about economies that cannot get out of the whole they have. Why

should we believe that the sovereign debt crisis is over.

will give you a example of my own country, Spain. We have to pay a

spread of the ten-year bonds of 1,500 basis points. Yesterday in

the markets it was 350. The spread has been reduced by half. Thanks to

the elimination of the uncertainties. It could be lost

very quickly? The Spanish economic problems remain but for the public

sector and the private companies they wanted to go to the market to

borrow money, it is easier to tackle. For Greece, this is a most

difficult situation, if you look at the spreads of the public debt for

Greece it has been reduced by half. But you can look at other figures

which tell us the Greek economy is still is on the economy. Look at

the unemployment rates. It is not just Greece. You are Spanish, you

been a minister for successive Spanish governments which oversaw

of prosperity. Hardy feel about a country in which 56% of your young

people under 25 are out of work? It is disastrous. Of course I feel

that. During Christmas I talk with many people that share with me

their anger and Constanze and uncertainties. Let us look at the

other side of the coin. Thanks to the reforms and the adjustments

that Spain launched three years ago, now the current account for Spain

is completely different than three years ago. The financial needs of

the Spanish economy are close to zero. This means an important step

forward towards a solution. Not all problems will be solved early.

There are such a disconnect from the message from people like you

and the one on the streets of Madrid or Athens or Lisbon. In 2013,

the Disconnect will become untenable? The citizens are clever

enough. They know a huge problems accumulated before the crisis and

accelerated because of the crisis will not disappear from Monday to

another. On one hand, the ask the governments and the authorities

they have good reasons to do this. They ask for more decisions and

quicker results. But they understand the policies that should

be decided and implemented to overcome these typical situations

will not produce the results from one day to another. We have talked

about the Mediterranean states but not the mood in Germany. The reason

why you appear to me and your colleagues to be more confident at

the beginning of this year's because the German government has

bought into the notion that it will use the CBD and its own money to

keep buying debt. It is prepared to prop up the system. How long will

creditor nations like Germany regard that as sustainable? Through

the course of this year you do not know answer? Two reasons. Firstly,

the German economy is also having problems. At the beginning of the

public debt crisis, their way out of these kinds of problems. Now

they are having problems with growth and they realise how strong

week there is interdependence with our economies. And they realise

since June last year that it is very important for them, not only

for the partners but for the German people to contribute to the

solution of the common problems provided those who have the more

serious problems will take responsibility to decide what

should be done. Took quite a phrase from an analyst of the European

economy the question is how long the German public in particular is

prepared to put life into a corpse? That was as memorable phrase. If

Germans begin to think that way about the European economy and

especially the southern periphery, you have all got a problem in

Brussels? The Germans have to take into account their own interests

and priorities and needs. But they are fully aware, that for the

future of German citizens it is important the strength of the euro

and the strength of the European Union. Jim money has a very good

memory of the past. They know how important it is for Germany and the

German people, the strength of the euro. That is where we get to in

many of these discussions. This is about the political future of

Europe, the project requires this economic fix be maintained and

sustained. I said many times that if this political awareness about

the need to become more integrated as Europeans would not be on the

table of the founders of the economic and monetary union, the

decision about debt at the end of the 80s and 90s would have been

different. You agree with your colleague and maybe even your boss

when he said last year, the only long-term sustainable solution to

the mess Europe has is a federation of nation states. Political union

he said is now a necessity. Your new? Political integration, yes.

Not only because of the existence of the EU because of how the world

is in this century. With globalisation, every European

country will be better off acting fire itself without co-operation.

If there has to be new movement to a federation, that means another

round of exhaust of treaty negotiations. I do not talk about

treaty changes. But about decisions and a clear vision on what is the

direction of the world. Bake in only be turned into reality, it

will words with a new treaty. decisions would have been

impossible a few years ago. Many diff sessions going forward, the

main elements of the banking unit. I'm looking be on the organisation

of the European banks. A European ministry with fiscal policy across

the being run from Brussels. Many of these decisions and advances

towards further integration and better co-ordination and more

capacity to obtain results can be achieved without discussing legal

changes. Perhaps you are not on the same stage as your boss. He talked

up proposals about a new European treaty before the European

elections. France and Germany have been arguing for. They will not be

a treaty change. But they will be the beginnings of the discussion.

Some people think this treaty change will be needed in 2015. Some

others think the most important thing is to have a clear sense of

the direction and to adopt decisions, together political will

to support these decisions and if needed, you can change in article

or a few of the treaty. But the most important thing is where we

want to go. There are big decisions about where different leaders and

nations think the union wants to go. David Cameron has different views.

He thinks they will be a lot of discussion about a new direction,

especially for the core eurozone countries. He thinks there will be

discussion about a new treaty. He says Britain must have the right to

renegotiate its relationship with the European Union to loosen its

ties. He wants a mandate from the British people to loosen and

changed its relation between Britain and the European Union. You

believe he should be allowed to change that relationship. To modify

the treaty Britain has signed up Euro area will overcome their

problems. It will be efficient. This would be good not only for

those who belong to the euro but also those who have strong links

with the euro area or as is the case of the UK or the non euro

economies. The US as well. The further integration and the

deepening of European integration had to solve the problems of the

euro. The point is that I want your view as the vice-president of the

commission as to whether it is viable for Britain to expect to

renegotiate it's relationship... It is difficult. When you belong to

a club, you cannot be an implement -- you cannot be an influential

member and say that you do not want to accept this or that proposition

all this constraint. If you belong to a club and you want to be an

important member of the club, as I think the UK should be, you cannot

beat influential or relevant and say that you do not want this or

that. You can't Modify, you're saying that it is a binary choice.

You must accept what you already have or you must calypsos I would

like to listen to the UK authorities to their

representatives when they go to the European Council. I would like them

to be changed in this or that direction but not I do not want to

participate in European policy. were a form a monetary affairs

commissioner. You have an experienced insight into the way

the European economy works. There are people who say that for Britain,

leaving the European Union would be a disaster. We heard the American

saying those words. It was in Britain's interest to stay in the

end if they were to leave, it would be a disaster. Is that your view?

Yes. I think for the members of the EU, it would be very bad for the UK

it would be a disaster. Wider use a disaster. There are nations in

Europe who thrive without the members of the EU. I'm not British-

born Sydow know of the word is precise enough. -- so I do not know.

The priority for the future of British citizens would be better

satisfied our side then we be in. I like when the EU receives a

positive influence of Britain or UK visitors. Final question on Britain.

It seems that around Europe there's a lot of discussion about what will

happen. (CROSSTALK). How frustrating is it as an EU official

defined there is so much attention in this country and that the US is

talking about it, how frustrating is it that this sucks up so much

time and attention? It is worrying. We have so many problems on our

agenda. So many important things on the table. We discuss in every

meeting. To discuss the first and foremost, these kind of issue. How

to renegotiate the participation of the UK in one particular policy.

This is not a priority. Neither in Brussels nor in London. You make a

point that the US official who was pronouncing on America's view of

Britain and Europe. His point the other day was that the more the EU

reflects on the internal debate, the less it is able to be unified.

We think that it is better for leaders in Europe to focus on,

challenges and spend their time on internal workings. With that in

mind, this is your view that your own portfolio is working

effectively? There are question marks about the way you're handling

some very high profile cases. listen. It is true that I have on

the table very important competition cases. The majority of

opinions are quite positive. One in particular. Google. He conducted

two years of investigations into the way that the search engine

works and whether it is abusive and breaks anti-trust rules. In the

very recent past, the Americans looking at the same issue had given

Google a clean bill of health. They looked at 9 million documents. They

spent 19 months. They gave Google a clean bill of health. Does that not

so Jessie had been wasting no time? I'm in close contact with American

friends. We have been talking almost every week regarding the

case. They made the decision a few weeks ago. We continue to work with

Google and the other state halls. We are convinced that there are

real issues. -- holders. In particular, we are looking very

closely at we call the vertical search. The results of the search

engine regarding certain products of a certain... it Essenes there

you have already decided that Google unfairly diverts traffic.

This is my concern. We are discussing with Google in a co-

operative way. They have to present next week's remedies. I fear that

this is abuse of their dominant position. You have made your mind

up? We try to demonstrate this. Unless Google will put on the table

the remedies that we were -- will eliminate this. I had my last

meeting with their top respond of Google in December. They have

committed it to send us the proposals to overcome our concerns

by the end of January. To be clear, you have the power to impose a 10%

fine. That would be 10% of their global revenues. That would amount

to about $4 billion. (CROSSTALK). We are discussing with a cool to

attempt to avoid this sort of a primitive a result. That is the

thread that you're saying... it is not the threat. It is the bigger

provision. I'm trying to get from Google a solution to eliminate our

concerns and to reach commitments that would be legally binding and

that will avoid any further conflicts between global, the

competitors and the stakeholders. One other key case that a much

speed you're about. You are looking at the way that they provided gas

to eastern European nations. It has led Putin to respond by saying that

is a national asset company. Don't talk to gas from but speak to us.

Is that what you're doing? We are speaking to them as a company. In

NT trust procedures we are looking at companies. Both private

companies or public companies but the company's that operate in the

markets. We have serious concerns regarding three points. How does

promise relates with that those in the central and the European

countries in the gas sector. On the one hand we were looking at the

provisions that tried to establish internal fragmentation of the

market. Russian gas it cannot compete against a Russian gas.

want to be clear. You'll have a showdown with the Russian

government. The Russian Prime Minister said that Russia will

retaliate if the EU's anti-trust investigation into us lead to sag -

- sanctions. Regulatory risks, he said, could cut suppliers and

result in higher gas prices across central and eastern Europe.

conduct this investigation with the same approach as in other cases. It

is an important one. I am doing what I should do. (CROSSTALK). I

will tell you something that is sometimes forgotten. In 2003, the

Commission adopted anti-trust positions regarding some practices

of the gas company. The Russian authorities of the time accepted

these as always. These are companies that operate the letters

we are not investigating how they investigate -- operate in Russia.

We're investigating how they through subsidiaries, is operating