Schäuble: UK shouldn’t be punished for Brexit

Wolfgang Schäuble [ Flickr]

German Finance Minister Wolfgang Schäuble told EURACTIV’s partner Der Tagesspiegel that dealing with new US President Donald Trump requires a “calm” approach and that the UK shouldn’t be punished for Brexit.

Wolfgang Schäuble has been minister of finance since 2009. He represents the Christian Democratic Union (CDU).

He spoke to Der Tagesspiegel’s Robert Birnbaum and Albert Funk.

You are one of Germany’s most experienced politicians. Have you ever encountered anyone like Donald Trump before?

There are always new surprises waiting around the corner.

Are you anxious about this new “surprise” in the White House?

I always make sure to be cautious when confronted with such excitement and anxieties. Years ago, when the issue of debt relief for private creditors and Greece was on the table, the then president of the European Central Bank, Jean-Claude Trichet told me: Wolfgang, this is the worst period since the Great Depression in the late twenties! I told him: But Jean-Claude, the Second World War wasn’t exactly harmless!

Can you explain Trump’s success?

Donald Trump has certainly grasped the usefulness of these new communication techniques earlier than others and has used them effectively. But many, and Americans know it better than I, have asked: are you actually surprised? Haven’t people noticed how that country has sunk deeper into a split? The Tea Party was one of the first warnings. And when an election system doesn’t allow the vote to be won by the middle-ground, then stability has been lost. The middle can be boring. But its great advantage is that it acts as a bulwark against extreme social fluctuations.

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How do you deal with an American president that calls into questions the functioning of the Western community?

With calmness and firmness, like how the chancellor (Angela Merkel) is doing right now. We cannot go into shock. Incidentally, we have no interest in lecturing the Americans day after day. We just have to say that we have our beliefs, we note that the new US administration appears to have different ones and that it is something we are willing to sit down and talk about.

Trump seems to be trying to run things how he would run a business: bluffing, a proactive approach and then withdrawing whatever is being proposed.

We cannot allow ourselves to be provoked nor to do the provoking ourselves. Nominee for US Secretary of the Treasury Steven Mnuchin has not made too many comments. I will speak to him in the same way I spoke to his predecessors and try to bring him over to our way of working. A strong US is important to us and it keeps the world on track. But Europe has grown and we know what responsibilities we have.

So Trump wants to divide Europe…

I don’t know Donald Trump personally but when you ask me that, I have to say that no he doesn’t. But he is testing the waters.

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European leaders want to strengthen defence cooperation to prepare for the rest of Trump’s presidency and a weakened NATO. However, the new president will most likely divide Europe, not bring it together, warns Jonas J. Driedger.

Given all that he said during his campaign, is it not a possibility?

What would the US president gain from dividing Europe? The Americans have a clear idea of the economy, democracy and things of that nature in their minds. In that regard, they are closer to Europe than to anyone else in the world.

What does Trump’s trade representative, Peter Navarro, mean when he accuses Germany, an export nation, of currency manipulation, to the detriment of the US and other European countries?

It’s not something we should dwell on. Washington will eventually realise that European monetary policy is not dictated by Berlin but by the ECB. And also that this finance minister is not its biggest fan. But our monetary policy is also independent and I hope that once Federal Reserve chief Janet Yellen’s term ends, things will progress as they have done.

That same accusation has been levelled at us by other countries with negative trade balances!

The ECB has to come up with a policy that works for all of Europe. For Germany, it is too loose. The euro exchange rate is too low for the competitiveness of the German economy. When ECB head Mario Draghi began this expansionary monetary policy, I warned him that this would drive Germany’s export surplus up.

Trump has plans for huge investment programmes with more debt looming…

If you want to increase growth in the short-term due to strong public demand, then the current situation means it’s going to be difficult to keep interest rates down without risk of inflation. That is not what the sustainability of America’s economy needs right now.

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Germany is chairing the G20 this year. “America first” isn’t exactly in line with the forum’s emphasis on cooperation. Is there a risk of a crisis?

It’s not just the US, but they are the most important member of the G20. It’s not going to get any easier either. We, the Germans, the Europeans, the G20, believe that the world needs more multilateral solutions to its common problems, whether people like it or not. If we want global stability then this “deal” mentality is not going to be enough. We do not need solutions where there are both winners and losers. Those in the property market might want it to be. But the world needs a win-win situation. It’s better and more stable.

If Europe does heed this wake-up call then what does it need to do in practice?

Within the EU, we need to ascertain what we can actually do in unison and what we need to do as individual members. The challenge of digitalisation or energy policy cannot be handled by countries acting alone. Only when we act together will Europe remain relevant internationally. We have to stabilise our immediate neighbourhood. We have to stay in dialogue with Turkey. Sigmar Gabriel once said that the Poles have to be met with outstretched arms. I hope that he stays as foreign minister. We also have to try and develop a reasonable relationship with Russia. That’s not going to happen overnight. But President Vladimir Putin must, in the medium-term, be interested in a reasonable relationship, based on mutual respect and cooperation with Europe.

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How do you feel about the United Kingdom and its prime minister’s visit to Washington?

Britain is always rational in pursuing its interests, even if the Brexit vote was not the smartest decision. For us, the main objective is to keep Europe together. The UK now has to properly detach itself from the EU. But we do not want to punish the British for their decision to leave the EU.

Prime Minister Theresa May wants some form of customs union.

We want to keep the UK in the fold. The City of London, for example, helps the European economy. London offers financial services that are hard to find elsewhere on the continent. That would indeed change once they leave, but we have to find some reasonable rules for this.

What are your thoughts on Martin Schulz entering domestic politics?

The SPD (Social Democratic Party) has made its decision. Martin Schulz was an effective president of the European Parliament. I was never that enthusiastic about his way of doing things but it, undeniably, had an impact. His nomination has at times been greeted with euphoria by the SPD, which is understandable given that it sees itself as a junior partner in the coalition under a form of Babylonian captivity. We are going to take him seriously.

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Martin Schulz is known in Germany mainly as a European politician and an ally of Chancellor Angela Merkel. But later this year they will face off in the country’s leadership race. EURACTIV’s partner Der Tagesspiegel reports.


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