Saturday, September 11, 2010

The German Finance Tsar's Super-German Stance

German finance minister Wolfgang Schaeuble

I liked this from the BBC's "Gavin Hewitt's Europe" blog, which is Hewitt's interview with German finance minister Wolfgang Schaeuble on Berlin's economic recovery policy. The official asserts that his country's path out of crisis is a correct one, and belabors the point that he wishes no one think that Germany thinks it's the correct one. 

Note the emphatic, traditionally German avoidance of any claim to leadership or even being in the right, a holdover from the country's post-World War II guilt and geopolitical introspection. It's also the consensus-building, lead-by-suggestion style that has characterized the German role in the EU integration process since its start.

Q, Gavin Hewitt: (...) With the German economy doing quite well [in light of the crisis], why is there still a need for an austerity programme here? 
A, Wolfgang Schaeuble: It is not an austerity programme.

Q: Well, it is spending cuts, 80 billion euros of spending cuts.

A: Yes, of course 80 billion in four years... it's not as dramatic as it may seem. Our programme fits in with the EU Stability and Growth Pact [to bring deficits down to 3%]. It's what we call a growth-friendly deficit reduction and that is a [foundation stone] for sustainable growth.
Q: But is part of the reason why you are doing it, to set an example to other EU countries? 
A: No, we are not the teacher for Europe. My principle is that every country has to do its duty... We have to defend the stability of the euro and we have to be in line with the European Stability and Growth Pact. And we are doing it. Not more, not less. And if we do so, we can ask our friends and partners to do the same, not more, not less. We are not the teacher of Europe [emphases by EurA].
Q: You say you are not the teacher of Europe, but Germany is sending out a message that other countries should not live beyond their means.
A: Germany sends out the message that in principle a balanced deficit reduction is not against sustainable economic growth. That is our message.
It means what all Europeans had in mind when we where all together in Toronto at the G20 summit... to say that deficit reduction or exit strategy as it was mentioned in the G20 policy since two years, is the right way.
Of course, you have to make it the right way to fit it into the special situation in any economy, but in principle it's necessary and it's a precondition for sustainable growth. I think the decision of the US is a little critical, but it is not up to me to decide it. For Germany our way is the right one and we won't destroy growth. It's the opposite. Our policy is very good and one precondition for a good economic development.
Q: And what do you say to those who argue that by adopting spending cuts and with other European countries cutting their budget deficit at the same time that it risks choking off growth, just at a time when so many economies are vulnerable?
A: No, the German example is proof it isn't necessarily so. In Germany our policy of a sustainable fiscal framework is a good precondition to increasing internal demand. Internal demand, consumption and investment are all increasing. We have had the highest figures of imports in Germany in the history of the Federal Republic of Germany, therefore what we are doing is not against growth, not in Europe, not in our global responsibility, but it's in favour of growth, sustainable growth. (...)

 Also see my previous post in response to an NYT piece on German national pride here, or below.

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