Karel Lannoo: European politicians are incapable to defend the European project

We are all bound together, and it is a lie that only Germany and the Netherlands are supporting Europe

Karel Lannoo

Italy has no problem to find money. Its debt is relatively high but is less compared to what Greece had during the crisis. Italy can find market for its debt, so I see no problem, at least not in the short term, said Karel Lannoo, CEO of CEPS, in an interview to Europost.

Mr Lannoo, were you surprised by the news that German Chancellor Angela Merkel will quit as CDU party leader and will not run for re-election as chancellor in 2021?

Not really. Her party suffered huge losses at the elections recently. In Hesse, for example, the Christian Democratic Union (CDU) has received its worst result in over five decades. The same happened in Bavaria few weeks earlier for the Christian Democrats' partner in the conservative coalition - the Christian Social Union, which marked their worst outcome in about 70 years. For a long time, there was a lot of pressure on her in Germany. So the news that she will quit her party leadership and will not run for fifth term as a chancellor was not a surprise.

Is it Merkel's open migration policy that weakened her position on the national scene?

It certainly played some role, but I think there were also other things. She has been in office for a long time, 13-14 years now, and that is 'l'usure du pouvoir' (the 'wear and tear' of power).

Do you agree with some analysts who said Merkel's message that she will quit politics in 2021 was a bit hasty?

We don't know, but this morning I've read the opinion of Javier Solana, who thinks that Merkel will liberate herself from internal domestic issues and can focus on European policy, and that it will be her legacy together with the courage she had with the Syrian refugees. Well, she is at the end of her carrier as chancellor but she still can develop a career at the European level. Until 2021, there is a lot of time and she can change her mind in the meantime, and even go for an international post.

What do you think about predictions that the German government will collapse much earlier than the next federal elections?

That is also possible, but it depends on the cohesion among the parties in the coalition. If they call for early election this will certainly not benefit the Christian Democratic Union/ Christian Social Union, or their coalition partner in the government - the Social Democratic Party, and I think they will hold together. Because early elections will benefit only Alternative for Germany, the Green Party and the Free Democratic Party.

What is your opinion on another issue with big public resonance - the Italian budget rejection by the Commission, for breaching debt rules, and the government in Rome saying it hasn't plan B?

It was Matteo Salvini who said that Italy will not change its draft budgetary plan for 2019, but formal rules are formal rules. And if the Commission asks from a member country a revision of their budget, this state has to obey. There will be an intensive dialogue on the issues and I think finally they can find a compromise. Otherwise, the Commission probably will start excessive deficit procedure.

Over the years, the Commission has applied many flexibilities concerning the Italian budget, as EC President Juncker recalled recently. Why now it is not doing the same?

You mean the French budget maybe. Italy's budget deficit was always below 3% of gross domestic product, and France's was always above 3%. So, for whom were the flexibilities? There was no need of flexibilities for Italy, but there was such need for France and other countries. Of course, there were other criteria, such as debt level.

Aren't the Italians right, saying that economic growth is the best way to get out of the debt trap?

Italy has a different line. Salvini said: “We need spending to promote growth.” They want to achieve growth in order to get out of the debt crisis, whereas the Commission said: “No, you have to address some structural problems.”

It means to continue with the austerity, isn't it?

Exactly.

Is it possible for the Greek scenario to be repeated somehow with Italy, and can it affect the whole Eurozone?

Italy has no problem to find money. Its debt is relatively high but is less compared to what Greece had during the crisis. Italy can find market for its debt, so I see no problem, at least not in the short term.

Moving to Brexit, what can happen if the two sides do not reach a deal?

It is very likely not to have a deal. And everything that we can read in the newspapers will happen. There will be a kind of disruption for Britain, but for other countries in Europe as well.

What is your opinion concerning the depth and the intensity of the debate on the future of Europe against the backdrop of the coming European elections?

We will have a big summit about the future of Europe in May next year in Sibiu, Romania. I expect there will be new proposals, but we also had proposals from the past months. It will be a very important debate in the context of the European elections as well.

What are the factors that nourish so strongly the rising Eurosceptic wave in some Member States?

Populism, lies, stupid statements, and incapacity of the European politicians to defend the European project. One example is the statement that Germany upholds the whole of Europe. Nevertheless, as we know, the other countries are supporting the German economy as well, they are buying German products. We are all bound together, and it is a lie that only Germany and the Netherlands are supporting Europe, as key contributors to the common budget. It is simply not true. For instance, 30% of the cars in Italy are from German origin, and we don't know the share of the American cars that also come from Germany in the Italian market. So maybe they are altogether 40%.

The citizens are tired from the 'more of the same' narrative and deeds, but do you think that traditional parties will manage to scrap the cliches and regain voters' trust next May?

It is difficult to say. We cannot generalise. It differs from country to country, look at France, look at Spain, at the Netherlands, compared to what is going on in Germany, in Hungary, and in the United Kingdom. We can't get it right.

Nowadays, 'fake news' is a buzzword, but can the disinformation spread over social media really change voters' preferences, or will it be used as an excuse for an eventual failure?

Fake news certainly manipulate public opinion. If someone says this or that and it is not true, what will happen then? Spreading disinformation can change voters' preferences.

What will be new on the political scene after the European elections, according to you?

It will be more difficult to take decisions at the European level. For many people, the European elections are not so significant, it's the national elections that are more important.

Are there possibilities to cope with migration issues that cannot be solved for three years already?

We need more European approach, but it is obviously difficult for Member States to find an agreement.

How do you understand the phase “the time for European sovereignty has come”, said by EC President Juncker in his State of the Union address?

But Europe is sovereign, because it can take sovereign decisions. The European Parliament that is democratically elected is taking sovereign decisions. The European Commission is taking sovereign decisions, as well.

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Karel Lannoo has been the Chief Executive Officer of the Centre for European Policy Studies (CEPS), a Brussels-based think tank, since 2000. He worked at the Ferruzzi group and is an expert in European monetary policy, banking and financial markets, financial market regulation, European Union business policies and corporate governance. He has chaired various working groups at the CEPS and has taken part in several studies and working groups for Spanish organisations, European institutions, the OECD, the Asian Development Bank and the World Bank. He serves as Director of Lannoo publishing SA and Distrimedia SA, and has been a Director of Bolsas y Mercados Espanoles SA. He has published a prolific amount of articles and reports in European journals and newspapers. Karel Lannoo holds a degree in Philosophy, an MA in History from Leuven University in Belgium and a Master's degree in European Studies from Nancy University in France.

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