Nikkei: The leaders of the euro-zone countries have reached an agreement on the measures for the short-term stabilizing of financial markets. Can you tell us about this decision?
Jean-Claude Juncker: It was my wish and will that we would come to a decision during this European Council on the 28th and 29th of June, a decision that would have a short-term effect on the financial market. As the four presidents (of the Euro-Group, European Union, European Commission and European Central Bank), we have presented a medium- and long-term oriented report about the future development of the monetary union. However, this isn't an answer for the financial markets.
We had to also make a short-term formulation in order to meet the expectations of the financial markets. We also made it particularly for Spain and Italy. Both countries do not need assistance programs, because they meet all budgetary requirements. But their biggest problem has been with financing normal interest rates on financial markets. This situation puts big pressure on both of these countries through higher interest burdens. These rates should be reduced to levels at which both countries can breathe better. They can now do this because we have clarified that we'll be able to lead the recapitalization of banks directly -as a safety net for Spanish banks -before the end of this year.
Nikkei: Reporters had pointed out disagreement between German Chancellor Angela Merkel and southern European leaders prior to the summit. Because of the summit's outcome, Ms. Merkel was criticized in the German media as being on the losing side. Do you agree with this?
Jean-Claude Juncker: No, I don't share the view that we are somehow in a kind of trench-warfare situation. That would be unnecessary. It's agreed-upon politics and also basic consensus in the euro-zone that we must take into account both on the consolidation of public finance and growth stimulus, because they are not contradictory. Thinking about the past, it was a mistake for the European Council to say good-bye to necessary budget consolidation. Now it must be done, as has already been decided. I also don't share the view that participants at the summit always need to be divided as either winners or losers. I find it a most primitive simplification of what is a very real exchange of positions. We all make efforts to find common ground, favoring virtuous and object-oriented decision-making. I see it as a success -I do not see Ms. Merkel as a loser, nor the rest as winners.
Nikkei: Then is it a question how swiftly you will implement this decision? You have said that direct capital injection into banks will take place through the end of this year. What is your plan?
Jean-Claude Juncker: We made it dependent on the installation of a centralized banking supervising authority, which we will have until the end of the year. Then there will be direct assistance to banks. Markets also know what can be expected in the coming months. It will become a matter for euro-zone finance ministers, who will deal with this legislatively as quickly as possible.
Nikkei: Could this be too slow? Positive decisions on tackling the debt crisis have been having shorter and shorter positive impacts on the market.
Jean-Claude Juncker: No, I don't think that it's too slow. We need time in our democratic processes to implement all of these measures. I understand that people want usable and quick decisions, however, the markets have become used to the fact that we in the euro-zone have 17 democracies, 17 parliaments and 17 governments. Democracies require more time than dictatorships.
Nikkei: Some members of the German parliament pointed out that this decision would violate Article 125 of the EU treaty, the so-called no-bail-out clause, which states that member countries cannot bail out others. Do you agree with this?
Jean-Claude Juncker: No. Today's decision doesn't violate this no-bail-out clause. This clause was fully respected. Mr. Mario Draghi, the President of the European Central Bank, has said clearly that he feels that what we have agreed upon has fully taken into account the framework of the treaty. Italy and Spain are not on the financial assistance program; they fulfill budgetary conditions impeccably. It is not the case that this capital injection is happening without any conditions and they have to meet up with the specific recommendation of the European Commission on individual countries.
Nikkei: The leaders of the euro-zone also decided that the European Stability Mechanism and the European Financial Stability Fund can also buy sovereign bonds effectively. While the prime minister of Italy, Mr. Mario Monti, welcomed this efficient procedure, it seems that Ms. Merkel sticks to strong conditionality. Does there seem to be opposition?
Jean-Claude Juncker: No. It was agreed that so long as Italy, for example, meets conditions and that it would adhere to the consolidation path, then it is in line with the conditions. I don't see that this will come to further trouble.
Nikkei: Will the role of the centralized banking supervision be played by the ECB?
Jean-Claude Juncker: We are very firmly in the opinion that the ECB should be entrusted with this task, as Article 127 of the Treaty of the EU addresses this. And the ECB is the right authority to take on this task because of its independency, know-how and enforcement power.