France’s EU Economy-Finance Comissioner Discusses His Experiences and Visions Regarding the Future of Europe

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By  Axel Krause

 

Paris, March 14, 2017

Picture credits: Geert Vanden Wiljngaert (AFP)

This second of two interviews with two leaders is with Pierre Moscovici, who turns 60 in September and thus is of the same generation as seasoned US former ambassador to the EU Ambassador Gardner, subjet of the first, reflecting some striking similaries. As Gardner has a European past, Moscovici has close links to the US, likewise going back to childhood.

 

Graduate of France’s two prestigious institutions, somewhat similar to Gardner’s alma maters, the Institute of Political Studies, Sciences Po, and the National School of Public Administration, ENA, Moscovici, with early ties to left-wing political organizations and even today a member of the Socialist Party, has been in public service jobs since graduation.

 

He has been elected to legislative positions in France and to the European Parliament ; and held ministerial positons for European affairs and prior to assuming his position as France’s EU commissioner November 1, 2014, was the current Socialist governent’s minister for economy and finance. Since assuming office, he has had contacts with Gardner, among most other envoys in Brussels, but told me, admiringly, « not enough. »

 

You are credited with insights into the United States dating from  childhood. How so ?

My first contact was in 1962 (aged five) when my father was professor at Princeton University where I lived for a year and again in 1969 when he was professor of social psychology at Stanford. For me it’s an old friendship ; I spent my honeymoon in New York. And later in 1996 further developed that friendship in the Young Leaders program of the French-American Foundation.

 

What have been your professional and administration contacts in Washington since becoming a commissioner in 2014 ?

As finance minister of France (2012-2014) with (US Treasury secretaries)Tim Geithner and Jack Lew ; both were my counterparts.And since becomming commissioner at least three-four times a year ; at meetings also with the IMF, among others, such as the G20, and recently lectured at Harvard and others are now planned this spring with those in the administration, including at the White House and the Council of Economic Advisers. This afternoon I will have my first phone call with Steve Mnochin. (The administration’s Treasury Secretary) after I wrote him a letter and our agreement to talk.

 

What would you say are your most important achievements since becoming an EU commissioner ?

Taking into account that it (the 28-member commission) is a collective body and we are only half-way in our mandate, (until 2019) I have tried to focus on three main avenues of action. First, we now have a new vision , having introduced flexibility, subtleness, intelligence in the interpretation of the (EU) rules on fiscal policy, that have led to incentives for reforms that are less restrained.

Secondly, as the commissioner responsible for taxation, I have devoted considerable time to combating tax avoidance and fraud. I am rather proud that we have made considerable progress in the past two years, bigger than what was done in previous decades, influenced by the work of the OECD, the leadership of the G20 and pushed by the scandals, (revealed by, for example)) the Panama Papers…this has helped a lot in putting pressure on member-states.

We no longer have bank secrecy in Europe, including our closest neighbors, Switzerland, Monaco, Liechtenstein, Andorra ; that cover (rules on) automatic exchanges of information on tax rulings to fight tax avoidance. With my colleague, Margrethe Vestager, (Competition Commissioner)  we act with a very simple principle that multinationals must pay their fair share of taxes wherever their profits.

The third avenue of my priorities is Greece. Working hand-in-hand with Commission President Jean-Claude Juncker, whom I have known for over twenty years, we are fighting for the integrity and unity of the euro zone, that includes trying to avoid a Grexit – it must not and won’t happen – (with a goal of building) a success story with Greece in the heart of the euro zone.

 

In our recent interview with US Ambassador Anthony Gardner, he described that state of the TTIP trade-investment liberalization negotiations as being in « deep freeze. » That it relfects President Trump’s hostility to multilateral trade deals. What is your view ?

Let’s be very frank.Even during the Obama administration we were  far away from a global deal that we favored if concluded in good conditons, like the one we concluded with Canada. We recognized in light of the adminisration change, that the TTIP discussions would be frozen for a while ; my colleague Cecilia Malmstrom (EU trade commissioner) has said as much. We will engage with the new administraion, once all the relevant interlocutors are in place…to see where we might go.

But it is very clear that as of this moment the mood is not to re-launch ; but more broadly, this commission remains (nevertheless) commited to deepening free trade with key partners all around the world, avoiding a protectionist wave  that it is a mistake, would be a loss for the world economy, that it is a social deadend ; following a positive vote by the European Parliament we  will soon be able to implement the (similar trade liberalization) agreement with Canada, with followup negotiations with Mercusor (in Latin America) and with Japan. In our view, bridges, not walls, of this kind are the way forward.

 

German Chancellor Angela Merkel is still plannning to visit Washington this week for talks with President Trump, and with whom she has sharp differences mainly regarding trade and imigration. Do you consider her an important supporter of TTIP ?

I consider her a very important leader and think this meeting with President Trump is welcome. Because I think he must meet with the Europeans, know what they think, what their values are and how they see the future of our (trans-Atlantic) relationship.  But on trade, let’s be clear – any agreement on this TTIP is not for tomorrow. We were not (even) close to a conclusion.

 

Coming back to Greece, from your perspective as one of those responsible for the negotiations with Athens, has the situation there been resloved with regard to the euro ?

Spending 15% of my time on Greece I go there three, four times a year, and follow developments on a daily basis. I have been struck by the good image of the commission. But yes, they (Greeks) have a very tough life, lost a lot. They are also conscious of the efforts by their partners. Trying to be objective, I think we have made a lot of progress to get Greece out of the mess. There is no longer a real chance of a Grexit. It won’t happen.

This government (of Prime Minister Alexis Tsipras) after not negotiating for a period of time, has done more in terms of reforms, including on  taxation, the labor market, pensions, privatizations, than any other previous government. We still have reforms left, notably with regard to jobs. But the outlook is favorable, notably for GDP growth, now at around 2.7%.

We also need a sizeable budget surplus of important size to reduce the enormous debt…and more positive measures to sustain growth, for investments, which we now are discussing with the government. Such as a loan from the World Bank ; we are now working on it. Austerity cannot be the future for Greece. The future has to be growth.

There is tremendous capacity for creativeness in Greece, so let’s look to growth and remember what Mr. Tsipras and his government,, with whom we work very well, has already accomplished in terms of reforms , compared to all his predecessors.

 

How do you view right-wing, populist movements seemingly gathering ground throughout Europe that could weigh heavily on EU economies, if they come to power ?

We have an enormous challenge to fight contain populism all over Europe with elections ( beyond Holland, France and Germany) also in Bulgaria and the Czech Republic in the months to come. I realize there are voters who feel they have been losers in globalization whether in Pennsulvania, Michigan, Wisconsin, who elected Donald Trump, or in eastern France twhere are those who favor Le Pen.

But I am confident whether in Holland, France or Gerany,  that they are not capable of taking power. We must dedicate all our energy, to fight through ideas to beat them…it is the responsibility of our political leaders to provide responses to our citizens those who feel excluded, feel frustration, anger. We need to create popular politics.A popular Europe.

In France, if Madame Le Pen were to come to power, it would mean the exit from the euro zone and even out of the EU. What would that mean ?  Without France, given the strong, raison d’etre of the Franco-German alliance, we, the EU, would be in a disastrous situation. It must not happen !

 

Assuming she wins the presidency, do you think she is capable of governing France ?

For me it is absurd. She won’t, she cannot win the presidential election. And yes, she might be in the second round (May 7) going from 25% to 40%, projected in the first round (April 23) would be enormous. But going from 25%to 50% is impossible. But let’s assume the impossible happens. She would have the means to deliver on her program, which would be a catastrophe for France, its people, and for Europe.

 

Coming back to EU views regarding the United States, do you feel that the US is still considered its closest military, economic and financial friend, as it was for decades pre-Trump ?

The answer is clearly and undoubtedly – yes. The US is and will remain our ally and our friend. That is our history. We must work to build that friendship, with the new interlocutors  in Washington, including by speaking frankly to them when we are on different sides of issues. Hoping that this consciousness also comes to Washington. The Trumpist way of politics is, however, not exactly the cup of tea of Europe.But that does not mean we should not work on our friendship.

 

Ambassador Gardner told us that, in contrast to earlier critical comments about the EU, President Trump has been quoted recently as proclaiming his love for the European Union.

This change if true, is welcome…we need a more united, not divided, Europe. I am confident that the new (Trump) administration will learn by doing, as our privileged relationship is as important for them as for us.

Regarding negative statements made by a possible US ambassador to the EU and the need for approval by the EU, it is true of all ambassadors who are named to a given post that they must have the approval of the hosting government. And the EU institutions will be carefully examining his commitments. It also happens on the other side of the Atlantic.We try to name diplomats toWashington who are capable of developing relationships with the United States.

 

How would you define the EU to an American audience?

As the most peaceful project in human history. First, it unified countries that fought against each other for centuries, like France and Germany, adding we could not have come out of the Second World War wihout the US. Secondly, it has emerged (taken together) with the US as the single, largest economy in the world.

 

Ambassador Gardner told us that in his view, the World War II arguments related to European construction don’t work much anymore, particularly with regard to young people, and thus it is a major challenge for the Commission to communicate better.

He is absolutely right. But for people of all generations, including ours – I was born in the same year as the Treaty of Rome – we have not known war here and even for a youngster who today is 18, he or she has always lived in a united Europe. Today we must be able to show people that we are capable of delivering on an economic and social basis, if we are to combat populism.

Yes,  Europe is not very popular, even in Europe. But the euro yes. The French, according to a poll of last week, 72 % do not believe they should get out. It is (perceived as) a symbol of strength, the second-largest currency after the dollar, and is only twenty years old. And it has ended (currency) speculation between member states. Therefore, it now is the time to complete the euro.

 

How so ?

As (former Commission president) Jacques Delors said, (the euro system) provides protection, but not dynamics, nor a system capable of creating growth and jobs.

 

Are you alluding to the idea of creating, as and others have suggested, a system of euro governance, even with a euro-based budget ?

Absolutely. I think we need a euro budget of the 19 member-states, to, among other things, combat unemployment, and that is why I am in favor of a minister of finance of the euro zone.

I only represent the Commission in the eurgroup whose presidency should be unified with the ministerial function suggested, which I hope my successor will be able to accomplish. With renewed leadership (following national elections) in France and Germany, I hope this will come about.

 

Finally, what is the current outlook for the EU economy ?

Quite good…moving from 1.6% to 1.8% growth this year and next ; all members are now in positive growth, though we lack investment , which is why we developed the Juncker Plan of some 315 billion euros. The problem (with the growth rate) is still not strong enough to significantly reduce unemployment in the way we would like it to happen, and to face the challenges ahead, such as the Brexit. I would say (summing up the economic outlook) – solid, strong, including Spain and Italy, but could be better. I might add, I consider Mr. Juncker because of his experience and capacity, knowing everything and everybody, the best president since Jacques Delors (who served from 1985 to 1995).

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