Giscard d'Estaing

'Europe No Longer Has a Common Goal'

Valéry  says France needs reform. Source: DPA
Valéry says France needs reform.
  • Why it matters

    Why it matters

    Valéry Giscard d’Estaing was president of France from 1974 to 1981. The 88-year-old, who has a close relationship with Germany, is a strong advocate of  European integration.

  • Facts

    Facts

    • Mr. Giscard d’Estaing helped draft the European constitution.
    • When it was rejected by French and Dutch voters in 2005 it was replaced with the Lisbon Treaty.
    • He supports serious reform of France’s floundering economy.
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  • Audio

    Audio

  • Pdf

Valéry Giscard d’Estaing, French president from 1974 to 1981, is a proponent of greater integration in the European Union. He presided over the Convention on the Future of the European Union, which drew up a Treaty establishing a Constitution for Europe.  The treaty was never ratified after voters in France and the Netherlands rejected it in 2005. It was replaced with the Lisbon Treaty. In an interview with German daily Der Tagesspiegel, Mr. Giscard d’Estaing spoke about the need for a common European identity to strengthen the European Union’s international role.

 

Mr. Giscard d’Estaing, you’ve just published a book on the current state of our Continent’s politics with the subtitle “Europe’s Last Chance.” That’s rather pessimistic.

True. But look at the situation right now: The European system is in retreat. I wouldn’t speak of a return to nationalism. But on the other hand, that concept is growing in popularity that nation states are what can solve the big problems. Europe is not seen as an ensemble that takes action collectively. Even though that’s exactly the vision that one should wish for.

In the recent European Parliament election, a fifth of all voters chose parties that in some form reject the European Union. Why?

It’s the crisis. Unemployment in the E.U. is on average 12 percent, growth is weak. The European system has up till now had no answer to this. That’s why the public is abandoning the European idea…

…and even in Germany, where the economy is doing fairly OK, the euroskeptic party Alternative for Germany (AfD) has established itself.

To be honest, that doesn’t unsettle me very much. It’s part of democracy that opinions and attitudes are constantly in flux in the public. Sometimes extreme tendencies come to the surface. But it’s very rare that an actual majority develops from that. The current problem is different. Europe no longer has a common goal. After World War II the goal was peace, then the political organization of Western Europe. Since 1990 Europe hasn’t had a goal to strive towards.

What changed after 1990?

In the public it’s often overlooked what kind of changes have taken place in the world: The great powers are playing an increasingly important role. Countries like China and India, which were left on the sidelines in the 1970s and 1980s, have become world powers. Europe, however, remains fragmented. If it stays that way, Europe’s role will be diminished to that of a supporting one.

You suggest in your book a core Europe of 12 countries that forge a closer economic policy. How would that work?

When we created the currency union, we knew economic policy needed to be part of it. But we didn’t do that. It’s about nation states, some dating back to the 17th century, taking a step to build some sort of a common entity. This path will take several steps: First a common currency, then a joint fiscal policy, then a common tax policy, and eventually also a mutualization of debt and finally even financial transfers from rich to poor euro countries.

The reality in 2014 is vastly different. There is tax competition between countries – as the special deals between corporations and Luxembourg show.

It’s clear there’s abuse of the different tax systems in the E.U. Up to now it hasn’t been possible to put an end to such practices.

Your proposed European core does not include Greece, but does have Germany and France from the start. Poland, however, should only join “at the right time.” Why the reluctance with Poland?

Poland has yet to join the euro. That’s why I make such a qualification.

Do you believe that your idea of common debt would be accepted by Germany?

I believe so, the Germans are a reasonable people. No, it’s something else that has caused irritation recently in Germany – the fact that some countries in the euro zone have wantonly increased their indebtedness over the past decade.

France is one of these nations. What’s your take on the budgetary situation of your country?

In this year and the next, France will break the budgetary rules. That’s a mistake. This behavior will first lead to an increase in our overall debt level, which is already rather high. Secondly, the interest burden will likely grow, because Great Britain and the United States are apparently preparing to raise interest rates.

 

Frances Budget Struggle-Debt-Deficit-Growth-01

 

Is there a danger that France will one day need an international bailout like Greece?

I hope that won’t be the case. France has always paid her debts. Even in the most tragic moments of our history like after the war of 1870 and 1871. At the time, France had a mountain of debt and the nation had to undertake a collective struggle to pay back the money. We have a good reputation in the debt markets and I hope it stays that way. But again: the budgetary burden from the interest is enormous. We have to return to a sensible budgetary policy. Fifty-seven percent of the gross domestic product is currently devoured by the state. My goal back in the day was 44 percent.

Germany’s finance minister, Wolfgang Schäuble, has suggested that there should be an E.U. finance minster, who could watch over budgetary discipline in the euro-zone countries. What do you think about that?

The euro is the second most important currency in the world. It’s incomprehensible that those states in the euro zone don’t even have a general secretary. I would like to see the euro zone create such a position, which would more or less be the same thing Schäuble is talking about with an E.U. finance minister.

Former Chancellor Helmut Kohl recently called Germany’s and France’s weakening of the Stability Pact, the European Union’s budgetary rules, a huge mistake. Would you agree?

That is very clearly what it is. In the years 1999 and 2000, everything went off the rails. Germany was, however, in an exceptional position. Germany actually wanted to keep to the Stability Pact. But because Germany undertook deep reforms while still shouldering the burden of reunification, the country was in a difficult budgetary situation. It was different in France: We’ve always had an increase in public expenditures. Instead of fixing that, the expenditures in France have continued to climb. Ex-Chancellor Kohl was right: We should have kept to the stability pact from 2000 to 2004.

There is plenty of need for reform in France besides cutting spending. For example, the unemployment insurance system is ripe for an overhaul. The unemployment rate is currently many times higher than in Germany.

The current French unemployment insurance system was created in the mid-1970s, back when I was president. At the time, I and many others thought unemployment would be a temporary problem. We assumed that those affected would be out of work for a year or a year-and-a-half before they found another job. That’s why we set up a system made for short-term unemployment. As long-term unemployment grew, the regulations we set up became increasingly expensive. That’s why we truly have to look at the reforms to unemployment insurance implemented in other countries – especially in Germany.

Looking at France, it’s easy to see a picture of political gridlock. There’s hardly any debate about reform. Instead, all of Paris is aflutter about speculation whether Nicolas Sarkozy will run for president again or who his Socialist opponent will be in 2017.

This whole debate about the presidential election in 2017 that we’re currently seeing comes much too soon. Look at the United States: There will be a presidential election there first, in 2016. But there’s less chatter about candidates in Washington than in Paris. The candidates will be picked in France in 2016. Not sooner.

 

This interview first appeared in Der Tagesspiegel. To contact the author: redaktion@tagesspiegel.de

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