Dalia Grybauskaitė has been president of Lithuania since 12 July 2009. A former vice-minister of foreign affairs and minister of finance, she was the European commissioner for Financial Programming and the Budget from 2004 to 2009. Often referred to as the Iron Lady or the "Steel Magnolia", Grybauskaitė is Lithuania's first female head of state.
She spoke to EurActiv Editor-in-Chief Daniela Vincenti on the margins of the EU summit last week.
So we finally have a political agreement on the EU's long-term budget. That must be a big relief for the Lithuanian presidency.
I call it preliminary still because this agreement still needs to be voted on in the European parliament.
Is this a satisfactory political agreement? What do you think of it?
I think it’s a compromise between what the Council wanted and what the Parliament wanted.
Flexibility, which was a sensitive dossier, in reality was agreed partially. By that I mean that on payments for the first years there is no capping. And the last three years, from 2018 to 2020, there is capping.
So both sides achieved partial capping or partial non-capping, it depends which side you are talking to. This is a compromise. The rest was already agreed a few days ago - the revision clause and front - loading [the Youth Employment Initiative]. In the long run, I think the package is good for both sides.
It will allow the union to function until 2020 …
Yes, I think it will if the endorsement will be fast. If it will be finally voted on, we can expect already in 2014 the first tranches to come into our economy, especially to solve youth unemployment and for new projects to start.
The Lithuanian presidency will have about 70 legal acts to negotiate for the multi-annual financial framework. The Irish presidency has already started. As soon as the Parliament gives the green light to the so-called political pre-agreement, we will be able to do our job by the end of this year.
You mentioned front-loading and the funding allocated to tackle youth unemployment - €6 billion against the €700 billion provided to bail out banks. How do you explain this imbalance to EU citizens?
We also know that €3 billion will be taken from the social security fund and 3 probably from other 1A [budget heading] lines, maybe even horizontal programmes such as energy and transport, which are also very important to the European Union.
So, really, we are squeezing ourselves, we are reprioritising our very lean resources form one to another priority. But all our priorities which are in 1A are really very important.
You're right to compare the money we are putting into saving banks rather than for the stimulus for our economy, but the European budget is very small.
Will that allow the union to become more efficient, to do more with less?
You know with such a small budget, which now is even lower than 1% of EU GDP, is difficult to talk about efficiency.
Despite the crisis, still about 80% of the EU budget goes to traditional policies and for the rest we are trying to reshuffle our priorities in the leftovers. These are very small amounts. If we front-load for youth unemployment we are taking away from transport and energy connections, which is again very important. So in reality we are trying to say somehow that some priorities are more priorities than others, but it's still in the same basket.
Because of the small budget, the European Parliament asked for flexibility and here, as ex-budget commissioner, I understand fully that with such a low budget you cannot execute payments without very large flexibility, which is why I was arguing in favour and supporting this request.
Lithuania is assuming the presidency of the EU at a key moment when 28-country bloc has been rocked by the eurozone crisis and a lack of internal and external confidence. How will you make sure to switch gears so that the EU regains its credibility and legitimacy, just ahead the European elections in May 2014?
That is exactly about priorities, about what Europe needs and how it wants to respond to the economic situation. One response is to increase investments into stimulating our economy and tackling unemployment.
We are going to have at the very beginning of our presidency a high-level conference in Berlin that will be attended by all EU leaders.
We will try to find out how to use this very small amount of money can be used efficiently to save Europe’s young generation - give them a job and a future. We will look into best practices of Austria and Germany to find out how they are tackling youth unemployment.
So, all member states will be able to look at this experience and translate best practices in their countries. We will also try to have as soon as possible efficient programmes to be able in the first two years of the financial framework, in 2014-15, to use it as efficiently as possible - youth guarantees, exchange programmes, new forms for youth engagement into practices, into beginning of their first job.
There are a lot of initiatives, we just need to find out which are giving the best and fastest results, but it's not only about youth unemployment of course.
We are also inheriting other dossiers to finalise like the internal market, the digitalisation of our economy. We will make progress on these areas.
You mentioned the banking union. Do we need to move towards further political integration to tackle the democratic deficit and create what WTO chief Pascal Lamy called an ‘affectio societatis’, meaning greater affection for the European project?
I can also say that there is a lack of affection from national governments in practically all member states, because the economic recovery is slower than we expected.
The trust in national government is diminishing in most countries. That affects the support of the European Union differently in every country.
It also depends on the amount received from the EU, which differs from country to country. In my country, for instance, we still receive about 3 to 4% of our GDP so it is very visible.
But in some countries it is the opposite. Some countries are paying and, of course, in this environment of economic difficulties, it is very difficult for people to be positive.
So, here I see a more general attitude throughout Europe which is very much influenced by the economic situation, as we are not able to recover fast enough.
But we also know that national politicians sometimes, when they are unable to manage their country, they look to blame somebody outside. And it's easier to blame the European Union or Brussels, which is really non-existent, as Brussels is created de facto by the member states and their leaders.
So it is not easy to answer the question but I think the more positive mood is usually coming in a different economic cycle, in a more upward-rising cycle than at the bottom.
But aren't you afraid that ahead of the European elections that might disrupt the political mood for, let's not call it integration, but better management of the EU?
Some decisions we made already in recent years on governance (six-pack, two-pack, banking union) were prompted by necessity to react and tackle the economic crisis. These were not done because one day member states woke up willing to be more eagerly integrated.
We had a growth and stability pact and we never really respected it since 2005, exactly before the crisis. So all this integration mood, especially on economic matters, was pushed mainly by economic factors from outside, not from inside, as a need to react and to survive and to stay competitive.
The globalisation challenges that we are now facing, especially being less and less competitive in the world, it is important for Europe to be more integrated economically. We need to finalise our internal market everywhere - in finance, in digitalisation, in services - to be able to compete, to be able to solve the economic pressure coming from outside.
It's not only about the debt crisis, it's also an economic crisis, it's a symbiosis of both now.
So economic integration now comes as an objective necessity and that always calls for some political integration.
However, the process will be slow. You cannot impose by force more rapid political integration or more rapid economic integration. All this needs to mature. And with economic difficulties and cycles you need to build stone by stone.
Also we should not forget that we are slow, because we are not one country, we are a union of independent states.
But stone by stone, if we look 10-20 years ago, there is an impressive progress. We are slowly building ourselves. It is probably the natural way for our development.
Of course, some people are impatient, federalists or others. They want integration now. But I leave it to life and time to settle.
But would you favour a core union that moves forward, faster than the rest?
There are already countries with opt-outs. We do have a lot of models of how we operate because it depends much on our treaties.
On our common policies, we need to have more or less unanimous decisions. All the rest are taken by majority. You can use just majority [voting] or you can use enhanced cooperation. But that is exactly defined by our treaties.
[Enhanced cooperation] is a very useful tool. It is often used but it does not mean that we have a two-speed Europe. Most decisions are made by all 27 and now 28 member states, such as the European budget for seven years. It is a unanimous decision.
Energy security is a key issue for Europe and the Baltic states. EU leaders at their May summit reaffirmed their objective of completing the internal energy market by 2014 and developing interconnections, so as to put an end to the isolation of member states from European gas and electricity networks by 2015. Is this wishful thinking or a realistic target? What obstacles need still to be removed?
I think it is quite realistic. Maybe not 100% will be fulfilled, but it is very realistic and I can use the example of the Baltic states, especially Lithuania's case.
For example, by the end of 2013 we will have pipelines connected with other regions. We will have a power link with Sweden by 2015. It is paid also partly for by European money. So really we will be connected already in our own system and less dependent on Russia for gas. Plus, in the new multi-annual financial framework we have additional resources devoted to the connections between Lithuania and Poland ….
In our region we will deliver by 2014-2015 - and this is already quite a huge step in connecting our energy systems - electricity and gas, into European systems.
What energy mix for Europe? Do you favour shale gas?
First, in Europe we have to know what we have. It seems we are afraid to investigate really what we have.
Regarding shale gas, there is still a lot of prejudice that maybe it is not safe and secure. But the world's gas sector is under revolutionary change.
In less than two years, if we are won’t develop shale gas in Europe, the United States will start to sell shale gas to other countries, which today is already three or four times cheaper than the normal gas in the pipelines from the land.
I think that this will change the total picture of the gas sector in the world because liquid gas won't be available everywhere and the energy terminals we have to build very fast, if we don't want to be dependent on Russian supply, for example.
Norway is ready to provide Europe the liquid gas, not shale gas, and competition in two or three years will be absolutely different.
The gas sector will look absolutely different and we, Europeans, need to be prepared for it because today energy prices in Europe are absolutely uncompetitive. We are paying a lot and this jeopardises our recovery and development.
We need to invest into interconnecting ourselves and into the security and diversification of supply. This means also to be able to accept liquid gas from anywhere, from Norway or the United States.
If we want, in the short term or the medium term, to be less dependent we need to investigate what we have ourselves. Even in Lithuania there are possibilities that we have something in between shale gas or maybe oil and still we are a little bit afraid to start to investigate as all Europe is trying to postpone these questions.
To not know what kinds of resources we have ourselves is a huge mistake and a very costly mistake.
We need to understand that with such energy policies in the European Union, we are shooting ourselves in the foot and we will be less and less competitive and our recovery will be more difficult, more costly to our people.
So finishing the internal market for energy and services….
Absolutely a must. And the third energy package to make us competitive, no matter what, against all lobbyists, which are doing the opposite work in Europe [laughter].
During your presidency the European Council in December is going to focus on defence. Do we need a common defence policy?
I think we need a lot of more common policies if we talk about the necessity of deeper integration, especially seeing that globalised tendencies in security in the world are changing, and especially the US attitude towards their presence in Europe.
Looking at the international terrorist activities, how they are shuffling around Europe, I think that more coordinated efforts on defence, maybe not joint, are necessary.
It's not only about defence, it's about the defence industry, it's about securitising our neighbourhood.
We have to review our role in NATO, as the US is asking Europe to be more active in defence policies.
So I think it time to think about that. The last time Europe was discussing those questions was seven or eight years ago.
So the mood is right?
No, I think that terrorism around Europe reminds us that we need to anticipate.
Your presidency will take place at the time of launching the EU-US negotiations for a trade and investment partnership. Can a deal be reached in 15 months?
Look, it depends on the mandate. If we are talking about a real free trade agreement in all sectors, it is not possible to do it fast. It depends on what sort of free trade agreement we are talking about because a lot of elements will have to be opted-out.
Already we see the French opt-out on the cultural exception, intellectual property is always very difficult to negotiate, some elements of agricultural or environmental policies…
Of course, there will be objective necessity to have very close trade relations between two large trade centres, the US and the European Union.
Yes, everything is possible but the understanding of free trade in Europe and the US is so different. Until now it is so different that I can only imagine a free trade agreement if it will be absolutely, globally necessary for these two centres to be competitive.
If they don't have any other choice, basically….
Yes, otherwise why did we not strike a deal before? But sometimes external necessities can push us for some sort of negotiation agreement. I envisage some opt-outs, which will be one of the possible solutions to speed up negotiations.
But we need to understand that we are not only negotiating with the US, we are really negotiating with the NAFTA region, and it is North and Central America - Canada, Mexico. In reality it is a negotiation between two continents.
They are also talking about a living agreement which means it will be…
Updated, updated. Precisely, we are talking about some sort of framework. At least as a first step it is welcome and it is really objectively necessary. For both sides it is very important, especially seeing how competitive have become other areas, like China.
But if the mandate will only be a framework mandate, fine. And maybe it will be more clever because life is very fast-changing so maybe more and more things will come up which we will need to negotiate and to update.
You have been called Iron lady, alluding to your determination. I would add competence and unpretentiousness. Would you agree with this description? Will that be the right description for the Lithuanian presidency?
These descriptions come from abroad. Inside Lithuania, I am called only Dalia and nothing else probably [laughter].
I think the main goal for us in the presidency is commitment, professionalism and results.
This we will try to achieve and we will work hard as much as we can, we are learning, we are preparing ourselves very well.
The Luxembourg presidency comprised a very small team but they were doing very good work. We are not a very large country but our people will try to do their job professionally.
We'll see now, if the MFF is final and will be endorsed, it will be really more technicalities left for us to negotiate, a lot of workload, a lot of legal acts, of course.
We calculated on the table already more than 300. We have some to finalise and some to push. Seventy-four for the budget but others are in the pipeline, including enlargement, the Eastern Partnership, these kinds of things.
But we will do our best job and descriptions you will make, not us.
So the Iron presidency?
If the presidency will have as much power as possible, of course maybe we will be able to be iron [laughs], but the treaties and the balance of powers are limited.
If you were to think of the legacy of your presidency, what would it be?
We will strive to be a trustworthy presidency – a presidency you can rely on. We will deliver what we promise to deliver.
Your name has been floated for one of the top jobs in the EU. Would you feel like coming back to Brussels?
But you know how this happens. It is a game, you journalists like to do. In my home country nobody is floating my name that way.
I'm always saying that I am not speculating about my future. I'm mainly responding to what the Lithuanian people want and I responded in 2009 when I went back for the presidency. Now, again, it will be for the Lithuanian people to decide where they would like to see me.
But what kind of leadership do we need in Europe?
[Pauses] I think we need leadership. It's not about what kind of leadership, just leadership. A leader takes responsibility, sacrifices himself/herself for other people. You need to start from yourself … you need to be a leader in whatever you do.