‘A crisis of confidence’

December 10, 2011

German Foreign Minister Guido Westerwelle spoke to The Washington Post’s Michael Birnbaum in Berlin as the summit in Brussels was underway. Below are excerpts from the interview. Westerwelle visited New York this weekend to award the Leo Baeck Medal to German artist Anselm Kiefer.

On the problems facing Europe:

What we are facing, and what we have to solve, is a serious debt crisis. This debt crisis brought Europe a lack of trust and a crisis of confidence. Therefore, we propose two solutions. First, we have to erect a firewall to solve the present crisis, and second, it is necessary to repair the deficiencies in the construction of the euro and the euro zone, which is a long-term issue.

If we do not fix the long-term problems, we will not fix the present crisis. The result of the debt crisis is a crisis of confidence, and we will only establish new confidence in the euro and the euro zone if we commit ourselves to more integration and a new chapter in European history.

On how to find solutions:

Our philosophy is that one cannot solve a debt crisis by making it easier to take up more debt. The answer to a debt crisis is budget discipline, is to understand that you cannot spend more money than you earn. It’s to understand that it is not acceptable to finance our present lifestyle with more debts against the future. The key question is: Will we be able to stimulate new budget discipline in those countries that are under pressure by the financial markets?

From our point of view, it is short-sighted management to allow more debts as a response to the debt crisis.

If you look at Spain and you look at Italy, these are two stable, healthy countries. Spain and Italy are stable countries with healthy economies. They wound up in difficulties because investors were concerned that they did not deliver early enough reforms. And the moment they decided to pass reforms through their parliaments, to respond to the crisis with structural reforms, that same moment you could see that it bettered the situation.

If the house is burning, you have to call for the firefighters, and help them in their work. But you also have to make up your mind why this fire started.

On criticism from some countries that Germany is seeking to dominate Europe by its actions in the financial crisis:

It is always the same with political leadership. If you lead, you are criticized by some. If you do not lead, you are criticized by everyone. And I think it is necessary that we agree on cooperative leadership in Europe. I do not strive for a German Europe, but for a European Germany.

We are not technocrats, we are politicians. It is our responsibility vis-a-vis our people to draw the right conclusions from the crisis. And we have to understand that we have to respond to this crisis with more Europe, and better European integration. This is our clear and firm commitment.

On calls to allow euro-zone countries to borrow money with the full backing of the European Union, also known as eurobonds:

It’s wrong. It’s a dead end. If we make it easier to take up new debt, you can foresee what the political reaction will be: Not discipline, but more deficit spending.

A nd on calls to unleash the European Central Bank to push down borrowing costs for troubled countries:

The German government is absolutely pro-European. We want to protect Europe. We want to see a peaceful, prosperous Europe and a successful euro. We think it is absolutely necessary not to do business as usual, which is to say: let’s print money and the crisis is over. This would be a boomerang.

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