Moscovici: Progress on deficit reduction must not be reversed

Pierre Moscovici: The Trump presidency will change the global balance of power, and lead to America’s isolation. [Frederic Legrand/Shutterstock]

Pierre Moscovici spoke to EURACTIV’s partner Ouest-France about France’s left-wing primary, the impact of Donald Trump’s election, the 3% deficit rule, the Commission’s March white paper and the importance of the euro.

Pierre Moscovici is a French Socialist politician and the European Commissioner for Economic and Financial Affairs.

Is the subject of Europe enough of a priority in France’s left-wing primary?

Europe was not a big subject in the right-wing debate, and it is not enough of a priority on the left either. We have two threats to stand up to. On the one hand, there is the noisy Euroscepticism that just wants tear the whole thing down – to me, the idea of a confrontation with Germany seems far-fetched and completely wrong. And when this loud form of Euroscepticism affects my own political family, I fight it too. On the other hand, we have to be aware of the quieter kind of Euroscepticism, which talks like Europe but is really about individual states.

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On the right and the left, several candidates have announced their intention to allow the budget deficit to stray over the 3% threshold. What is your view on this?

France has made great efforts over the last five years to cut the deficit. If this effort is continued, France should pass below the 3% threshold in 2017. That is good news, if nothing else, because it will restore the country’s credibility. Today, there are only three countries left under excessive deficit procedures. Portugal should come out of it this year. Spain in 2018. And then there’s France. To have any kind of political weight next to our partners like Germany, we have to keep our promises. I say this to all the presidential candidates: you should think twice before allowing the deficit to grow.

But don’t several candidates view it as a straightjacket?

This would be a very bad signal for France to give its partners. What we need after the presidential election is to work on our relations with Germany to make the eurozone more powerful. Allowing deficits to grow once again would mean getting into debt and exposing ourselves to increasing interest rates. It would mean not having the money to fund public services, education, security, ecology. This is not fair because it means ordinary French citizens have to pay taxes to pay off debts held by the rich.

When you look at the Socialist primary, how do you react?

I want the Socialist candidate to be able to say that France and Europe are inseparable. We don’t want France to wake up one day without a strong Europe. I support a left-wing vision of Europe. If we lose sight of that vision, we will find ourselves in a considerable political and intellectual regression.

Can the election of Donald Trump bring Europe closer together?

If I look at the world today, I see a Trump presidency that will change the global balance of power, and without a doubt progressively lead to America’s isolation. I see an aggressive Russia, a powerful and fragile China, I see Turkey at a crossroads and Great Britain on its way out of the European Union. In this context, more than ever we need a united, solid and powerful European response. If the next French president, whoever it is, does not give the French people a firm view of France’s position in Europe and shape the Europe they want, the big questions of our time will pass us by.

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Which questions are these?

Take security, the fight against terrorism, the refugee crisis, tax evasion, climate change, the economic crisis… None of these questions has a purely national response. Stonewalling Europe is not the way to address the difficulties of French society.

The terrorists that hit Paris, Brussels, Berlin travelled right around Europe. What would you recommend to tackle this?   

Exactly. These are international networks, we need a collective response. To protect our borders and tackle the financing of these networks.

But one could argue that these movements are aided by the free movement of people.

We have to protect our shared external borders, promote the exchange of intelligence, mechanisms that help us check the movements of criminals. What is more, Schengen is not incompatible with border controls.

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Even within the border-free zone?

Yes. Re-establishing borders would be against Schengen, but not border controls. It is possible to change, to improve Schengen. Taking it apart is something else: it is an inward withdrawal that does not solve any of our challenges.

The treaties advise against – but do not outlaw – budget surpluses, like Germany’s. You made a proposal in November…

Yes, the eurozone’s collective contribution to economic growth is finally becoming positive. The countries that still have problems with deficits must continue to make efforts, but those with surpluses must invest more. That is what the Commission has demanded.

Germany has not played along…

Not yet, but the debate is still ongoing. I think that after the 2017 electoral cycle, where several of the most important countries, economically speaking (The Netherlands, France, Germany, Italy), will vote, we will be able to carry out this relaunch of the eurozone. My idea is to that together, we have to invest more.

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Is anything going to change during an election year?

2017 is an election year, but it does not have to be a blank, wasted year. That is why the European question must be at the heart of the election campaigns. It is not incompatible with budgetary rigour.

Should we expect new initiatives at the end of March for the 60th anniversary of the Treaty of Rome?

The Commission is working on a white paper for this very occasion. We will make ambitious proposals, notably on the future of the eurozone. Our proposals will be put to a public debate and decided on by the member states. We should not forget that it is the Commission that makes the proposals and the states that implement them.

For the last five years, we have constantly repeated that we have to stick to the rules if we want to be respected by Germany. But is Germany prepared to be more flexible?

In Germany, they are waiting for France, it’s true. We should be able to build a new contract, with France able to reform by cutting its deficit and Germany more open to investment in Europe, with a more forceful eurozone. The euro protects us, but the French also want the euro to make their economy more dynamic. For that, we need a eurozone budgetary capacity, better governance with a eurozone finance minister, transparency, accountability to the European Parliament and European citizens, and finally, an all-around positive budgetary orientation.

Without convergence, the euro may fall apart.

After Brexit, everyone is talking about the need to bounce back. But this has been slow in coming, hasn’t it?

Yes. Brexit was a big shock that generated a will to consolidate the 27-state EU around the issues of internal security and defence. But let’s not forget that everything begins with the economy. Protecting Europe citizens is vital, but making Europe more dynamic is just as important. Acting together as a 27-nation bloc is essential. Strengthening the euro is vital.

But the crisis has deepened divisions, particularly between the European North and South…

That is right, and it strengthens my case. When we look at the euro, we see that it has brought a lot in terms of identification and protection against monetary variations. We have a central bank that works well and exceptionally low and unified rates. The euro avoids harmful speculation between its members. But at the same time, anyone can see that it is lacking in dynamism, that the euro must become a factor of convergence. This is the point of the Commission’s proposals. If the divisions continue to grow, the idea of dismantling the eurozone may become a more popular one, or even a reality. The euro is a brilliant, historic experiment, but it will always be fragile if it is not able to create convergence.