In this first part of a wide-ranging exclusive interview with Mediapart, French Prime Minister Jean-Marc Ayrault pledges his government will do its all to keep the euro alive, argues that a delay should be given to Greece to meet its deficit target and answers mounting criticism that he and President François Hollande have capitulated their pro-growth policies with the adoption, without any compromise, of the austerity-promoting European Treaty on Stability, Cooperation and Governance, the TSCG. The French Prime Minister, in an interview conducted in French and translated here into English, calls on the treaty’s opponents to come clean that they want to leave the euro, and claims the election of President Hollande has announced a re-orientation of European policy-making. “I am convinced there has been an enormous degree of political weakness and lack of vision since the start of the crisis,” he comments, adding that European leaders are “beginning to be conscious of the major risks into which we will be plunged if Greece leaves the euro.”
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Mediapart: President François Hollande led his election campaign with the refrain that ‘I will only do what I promise, and I will carry out my promises’. During his campaign, he very clearly made the engagement to renegotiate the European Treaty on Stability, Coordination and Governance, the TSCG, drawn up by Nicolas Sarkozy and Angela Merkel. Today, you are presenting before the French parliament this same treaty. Why not simply tell the French people the truth, which is that you were unable to re-negotiate the treaty?
Jean-Marc Ayrault: There was indeed a negotiation. It is a package that I will present before the National Assembly on October 2nd, and then the Senate, on the 9th, and not just the treaty submitted for ratification. From a legal point of view, it is true that the treaty is the same. But is the political order, the context and the political perspectives that we can imagine the same? No. The re-orientation of Europe has again become possible. The engagements have therefore been kept.
We could always hold forth on whether the bottle is half-empty or half-full. But what has been obtained is considerable, and it is the fruit of the French presidential election. If there had not been a political change in France, nothing would have changed in Europe. It is a political fact, which was not guaranteed in advance. The lines are changing significantly, but Europe is a complex political construction, made up of compromises between points of view that ae often very far apart, where there is resistance to change. When François Hollande went to Berlin, as of May 15th, he wasn’t on the walk to Canossa. He explained that he had a mandate from the French people to work for a re-orientation of Europe.
The discussion has continued since, in a very difficult informal council meeting, in the face of very liberal [economic] positions. But subsequently things have moved. An on June 28th and 29th, the European council decided on a growth and employment pact, for the setting up of a financial transaction tax, which the Left had called for 15 years, and banking supervision. And things continue to move, as we saw with the recent decisions of the European Central Bank, which has at last decided to intervene on the markets.
Without the [French] presidential elections and a very large [socialist] majority obtained in the National Assembly, the situation would have continued to worsen. Now, a new path has been opened up. For me, the mandate given by the French people has been respected.
Mediapart: What guarantees are there that the promised evolution will be anything different to the last experience when the French Left was in power in 1997? At that time, socialist Prime Minister Lionel Jospin had been elected after campaigning against the Treaty of Amsterdam as it was presented, and yet finally gave up on this, promising that changes would be made afterwards. Despite the fact that 13 out of the then-15 EU member states were led by social democrat governments, the result was the Treaty of Nice, a treaty that increased the gap between governments and people. Why will anything be different this time around?
J-M. A.: Firstly, because Europeans stand before a historic choice. The governments and heads of state must take their responsibilities. Either they save the euro, either they let things carry on as they are and the risk of an economic and social cataclysm is enormous. France, the president and myself, will never take on the responsibility of letting the euro disappear. I am convinced there has been an enormous degree of political weakness and lack of vision since the start of the crisis. When you think that the Greek crisis has lasted two and a half years, that Greece represents just 2% of the eurozone’s GDP - and that European leaders didn’t know how to assume their responsibilities quickly enough.
Today, things have also changed on this issue. Even if Greece has weaknesses, a weak administration, social inequalities that continue, an unjust and little reliable fiscal system, we are going to help it return to a production economy. The Troika [Editor’s note: made up of the EU, the International Monetary fund and the European Central Bank] now has a more pragmatic and realistic approach. Something has happened among European leaders, including in Germany. [They] are beginning to be conscious of the major risks into which we will be plunged if Greece leaves the euro. For the European people, at any rate, it will be considerable economic and social regression. It could perhaps be the beginning of the end of the European project.
I also note that the principle German leaders have understood that a lack of sense of reality about Greece will send us on an absolutely uncontrollable adventure. Many also are beginning to say that it is unjust that Italy continues to borrow at 5%, 6%, despite the efforts of Mario Monti’s government. The role of the ECB must also be consolidated.
I say this to those who criticize us for not having obtained enough, notably a part of the [French] Left. Let them say aloud what they are thinking of in silence. For the moment, they don’t dare to say it because they know that public opinion won’t follow them. The logical consequence of their approach is an exit from the euro. On our part, we are going right to the end in defending the euro. Not out of dogmatism, but out of a sense of reality.
Mediapart: Many economists have commented that the plans put in place for Greece don’t allow the country to exit the crisis that it’s going through. The chosen remedy is hotly contested, and not only by those on the Left of the Left.
J-M. A.: The solution cannot be Greece’s exit from the euro. We can, already, give it more time to extricate itself.
Mediapart: Are you in favour of that?
J-M. A.: Yes. On one condition, which is that Greece is sincere in the engagement for reforms, notably fiscal [reform].
Mediapart : Do you think that it is?
J-M. A.: I discussed this with [Greek socialist Pasok party leader] Evangelos Venizelos in August and the Greeks are for the moment stuck on their fiscal reform. They are not able to make shipowners pay, and those in Greece who have a lot of money invest in property, abroad. All that is immoral. The Greek crisis is structural, but it is also political.
Mediapart: Returning to the growth pact to which you referred, aren’t the 120 billion euros allowed for extremely insufficient for the creation of a proper re-launching of the economy at a European level?
J-M. A.: That’s true. We need to go further. That’s why I repeat that the TSCG is not the alpha and omega of our European policy. It is the first stage of a re-orientation of Europe. One hundred and twenty billion in not enough, but it is better than nothing. And before we came to power, there was nothing. Certainly, it’s only 1% of Europe’s GDP, but it is also about [the amount] of the European budget for one year. Concretely, for France it represents several billion euros in investment, which will have [consequent] lever effects.
It will allow the unblocking of projects for the future on hold in the French regions. Without the election of François Hollande, nothing would have happened, because many countries are led by economically conservative governments. That is also what Europe is about. It’s a permanent battle.
Mediapart: Europe is a battle, but its peoples have the feeling that they are removed from this combat. It is fuzzy, led from up on high, technical. Whereas the hopes created by the French electoral campaign included that of a political renewal of this European debate. Was it a wily tactic to have promised a renegotiation, which has now become a re-orientation, and a growth pact on top which includes projects already in place, without any precise objectives concerning employment and growth? Why did you give in after just one summit?
J-M. A.: Don’t place the evolution of the role of the ECB in a rut. Up until François Hollande’s election it was a taboo subject. Now, it is progressively taking on a role that we would like to see it play. Subsequently, I told you that we need to go further and carry out other investments.
Mediapart: Ever since Jacques Delors became president of the European Commission in 1985, European peoples have always been told that things will be taken further but later on.
J-M. A.: If the orientations of Jacques Delors had been kept, Europe would be doing much better. Today, it’s a question of one stage. As for the treaty itself, read it properly, it speaks of a ‘structural balance’ of public finances, which signifies that one can also take into account moments of crisis. It isn’t the straightjacket that has been described.
Concerning the perspectives of French public finances, we will keep to the objective of a deficit of 3% [of GDP], because we want to control our destiny and to preserve our sovereignty. France’s problem is its debt. A debt that is not healthy, a debt from ten years of [governance of] the Right, a debt that has risen by 600 billion [euros] during the five years of Nicolas Sarkozy’s presidency. It served only to pay for current spending and to fill holes, while reducing tax on the richest. It did not prepare the future, while degrading public services.
This is not at all our approach. We need to take things back in hand. This choice will demand efforts, just ones, but which neither break our economy or our social model. It is neither Europe nor the treaty that imposes this upon us, it is our will not to let our policies be dictated by the financial markets.
Mediapart: But this objective of 3% is that fixed by the Maastricht Treaty and the TSCG. Even if it’s your political choice, it is also a return to adherence to treaties.
J-M. A.: Yes, it’s the respect of the Maastricht Treaty which was ratified by the French people. You can say what you wish, but you, at Mediapart also, must go right to the end of your argument, and explain that the only alternative is an exit from the euro. Politics is not about describing an ideal world, it is also about confronting oneself with reality. The reality is the common currency. So, do we leave it? There is only one party [the French far-right Front National] that says so, by playing on fear.
Mediapart: There are also Nobel economics prize-winners, like Joseph Stiglitz and Paul Krugman, who argue that we should question a system that stands on its head, and who believe the autonomy of the ECB, and the absence of any control, are part of a logic that favours the markets rather than the political logic that you speak of.
J-M. A.: Precisely, the reorientation of Europe is necessary to re-launch growth. Things are moving on the ECB, I have spoken about this, and we would like this to go further.
Mediapart: How far?
J-M. A.: As far as playing the true role of a central bank.
Mediapart: By lending directly to States?
J-M. A.: It could do so in a different manner, not necessarily direct.
Mediapart: Why not?
J-M. A.: At any rate, the debate is re-opened. But there is a condition. It could not be done without a coordination of economic policies, which implies a transfer of responsibility. We’re not there yet. But in this framework, the question of democracy is necessarily raised. We will not be able to reach new stages of European construction without a new stage in democracy. And this question does not only concern the European Parliament, it must also involve nations’ representatives.
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- See the second and final part of Mediapart's interview with Jean-Marc Ayrault, published on Tuesday September 25th, here.
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English version: Graham Tearse