Maria João Rodrigues is EU special advisor to the EU presidencies and the Commission. She spoke to EurActiv Slovakia.
The report, of which you are the lead author, says that a political change in Europe is required if the situation in the eurozone will develop into a scenario of political and fiscal union, the most desirable scenario for you. Do you think that a bigger political shock is still to come? We are not on the political edge yet, are we?
Yes, I think that the main political shock is still to come, because the crisis in the eurozone is reaching a new stage. It is no longer evolving in small economies, but also in large economies. It is disturbing the banking system and it is disturbing the export capacity of the EU as whole. So the indicators are showing that the crisis is now a systemic one. Therefore we need bolder and more comprehensive solutions. So we really need to reshape the economic and monetary union and put it into a sustainable path.
You put a lot of emphasis on convergence in the eurozone. What should this encompass?
In fact, I think that convergence is a key word, which was forgotten over the last years and should be replaced by a central role. We should have more convergence towards lower deficits and lower public debts, but also more convergence towards a higher growth rates, investments rates and employment rates. Therefore convergence is such an important word. Frankly, I don’t believe that eurozone has a future if we don’t equip the eurozone with stronger instruments to support convergence, in this broader sense of word.
What should these instruments be? In Germany, any notion of a transfer union is unacceptable. Is there room for manoeuvre?
I think we need three new European instruments. One: powerful instruments to stabilise the financial and the banking system. It is called the banking union and it should be based on a stronger supervision framework for banks [with] the capacity to intervene whenever necessary regarding banks in trouble and a European guarantee for deposits.
The second instrument is a certain kind of eurobonds or joint issues of public debt to bring down the spreads, which are now too high and are pushing several countries into insolvency. The third instrument are stronger European instruments to support investment and job-creation - basically a strong European Investment Bank, the possibility to issue eurobonds to finance investments and the better use of structural funds.
Of course if you want to build these instruments, we need to have a financial collaboration involving all member states and this could be seen by Germany as a stronger transfer union. The first thing we have to realise is that we already have transfers in the European Union – the structural funds. But what is at stake is to strike the right balance between solidarity and responsibility.
We need to say that all member states need to make efforts to rebalance their finance and to make internal reforms to foster growth and to become more competitive. In the current situation of the crisis a member state alone cannot achieve success. You need to have the right European framework for this. And I think that all member states must collaborate to build this new European framework. If it is not there, all the member states will be hit by the crisis sooner or later.
I think that the indicators are telling it clearly. General exports from Europe are declining, spreads are increasing everywhere and capital is flowing away from Europe. These are very meaningful indicators showing that the problem is no longer with few economies, but with the European economy as a whole. So I would say that it is in the vital interest of the German citizens to understand that they will also win a lot if they collaborate for the solution.
Some European politicians say that the next EU summit [28-29 June] is crucial. The German government says we should not expect a political agreement. Next step will come at the end of the year or next year, as we need to build political institutions for the union first. Do you expect that this summit will bring something crucial?
I think it should bring something, because otherwise the crisis in eurozone will become out of control. The least we should expect from this summit is to define a clear framework for this political union with a banking and fiscal union inside, and that it will define clear steps and a calendar.
One of the possible scenarios you identified in the report is the possibility of a creation of a closed group of sound economies – not a two-speed, but a two-level Union. Yet you say that this scenario is not very likely, why not?
Because this is the positive side of the story we live in. Most of the European countries want to stay in the boat to reform the economic and monetary union. We could understand this clearly when the treaty for fiscal stability, even [though] there are controversial parts, was signed by 25 member states. This means, all these states want to be in the boat to discuss the rules, the governance of the eurozone in the future.
Therefore I see that this plan of moving forward with a smaller club, closed club, which was formed some years ago, has few chances to be launched. We know that there are clear signs of political will of the large majority of the member states to be in this boat, to reform the economic and monetary union - even in those which are not in the eurozone. This is very positive.
So this means that the risk of two-level Europe is small, even if two-speed Europe is already under way. This is unavoidable. We need to move forward without waiting for everybody. The United Kingdom understands this. It is in their interest to move faster to tackle the crisis, because otherwise the British economy will also be strongly hit, and they understand this. So they should not block this evolution.
The eurozone and some other countries will move towards political integration – which includes integrated tax and social policy. Some countries will stay out, like the UK. This basically means that there will be a two-level membership?
Yes, from this point of view. But I repeat this is not two-level, this is two-speed. We would have two-level if some member states are forbidden to enter. UK is not forbidden, this is their choice. That is my idea about the two-speed processes, but not two-level process.
We are often hearing the reasoning that it is no longer possible to force more integration on the European electorate. Sceptical feelings about the EU are growing. The feeling of legitimacy decreasing. People are not ready to support this kind of integration. Will integration not be hit with the lack of democratic legitimacy?
Yes, the risk is there, particularly if the leaders are not able to explain to the population what is at stake. In my own experience, if we explain, people will understand much better and they can move in the right direction of more European integration.
Of course, we need to have tailor-made messages because the countries, which are being rescued or close to that, we need to explain that if they want to have European solidarity, they have to accept two things – first internal reform and rebalancing the budget; and second is to accept to transfer part of the national sovereignty to the European level to give Europe certain possibility to consolidate the budgets.
In my experience, in many countries these debates are taking place, and this is the first time that we have people from all the social groups discussing Europe. I never saw so many discussions about Europe than the one we are having now. The European issues are becoming central to national politics. It is not so in all countries. Some citizens don’t feel the price. They don’t understand why the crisis can also be a problem for them.
I think they should listen to a message explaining that if a competitive country as Germany wants to rely on a large market and a stable currency and a stable social environment in Europe, Germany needs to invest, needs to collaborate with its partners to support in their effort to solve the crisis. Because a win-win game in Europe is better for Germany. We are now in a win-lose game. Some can win, some are losing a lot.
Comparing the crisis we have now and the one from 2008, are you optimistic about the survival of the eurozone?
I am much more worried, because in 2008 there was not a great risk of break-up in the eurozone. There was a risk of default in some countries. There was risk of reducing the growth rates and decreasing of employment, but now there is risk of break up.
What impact will the crisis have on European elections in 2014?
The short term is becoming a moment of long-term decision - that is why European elections seem to be far away. But if we manage to have a leap forward to a fiscal and political union, it should be implemented in a democratic way. This should be connected with much stronger democracy in the European elections.
The natural implications of this would be to give European citizens a real possibility to choose, not only the members of the Parliament, but also the members of the European government, which is a completely different election. If the citizens can choose the government, the course of government, hopefully they will be much more active in the elections, in the debate, in voting. Hopefully this crisis will lead to more democracy in Europe.