German Finance Minister Wolfgang Schäuble’s latest plans for a euro tax have solidified the prospect of a transfer union, says Eurosceptic Bernd Lucke in an interview with EURACTIV Germany. The founder of the Eurosceptic Alternative for Germany (AfD) party, argues that all the “talk about a Grexit” is just a bluff.
In July 2015, MEP Bernd Lucke withdrew from the Eurosceptic Alternative for Germany (AfD) party, which he co-founded, after being defeated by national conservative Frauke Petry for its leading post. One week ago, the economics professor created the party Alliance for Progress and Renewal (Alfa) along with other AfD-dropouts. Lucke spoke with EURACTIV Germany’s Dario Sarmadi.
Because of his strict austerity policy, Wolfgang Schäuble is likely one of the most hated politicians in Greece. Has the finance minister done everything right in dealing with the debt crisis?
With Schäuble, there is a gaping difference between appearance and reality. In fact, he has failed across the board. Deadlines and red lines were ignored by Greece on multiple occasions, without any consequences. All the talk of a Grexit turned out to be a very transparent bluff. Greece has been successful. It will stay in the euro and it will receive a third bailout programme, although it did not successfully complete the second bailout programme. Schäuble has totally buckled.
That doesn’t fit with Schäuble’s image as an iron finance minister under a steel helmet, as he was recently depicted in a Greek weekly newspaper.
Schäuble cleverly sells himself as an unrelenting politician but, in reality, his behaviour is not like that at all. The positive side of this PR strategy is he enjoys high popularity in Germany. The side that is negative but not harmful to himself is that he is hated in Greece – even though he has given in and kept Greece in the euro. But he should be viewed negatively, precisely because he has kept Greece in the euro. The path to economic recovery is only possible if Greece leaves the euro area.
Which is apparently not Schäuble’s intention. His ministry is considering introducing a euro tax and creating a euro finance minister post.
For which there is no competence in the European Treaties. There is a clear division of duties. There are political areas, for which the EU alone is responsible and there are areas for which the EU is jointly responsible with the member states and tax policy is purely up to the national governments. And this should not be tampered with.
Otherwise, budgetary law would gradually shift to the EU level. While the EU consolidates itself into an überstate, the member states would degenerate into dependent federal states.
But the euro tax is planned for the long-term. By then, a treaty change would be necessary. What is your fundamental assessment of the idea?
I think the idea is wrong because it relieves the member states of taking responsibility for their decisions. This solidifies the transfer union, in which defects in a country are supposed to be combated with financial transfers from other countries. That is exactly in line with the report from the five presidents of the European Commission, Council, ECB, Eurogroup and European Parliament, who would like to gradually centralise competences in economic and financial policy. It also includes the creation of a fiscal capacity and to refinance this, one needs autonomous taxation powers.
The euro tax is the first step. As the vital core of the EU, the eurozone will be permanently transformed into a transfer union. That undermines the conditions of the Maastricht Treaty, namely the independence and individual responsibility of the member states with regard to their economic and fiscal policies.
By means of the euro tax, the EU hopes to even out economic fluctuations. It is intended to allow Brussels to finally be able to pursue its own economic policy.
Right. That is what the EU wants and that is the transfer union. The money for the stimulus programmes in economically weaker countries comes from the countries which are doing well economically and financially. I don’t think it’s good that soon the EU will decide on stimulus packages. This is a matter for member states and not everyone wants an intervening government. Revoking this freedom of choice from the member states – that is incapacitation and a division of responsibility and financial effects of state activity. A country that pursues poor economic policy can rely on the EU to step in with resources from other countries.
But a new euro finance minister could issue sanctions and withhold payments if a country does not adhere to European law and agreements.
Your question chimes with the usual German romanticism over Europe. That will not occur de facto. Since the Maastricht Treaty, we have already had sanction options and treaty violations have never been sanctioned. And in this institutional framework it will stay that way, with or without a euro finance minister.
What is Schäuble’s motivation to work toward a euro tax?
Mr. Schäuble’s European policy behaviour has not been guided by German interests for some time now. Our scope for decision-making has become more and more restricted and we are increasingly ending up in the role of European paymaster. This can only be explained by Schäuble’s personal ambition. Perhaps he wants to go down in history books as a meaningful architect of European unification. After all, he promotes the development of a centralised European federal state. But that contradicts Europe’s model for success as a union of sovereign countries. In the first 40 years of its existence, the EU was only successful because its member states maintained their independence and stood in competition with each other.
But the way it is going now – the weekly crisis meetings – it cannot go on like this. What do you think needs to happen?
You are right. It cannot go on like this. There are two logical possibilities. The first is the one that Mr. Schäuble and several other politicians have in mind: the creation of a fiscal and transfer union with a centralised economic government. The other possibility is the one I am partial to. We strictly follow the framework of the monetary union as it was originally agreed, particularly the “non-support principle”. The latter says that member states who have excessive debt or who recognise that they cannot be competitive within the euro, can leave the eurozone. Like the United Kingdom or Denmark, they can remain in the EU with their own currency and be successful that way.
Wouldn’t a Grexit be a humanitarian catastrophe for the Greeks?
No. That is the usual scaremongering. One can leave the euro in an organised way by re-introducing the drachma as a parallel currency. After about a three-year transition period, the euro can be completely withdrawn from circulation there. During this time, the state and large companies should transition to paying wages completely or partially in drachma. To do this, the government should issue an acceptance and usage obligation for the drachma. I have no idea why that should lead to a humanitarian catastrophe.
Just a few weeks ago you founded a new party known as Alfa. What distinguishes the new party from the AfD?
The AfD has been derailed with regard to its content. Migration, asylum and Islam are important issues but for me and thousands of other AfD-dropouts it is unacceptable to operate with a latently xenophobic and openly anti-islamic tone. What is more, on foreign policy the AfD has increasingly been following a naïve pro-Russian course. Alfa, on the other hand, is clearly committed to the West, to membership in NATO and the EU. Finally, the AfD uncritically cultivates the prejudices within the population regarding the free trade agreements TTIP and CETA. However, these agreements hold substantial economic benefit and the complex material on non-tariff barriers to trade and the courts of arbitration demand a differentiated approach. Populism is celebrating a revival in the AfD and that hurts Germany.
The AfD is calling for Germany to immediately leave the eurozone, Alfa is not. Are you too soft on euro policy compared to the AfD?
Although a German exit from the euro is desirable, it holds the danger of much larger economic shocks than a Greek exit from the euro. Moreover it is definitely useful for states to leave the euro, who are not managing well with the euro. This would already improve a lot for Germany. Realistically, one can hardly achieve more in the foreseeable future.
In light of the political conditions in Germany, a withdrawal from the euro for Germany is really far off in the distance. But if the euro cannot be made into a stable community again by considerably scaling down the currency area, it must be clear that Germany has the option to exit as a last resort and will make use of it.
Where do you see the AfD in five years?
My fear is that the AfD is developing into a German Front National. There are still sensible members in the AfD, and they find it difficult to leave the party. But after the mass exodus in recent weeks, these members are hopelessly in a minority. There is no more chance for them to change course. Unfortunately, further radicalisation of the party can hardly be stopped.
How many members does the Alfa have already?
We intend to take special care in accepting members and, for that reason, we are still working through the procedure. We have a four-digit number of admissions applications, which we are currently reviewing and will respond to.
And when will the party be up for election for the first time?
Probably already at the state elections in Baden-Wuerttemberg and Rhineland-Palatinate in March 2016. But first we are establishing the respective regional associations and they will likely decide on that in September.