Euro Area/debt crisis – French economy – Iran – Arab Spring/Islamist parties
Paris, November 30, 2011
EURO AREA/DEBT CRISIS
Q. – Do people underestimate the seriousness and the challenge of the crisis Europe is going through?
THE MINISTER – Everyone’s aware that the crisis is extremely serious and may call into question everything we’ve built, not just since the adoption of the Maastricht Treaty about 20 years ago but also since the foundation of the European Community. It’s an existential crisis for Europe: we must devote all our energies to overcoming it. But the crisis may also be a chance for our Europe, which was beginning to go seriously adrift, and for France; it’s time to put a stop to bad habits in the management of our finances. I think the French understand this and know there’s a route and a pilot.
Q. – Do the least optimistic scenarios include an explosion of the Euro Area or complete gridlock?
THE MINISTER – An explosion of the Euro Area would be an explosion of the European Union itself. In that scenario, anything becomes possible. Even the worst. For decades we flattered ourselves that we’d eradicated all danger of conflict within our continent, but let’s not be too sure of ourselves. The rise of populism, nationalism, extremism in Europe makes the European enterprise more vital than ever – a Europe that protects and strengthens us in globalization. It deserves our deep commitment: it should be one of the great debates of the presidential election.
Q. – What is the “European federation” that you’re calling for?
THE MINISTER – Everyone’s more and more conscious of it, in France and elsewhere: when you have a single currency, you can’t allow yourself to have economic policies that converge as little as they do now. So the first response is to go further in the Euro Area’s integration so that economic, budgetary and fiscal policies are more harmonized. France has made important proposals to this end. The idea of an economic government, still taboo two years ago, is today, thanks to us, accepted in principle. Around this more integrated Euro Area, we’ll need a more flexible system. France and Germany must agree on this new European architecture. With the euro, we went so far that there’s now no turning back. And the French know what the euro gives them.
Q. – In retrospect, was the Euro Area a faulty product?
THE MINISTER – Yes, the Maastricht Treaty didn’t insist enough on the necessary coherence of economic policies. In fact, the criteria set out in the Stability Pact weren’t applied as strictly as they should have been. Amid the slowdown in the economy, every country more or less disregarded this discipline, as well as the mechanisms enabling us to monitor compliance with the criteria or ensure they were implemented. The extreme case is Greece, who is largely responsible for what’s happening to her; that’s no reason not to help her, of course. Other countries took liberties with the system – hence the need for greater Euro Area integration involving reinforced mechanisms enabling us to check that commitments are being honoured.
Q. – At the risk of a two-speed Europe?
THE MINISTER – It’s not a question of making the Euro Area a closed club. Some countries don’t want to join – Britain, for example – and others can’t. We must propose something else to them, in order to continue living together. (…)
Q. – Is there a lack of confidence or of governance?
THE MINISTER – With regard to the Euro Area, both. Governance is faulty, essentially in terms of timescale: the markets call for reactions in minutes, but the reaction time in European governance is weeks or months. Hence the need to adopt swifter, more operational mechanisms.
Q. – Would it be a disaster if France lost her Triple-A rating?
THE MINISTER – It wouldn’t be a trivial incident. People talk about the dictatorship of the ratings agencies… It’s true they can be criticized and improved, and they sometimes operate according to subjective or political criteria. But taking on the ratings agencies is equivalent to seeking to cure a fever by breaking the thermometer. Yet there is a problem we mustn’t evade: over-indebtedness. This over-indebtedness has now reached its limit. We must reduce our deficits by cutting spending and increasing revenue, while not killing growth. It’s a very difficult course to steer and I think France is doing it rather well: while making unprecedented budgetary savings, we’re injecting €35 billion into spending for the future, for investment, for research etc. (…)
Q. – Let’s get back to foreign policy. On the Iranian nuclear issue, is the use of force a prospect that’s being envisaged?
THE MINISTER – Not by us. As the President has said, we must do everything to avoid the irreparable. Such an intervention would have disastrous consequences in the region. France advocates sanctions that should really paralyse the regime: a freeze on the Central Bank’s assets, an embargo on hydrocarbons exports. The Americans and British have started making a move in this direction.
Q. – Slowly!
THE MINISTER – We want a common position, in order to exert maximum pressure. We can’t agree to the Iranians continuing to string us along. (…)
ARAB SPRING/ISLAMIST PARTIES
Q. – In April you called, on France’s behalf, for dialogue to begin with the Islamist movements in the Arab world. In view of the events in Libya, Egypt and Tunisia, are you afraid the religious parties might take part in a restoration of authoritarianism?
THE MINISTER – I don’t know any revolution that flows along like a long, peaceful river. We’re right to support people’s aspiration to express themselves and choose their leaders on their own. Those are our values and interests. You can’t encourage people to hold elections and then dispute the results. I’m aware of the risks, but for all that, not all parties linked to Islam are dangerous per se. I’m committed to French laïcité [secularism] (1), but Germany has a concordat, the Queen of England is head of the Anglican Church and so on; well, the religion of most Arab countries is Islam. There are still red lines, and we’ll be vigilant. We can win the elections, but we can also lose them; for us, you can’t seize power in the name of God, because power lies with the people. Additionally, there’s a need to build a law-based state that separates the three great powers and takes into account human rights, respect for minorities, women’s rights etc.
Q. – The Tunisian Prime Minister has talked about a sixth caliphate…
THE MINISTER – There have been worrying statements. We shouldn’t impose a model of democracy, but we assert a number of fundamental values – included in the Charter of the United Nations, moreover – and we’ll take care to ensure those principles are respected. And because we’re going to make a strong aid commitment to those countries, we have grounds to ensure they respect those fundamental principles. (…)./.
(1) laïcité goes beyond the concept of secularism, embracing the strict neutrality of the State.