issue 1 - Roland Berger

Interview DOSSIER #01
What does that mean in plain language?
It means that the total debt ratio will be much more
strictly observed and monitored in the future than it
has been in the past, especially during periods of
economic prosperity. We are convinced that the willingness
to enact reforms should not take a back
seat to any policies motivated by pressing shortterm
needs. Warning countries of impending economic
problems is much more effective than
complaining about them once they’ve become manifest.
But to be in a position to issue these warnings,
we have to receive, verify and analyze national
budgetary information and the long-term economic
and business plans well ahead of time. Only then can
we issue corrective recommendations.
How do you intend to ensure compliance?
Rest assured, we shall see to it that our recommendations
are implemented. The time for leniency and
understanding is over. The stability pact will not be
undermined. It is not to be viewed as merely a list
of invalidating circumstances. It is and remains the
EU directive.
But none of this will help if the figures submitted by
member states are incorrect, or if warnings are
ignored. After all, national governments ultimately
decide their own labor market policy, shape their
social system as they see fit, and set their country’s
level of taxation, and they do this entirely independently
of Brussels.
Naturally, the case of Greece came as quite a shock,
despite the fact that in 2000 the Luxembourg-based
statistical office, Eurostat, had already begun to
audit the data it had received from Athens. Nevertheless,
the size of the discrepancies is very much a
cause for concern. But what sense would it make to
ignore our constructive recommendations? Twothirds
of the total trade volume of the expanded
Union takes place within Europe. Does it not therefore
seem entirely sensible to take heed of our
reform proposals? Of course, I should add that we
too must exercise self-criticism as we go about our
work. We need to implement internal reforms and
publicize our proposals and successes to the European
public more broadly and transparently.
JOAQUÍN ALMUNIA, 56, is the EU commissioner
for economic and monetary affairs. He was
born in Bilbao in the Basque region of Spain. After
studying law and economics at the University of
Deusto (Bilbao) and in Paris, he lectured on labor
law at the University of Alcalá de Henares in
Madrid, and participated in the Harvard “Senior
Managers in Government” program. Almunia entered
politics in 1974 as a member of the UGT trade
union, which has close links with the Socialist
Labor Party of Spain. He became a member of the
Spanish Parliament in 1979. During the premiership
of Felipe Gonzales, Almunia took on greater
responsibility, initially as the minister of employment
and social security from 1982 to 1986, then
as minister of public administration until 1991.
Almunia has a reputation for being dialog-oriented
and open to compromise. He has already begun to
deal with the hottest issue of them all: reform of
the European stability pact.
The penalty for exceeding the 3 percent maximum
can amount to as much as 0.5 percent of a country’s
GDP. The EU budget could make good use of those
additional funds, couldn’t it?
In my opinion it simply isn’t advisable to impose
an additional debt burden on countries in this way,
thereby further constraining entire national
economies. The question once again is, What is the
best course to take if the growth rate is very low and
national debt can’t be kept below a certain limit? We
have to take such phases of stagnation into account
in the interests of the entire community of states.
Isn’t there a risk that member states, especially the
new ones, will note the bad examples, and that budget
discipline within the EU will weaken across the board?
I’m hoping for the opposite. After all, the states exchange
information and can learn from each other’s
mistakes. Naturally, much more can still be learned.
But in many cases the actual situation within the EU
is more complicated than it seems. We have to find
ways to set a realistic and future-oriented agenda,
preserve what is tried and tested, critically analyze
what we currently have, and be open to change. We
need to start rethinking what we know.
How do you envision this rethinking process?
It makes little sense always merely to be rushing
around repairing the mistakes of yesterday. Our strategy
is about avoiding mistakes in the first place. For
this the individual economic policies of the EU member
states need to be more effectively coordinated.
What new procedures does the Commission have up
its sleeve for bringing this about?
Careful observation of national budgets and more
transparency about problems and possible negative
developments, without losing sight of the overall
goal of creating an economically stable EU. This kind
of constructive partnership has been practiced far
too little in the past. In many cases, our recommendations
were down on paper but never implemented.
But pressure and sanctions from the top will go only
so far in bringing about the necessary change in the
way member states go about looking at the issues.
According to reform proposals, more attention needs
to be paid to the quality of national expenditure.
Moreover, expenditure on education and research, it
is suggested, should be removed from the calculation
of national deficits. It's an interesting fact that
the new member states have on average invested
more in education than have the old member states.
Would allowing the deduction of spending on education
be a sensible signal?
That needs to be examined carefully and discussed,
bearing in mind that the goals of the stability pact
are unchanged. We also have to make sure no obstacles
stand in the way of structural development.
think: act 37