:00:02. > :00:12.situation. They have not yet fully have identified it as a terrorist
:00:12. > :00:17.
:00:17. > :00:27.attack. It is now time for HARDtalk. Welcome to HARDtalk. Angela Merkel
:00:27. > :00:29.
:00:30. > :00:33.is a politician caught between a rock and a hard place. In Germany,
:00:33. > :00:36.a new party accuses her of doing too much to keep alive the hated
:00:36. > :00:38.Euro currency. Other eurozone members say her government is doing
:00:38. > :00:40.not enough, fearful of those domestic critics ahead of the
:00:40. > :00:43.autumn's federal election. HARDtalk speaks to Germany's deputy finance
:00:43. > :00:53.minister Steffen Kampeter. Just how big a price is Germany prepared to
:00:53. > :01:21.
:01:21. > :01:27.pay to save the euro project, and Welcome to HARDtalk. How would you
:01:28. > :01:35.describe the state of the eurozone? De eurozone is more stable than it
:01:35. > :01:41.has been one year ago. We have the markets calming down, the political
:01:41. > :01:46.progress to reorganise the shape of the European Monetary Union in a
:01:46. > :01:50.way that means more stable activities, more supervision is
:01:50. > :01:58.under way. I am satisfied with what we have achieved but we have to go
:01:58. > :02:03.on. Yet you would except that fragility remains? Of course. If we
:02:03. > :02:07.would stop the reforming we have already been achieving and go on a
:02:07. > :02:12.different course, leaving the fiscal path, it would mean more
:02:12. > :02:16.uncertainty and more pressure on the European Monetary Affairs and
:02:16. > :02:24.economic development. We should not do that. The fragility remains but
:02:24. > :02:29.the political will to keep on his larger. Is that the case? You say
:02:29. > :02:34.that if you stick with the fist will pop which has been set out,
:02:34. > :02:38.you will see the benefit of that. Ireland is a prime example of doing
:02:38. > :02:45.the right thing, he said in March it is our view that the Irish
:02:45. > :02:49.example shows the way. But last week, Ireland asked for and got a
:02:49. > :02:56.seven-year extension to repayment of the bailout. But there is
:02:56. > :03:02.flexibility? Keeping on track does not mean you have to be inflexible.
:03:02. > :03:08.If the situation changes you have to react. The general tone is that
:03:08. > :03:13.we need more fiscal consolidation and we need more growth enhancing
:03:13. > :03:17.politics. There are proposals on the table and people are calling
:03:17. > :03:21.for the opposite, the European leaders and the European finance
:03:21. > :03:27.leaders across staying on track. That is what I'm expecting from
:03:27. > :03:32.them and what I would recommend. Yet your own boss, the finance
:03:32. > :03:35.minister said originally before this proposal was accepted, more
:03:35. > :03:44.time equals more money. They got seven years more time. That is more
:03:44. > :03:50.money. There is a shift going on, it is happening? I would see the
:03:50. > :03:56.Irish and the Portuguese story as it less or more successful stories.
:03:56. > :04:00.It was the case that Ireland needed some solidarity and they got it.
:04:00. > :04:07.Ireland has changed its economic behaviour and fiscal policies and
:04:07. > :04:12.the general tone of the economic debate. Now it gets the benefits
:04:12. > :04:17.that they will except the programme. The same I'm expecting from
:04:17. > :04:22.Portugal, they are re-entering the market and if I look to other
:04:22. > :04:26.places in Europe like the Spanish case, the spreadsheets for Spain a
:04:26. > :04:34.lower than I have been one year ago. That is why I say the situation is
:04:34. > :04:38.improving. It is still fragile but we are on the right direction?
:04:38. > :04:41.Sydney is fragile. It was found that there were financial
:04:41. > :04:45.imbalances in 13 member states and they were unbalances for Slovenia
:04:45. > :04:48.where they were considered excessive. The economic affairs
:04:48. > :04:52.commissioner said on the same day we have to be aware of these
:04:52. > :04:56.problems continue to take a toll on our economies. The commission added
:04:56. > :05:04.the weakness of economic activity and the fragile economic outlook
:05:04. > :05:07.may have aggravated the risks and the cross country spillover is?
:05:07. > :05:12.have a challenging economic situation not only within the
:05:12. > :05:18.eurozone but within the world economy. Nobody is denying that. If
:05:18. > :05:23.I take a sharp look on the programme countries, rebalancing
:05:23. > :05:30.has taken place. They have enhanced their competitiveness and reduced
:05:30. > :05:36.the deficit. This is what we asked them for. This does not mean the
:05:36. > :05:41.growth path we have for the world economy is satisfying everybody.
:05:41. > :05:46.This is something which is not related to the euro is a currency
:05:46. > :05:49.but to the world economy as a whole. Within the eurozone, you have
:05:49. > :05:54.talked about the countries who have already looked for a bail-out and
:05:54. > :05:59.got one, what about the other countries, are they doing enough to
:05:59. > :06:05.ensure the long-term sustainability of the eurozone? As I stated before,
:06:05. > :06:10.there is much more credibility in the will of the European states to
:06:10. > :06:15.keep the economic pressure on growth enhancing reform up. If we
:06:15. > :06:21.see the development over the past 12 months, we have established a
:06:21. > :06:27.new framework, not only for the economic policy but for the court
:06:27. > :06:34.nation of economic policies in general. This means that the growth
:06:34. > :06:40.perspective so will probably get better year by year as we going to
:06:40. > :06:49.these integrated policies. You will not receive an easy result after a
:06:49. > :06:54.few months, you will have to keep this -- stable politics. We do not
:06:54. > :07:00.want a fast movement on the left or right-hand side, just keep on track
:07:00. > :07:04.and then we will come to better developments? But momentum matters?
:07:04. > :07:10.Francois Hollande pledged at the time of his election that he would
:07:10. > :07:15.cut GDP to 3%, now they say, auditors that growth will be below
:07:15. > :07:23.the average. That seems impossible for France to achieve that? What
:07:23. > :07:26.should it do? It is not a problem that can be limited to France. If
:07:26. > :07:33.you look to the economic development in the UK will United
:07:33. > :07:39.States we have to have a dress with tailor-made programmes and policies
:07:39. > :07:45.Max's that we have to enhance our growth potential. Forgive me for
:07:45. > :07:49.interrupting, the reason I ask her about France is that France is in
:07:49. > :07:53.the eurozone and one of the important economies. You have no
:07:53. > :08:02.locus for the UK for US, but France to have influence over. Do you
:08:02. > :08:05.think they should cut more? We are on good speaking terms to the UK
:08:05. > :08:10.and United States in co-operation and co-ordinating economic policies
:08:10. > :08:14.as well. That is not just the German and French battle. Every
:08:14. > :08:19.country must look at its growth potential and do their homework. It
:08:19. > :08:28.is not the case for Germany to lecture anybody. He say it is not
:08:28. > :08:36.the case -- other countries have different challenge us. They will
:08:36. > :08:41.know it is time to act now. I have one to ask you about the German
:08:41. > :08:45.economy in a moment. And the implications for your export-led
:08:45. > :08:50.economy which has been hit by what has been happening in the eurozone.
:08:50. > :08:55.You say it is not a position of Germany to lecture, some people
:08:55. > :09:02.might say Jimmy does not want to offend France but it is happy to
:09:02. > :09:09.defend countries on the periphery of the eurozone. The Ku -- the
:09:09. > :09:13.Cypriot president said his country had been served poison? De eurozone
:09:13. > :09:18.policies are made by 17 Prior -- finance ministers. They have a
:09:18. > :09:23.common voice. Sometimes they do not sound that common, but this is not
:09:23. > :09:29.the German or French or Spanish politics. It is eurozone politics.
:09:29. > :09:36.They agree you anonymously. It is not just the way Germany does it,
:09:36. > :09:44.we feel it is the best way to go for the eurozone. You say that, but
:09:44. > :09:49.the IMF President said in an interview that the reality of is
:09:49. > :09:55.that the largest country, the leader of the country's calls the
:09:55. > :10:00.tune. It sets the time and calls the shots. That is the reality in
:10:00. > :10:07.the eurozone? You are the largest and most powerful economy? You call
:10:07. > :10:15.the shots? Germany is contributing a very big proportion of solidarity
:10:15. > :10:20.does not mean we are the only one to run the game. We have co-
:10:20. > :10:24.operated with her to find a common ground amongst the 70 members of
:10:25. > :10:29.the eurozone, we are now doing it with the French and the actual
:10:29. > :10:36.Spanish and the Italian government. It is a misinterpretation that this
:10:36. > :10:41.chorus has only one voice. It has 17 forces. Germany is aware we are
:10:41. > :10:45.a strong voice in this course but not the only one. You made us think
:10:45. > :10:50.you are a strong voice, it is clear that Germany wants to impose its
:10:50. > :10:54.views on the pupils of southern Europe. The toughest decision was
:10:54. > :10:59.that for Cyprus according to the Greek Foreign Minister talking on
:10:59. > :11:03.Greek television at the end of March. It was a ruthless decision
:11:03. > :11:09.to wreck the finance system of the country which have terrible
:11:09. > :11:15.consequences. He laid the fault at the door of Germany? It is not a
:11:15. > :11:25.Germany point of view but that view of the European tax player. We need
:11:25. > :11:28.some solidity and exchange. This is view. I do not see that there is
:11:29. > :11:33.one European leader that is addressing his parliament and says,
:11:33. > :11:43.I invest my people's money in another country and I do not get
:11:43. > :11:50.
:11:50. > :11:54.anything out of it, including a Let us talk about what Germany gets
:11:54. > :12:00.out of bed and the state of your economy at the moment. You expect
:12:00. > :12:07.this to continue in 2013? I would love to have stronger growth in
:12:07. > :12:16.Germany but at the moment, we have not a very growing world economy.
:12:16. > :12:22.We have unstable internal demand at the moment and we are a challenge
:12:22. > :12:30.because some of our partners in the world are not as stable as farce. -
:12:30. > :12:35.- as us. Germany has to go on and stabilise internal demand and
:12:35. > :12:40.stabilised the world economy by growing imports. Our import high at
:12:40. > :12:43.the moment is stabilising the economy is of a partner countries.
:12:43. > :12:46.The US Treasury Secretary was in Berlin a week ago and hinted that
:12:46. > :12:49.it would be helpful that if countries to have the capacity
:12:49. > :12:59.would implement policies to encourage a bit more domestic
:12:59. > :12:59.
:12:59. > :13:05.consumer demand. We do what we can. Wage bargaining is not a state
:13:05. > :13:13.activity in Germany. If you look at the latest wage bargaining results,
:13:13. > :13:17.you see that we had a growing contribution to private demand. If
:13:17. > :13:22.you look at the West, I do not see a growing deficit spending there. -
:13:22. > :13:26.- if you look at the US. Everyone is on a different wage. Then no-one
:13:26. > :13:30.is spending more than they can at the moment. On a question of what
:13:30. > :13:35.is happening to how all your neighbours affects the German
:13:35. > :13:39.economy. German exports fell in February but wouldn't it be known
:13:39. > :13:42.eurozone countries, they grew. The concern ought to be for your
:13:42. > :13:46.country that in a sense, the policies that you are driving in
:13:46. > :13:55.those parts of the eurozone that are struggling are actually hurting
:13:55. > :14:01.your own country. It is not like you describe it. We are not
:14:01. > :14:05.intending to hurt anybody. Our economic model is based on
:14:05. > :14:12.innovation and competitiveness. We are delivering goods and services
:14:12. > :14:17.all over the world. If we have good economic circumstances, our
:14:17. > :14:24.companies are going quite well. In the emerging countries, the
:14:24. > :14:31.economic development is positive. If we have slow-growth within the
:14:31. > :14:37.EU, we cannot export as much as we would like. This has nothing to do
:14:37. > :14:43.-- this is nothing that we're trying to tease or penalise anyone.
:14:43. > :14:47.based economy but we are competing with other countries and we are
:14:47. > :14:52.doing quite well. It is doubling to blame us for. It is not a question
:14:52. > :14:54.of blame at but a question of saying that is there not some
:14:54. > :14:58.enlightened self-interest for Germany in encouraging growth in
:14:58. > :15:07.the neighbouring countries rather than pursuing, so relentlessly, the
:15:07. > :15:14.theme of austerity? A day to see a contradiction between the
:15:14. > :15:19.consolidation path and the growth path. You cannot buy growth.
:15:19. > :15:29.Disillusion has led to the state crisis which we are facing at the
:15:29. > :15:30.
:15:30. > :15:34.moment. What we do at the moment is regain trust that growth by fiscal
:15:34. > :15:41.consolidation and on the supply side, we have to do labour-market
:15:41. > :15:46.reforms, open markets for Trade, try to stabilise the supply-side
:15:46. > :15:50.potential. I do not see the alternative on the one hand of
:15:50. > :15:54.ideological concepts of austerity and on the other of Britain have
:15:54. > :16:00.images. The German. Did you eat much more pragmatic to consolidate
:16:00. > :16:04.and to invest in growth. Some observers wonder where you could
:16:04. > :16:11.narrow the gap in the eurozone by the introduction of euro bonds. But
:16:11. > :16:15.the debt of any individual are underpinned the surpluses of any
:16:15. > :16:23.other member country. There is that people promise that if they hit
:16:23. > :16:27.trouble, they will be redeemed. Let me put what non blogger said a few
:16:27. > :16:31.weeks ago. He said that the danger of default would disappear as
:16:31. > :16:37.wooden bricks premiums. Bank balance sheets would receive a
:16:37. > :16:40.boost as we have here in debt and budgets. They would not rule in
:16:40. > :16:48.Germany's credit-rating but rather compare favourably with the bonds
:16:48. > :16:53.of the West, the UK, and Japan. -- of the US. I don't know whether a
:16:53. > :17:00.speculator is a good adviser for economic policies. The focus should
:17:00. > :17:07.be for the pound which was damaged by the activities... This is not to
:17:07. > :17:12.be played out in his interview. I would keep the focus that the
:17:12. > :17:19.interest rates increase were too low to keep pressure on economic
:17:19. > :17:29.reform. The concept of Euro bonds is taking interest rates will and
:17:29. > :17:29.
:17:29. > :23:01.Apology for the loss of subtitles for 331 seconds
:23:01. > :23:05.without conditionality. This is the Whether we are challenged by a new
:23:05. > :23:13.party does not change our position. We are always challenging democracy.
:23:13. > :23:20.This is nothing new. Left wing of centre-right competitors. What
:23:20. > :23:23.about the challenge outside of Germany?? E said at the start of
:23:23. > :23:27.the interview that things have calmed down but there was a hiatus.
:23:27. > :23:32.The markets know that you cannot change policy until you're safely
:23:32. > :23:39.re-elected. Once you are safely re- elected, they will be able to
:23:39. > :23:43.challenge? We will not change our goals. If you see the majorities,
:23:43. > :23:49.Angela Merkel always gets for European politics, it shows that we
:23:49. > :23:56.have and 80% to 90% approval rating in the German parliament. It is
:23:56. > :24:00.mostly beyond 90%. What about the market's? With in any election,
:24:00. > :24:07.there will be no change in politics. What about the market's? Will they
:24:07. > :24:12.tolerate that? The markets have calmed down. I see no policy change.