Full of confidence, French Finance Minister Bruno Le Maire will chair the meeting with his EU colleagues for the first time on Tuesday. Not only because the French EU presidency is bursting with ambition and there is a new, more pro-European government in The Hague. No, Le Maire is beaming because, according to him, the era of budget hawks such as Wopke Hoekstra is definitely over. The austerity wind that has lashed the EU for decades has died down.
The debate about more or less thrift is ‘an outdated discussion’, says Le Maire (52) in a Zoom interview with seven European newspapers, including de Volkskrant. He points to the billions of euros with which governments have tackled the corona recession. A great success, according to Le Maire. “As Europeans, we can be proud of how we have overcome this crisis. By taking the same measures all at the same time: state-guaranteed loans for companies, special support for smaller companies, wage subsidies. As a result, the economic recovery is now strong across Europe. I congratulate the new Dutch government on its intention to invest more. The debate now is about the right balance between the necessary investments for the challenges that the 21st century poses us and the need for sound public finances. Because of course we have to reduce our national debt.’
About that new balance sheet: does that mean the end of the current spending party because of a lower government debt?
Compare how the EU has handled the financial crisis of 2010-2011 and the crisis of 2020-2021. The approach in 2010-2011 (with severe austerity measures, ed.) led to less growth, more government debt and more unemployment. It was a failure. We have learned our lessons from that. A continent that learns from its past is a political power. Europe has become a political power. In 2020-2021, we made the right decisions at the right time. Yes, we have spent a lot of public money, but the result has been fewer bankruptcies and fewer unemployed. Now that we get out of the crisis, we need towhatever it costs‘ approach behind us and move to customization for the last sectors that are still suffering from the corona pandemic. I hope that by the end of this year all corona restrictions will have disappeared and the financial support operation can stop.’
In the coming months, you and your colleagues will discuss a renewal of European fiscal rules in the famous Stability and Growth Pact. What is the minimum that needs to change?
“I’d like to reverse the order in the name. Start with pact, because there is no monetary union without common rules. Rules everyone adheres to: a pact is a pact. The second word for me is not stability but growth. We cannot be satisfied with a return to the low economic growth seen before the crisis. Why is the US economy growing at 2.5 percent a year and Europe’s at 1.2 percent? The last word is stability, for that we need rules about deficit and debt.’
The current rules – maximum 3 percent deficit, 60 percent government debt – are outdated?
‘The pact is not obsolete, but the rule on government debt is. There are euro countries with a debt of more than 160 percent (Greece, ed.) and less than 60 percent (Netherlands, Luxembourg), which is a difference of over 100 percent! We can’t ignore that. Rules should be based on reality, not dreams. We have to do something, not by letting go of all the rules, but by adapting them to the new reality. Commissioner Paolo Gentiloni (Economic Affairs) proposes that countries reduce their debt at different rates. One thing is certain: they have to be 21st century rules.’
A politically sensitive issue on your plate is the European Commission’s proposal to label gas and nuclear energy as ‘green’ under certain conditions, as a guideline for investors. Will this ‘taxonomy’ get the approval of the member states?
‘We are very aware of the sensitivity of the Member States about this. Each country decides itself about its energy supply. Some countries, such as France, have opted for renewable and nuclear energy, others for renewable and gas. The Commission has struck the right balance, I hope the proposal will be adopted soon.’
That remains to be seen. Austria and Luxembourg threaten to go to the Court of Justice, the German coalition is divided, the European Parliament is highly critical. What does a long legal battle mean for investments in gas and nuclear power plants?
‘We need a clear framework to help investors. We can’t get caught up in this issue, the 21st century has bigger challenges to tackle.”
High energy prices seem to be here to stay. What does that mean for the EU’s climate plans?
‘Energy prices are a major source of concern among citizens. More than half of the inflation in the eurozone is due to the increased rates for gas and electricity. High prices make companies less competitive and erode citizens’ purchasing power. I will raise this with my colleagues on Tuesday.’
Is the citizen prepared to pay the costs of greening society? Don’t the ‘yellow vests’ protests indicate growing revulsion?
‘The price of the switch to sustainable energy will be very high and will become even higher if we want to go faster. The question is, who pays that price? I want an in-depth discussion with my colleagues about this. The yellow vests have shown that passing the costs on to the lowest paid is a dead end.’
The International Energy Agency recently accused Russia of misusing its gas exports to Europe for geopolitical gain. Eastern European member states have been saying that for months. What’s the lesson here?
‘That Europe is too dependent on other countries in many areas. This applies to gas, but also to raw materials and semiconductors. We need to strengthen Europe’s economic strength and independence. Our economies cannot depend on the geopolitical trade-offs in Russia, Ukraine or any other continent.’
That’s easier said than done.
‘But it’s possible! Together with my friend Peter Altmaier (the former Minister of Economic Affairs of Germany, ed.) I took the initiative for the European Battery Alliance. A dire necessity, because 85 percent of the batteries for electric cars came from China. If Europe wants a successful car industry, it must produce its own batteries. The same approach is needed in the production of hydrogen, clouds for data storage and semiconductors. That is the revolution facing Europe. The same applies to energy. Putin can play with us because Europe depends on Russian gas. If we want to be free, we have to invest in our own energy production. That can be renewable energy or nuclear, that choice is up to each Member State.’
The European Recovery Fund (750 billion euros) and the new EU multi-year budget (1.100 billion euros) are important for the economic recovery. The European Commission is considering withholding billions of euros from those funds to Poland and Hungary as punishment for their systematic undermining of the rule of law. Do you support that strategy?
‘First of all, it is up to the Commission to advise on this. But given the size of the Polish economy, it is in everyone’s interest that Poland participate in the recovery.’
Poland and Hungary threaten to paralyze the entire EU if they no longer receive EU subsidies.
“It is in nobody’s interest to block European decision-making, especially not in the Polish or Hungarian interests.”
Would such a recovery fund have been possible if the United Kingdom was still a member of the EU? Will the EU run better without Britain?
“The facts speak for themselves: the EU is doing very well, we are moving in the right direction and doing so very quickly. There is less rivalry, less roar and more understanding. And I can compare it because I’ve been Minister of Finance for five years.’