Mark Breddy and Stephen Evans: What have been the presidency's main achievements?
Nicolas Schmit: I do not consider that there have been any failures. There was perhaps a non-success at the end, but it was not a failure of the presidency. The main achievements are multiple. First of all, we achieved the reform of the Stability Pact, which was absolutely necessary after all the discussions on how stupid or inefficient the pact was. In a way, I think we put the Stability Pact back on track, because if we hadn't got this reform, the pact would have been out anyway. So I think this was a very important achievement for the presidency.
I think in the end we achieved a reasonable relaunch of the Lisbon Strategy. We really succeeded in restructuring it, focusing the various objectives and making it leaner by increasing its efficiency in terms of implementation. We now have to see what the developments will be in the different Member States, but this was quite a positive achievement.
I also think we were quite successful in the transatlantic relationship. Having a summit in Brussels first and another one in Washington showed that the transatlantic relationship has improved. The Iraq conference was also quite important, showing that Europe was once again more united on the Iraqi question, but also that there was renewed cooperation with the US and a lot of other countries to help the new Iraqi government establish a democratic system, more security and a state of law in Iraq. I think this was also an important achievement.
Then there were the decisions reached on development aid: the commitment to dedicate 0.7 percent of national budgets to aid by 2015, going beyond what had been previously decided. We now have a real aim for the European Union in a time frame which is quite realistic. Although we shouldn't really mention it (it still has not been finalised), there was also the agreement on the statute of MEPs, which was quite a difficult exercise which had not been resolved under different presidencies. We were lucky to bring it to a positive conclusion. Then there are a series of elements which are linked to the Lisbon Process. Take, for example, the post-Kyoto objective on global warming. We finally established a new objective for negotiations, which should prepare the post-Kyoto era. Then there was another issue that was quite complicated and which failed under various presidencies: the Eurovignette. We got an agreement on this which was important, not only in terms of transportation policy, but also in terms of financing, big infrastructures and also helping the environment.
So, broadly speaking, there were some good results. There is one issue which you might call a failure, but which I prefer to refer to as a non-success, because the presidency did whatever it was able to do to present a coherent and balanced compromise on the financial perspectives.
Mark Breddy and Stephen Evans: Mr Juncker has said the EU is in deep crisis. But the EU has worked well for over 50 years without a constitution, delayed budget deals are the norm and has just completed a successful expansion. Where is the crisis?
Nicolas Schmit: I wouldn't speak about a crisis, but it depends on how you define a crisis. A crisis is a situation where you have serious problem which you don't exactly know how to resolve. But at the end you are confident that you will be able to find a solution.
Europe has experienced a lot of crises. Very often the crises have led to new impetus and a new start. If this is what a crisis is, then we are going through a crisis. If we remain in this kind of stagnation, that would be much more serious and much more problematic. It is a difficult moment because of enlargement and because we have somewhat lost the support of public opinion. This, I believe, is a major element. The constitution is not the reason behind this. Europe's lack of contact with its citizens is a broader phenomenon which goes back further. If you add to that a number of national issues, then you can understand the results in France and the Netherlands. I would not emphasise the failure of reaching an agreement on the financial package too much. It would have been better to solve problems now and to have come to an agreement. It would have left us much more time. We could have prepared the discussing a reform package of this size, you can never guarantee where the process will end. You can only guarantee that you will start discussing it. We considered that there had been an agreement on the CAP until 2013, including the phasing in of new member countries. It was a difficult agreement in 2002, but it was an agreement. You cannot just put into question this kind of agreement a few days before an overall agreement on the budget is expected. You cannot just put that into question.
This was the big surprise, when the British suddenly not only questioned the 2002 agreement, but said 'well, we have to reshuffle the whole financing of European Union policies in a much more radical and a much more global way. I do not put the necessity of this kind of debate into question. I think we need to have this kind of discussion and debate on Europe's priorities in the future. (...) Everybody more or less easily agreed that we should open this discussion, including the financing of the CAP, but to block the conclusion of the financial package for that reason was, I must say, difficult to understand.
Mark Breddy and Stephen Evans: Was it a mistake for Luxembourg to become so closely identified with the Franco-German position? Can it any longer play the role of independent broker?
Nicolas Schmit: This is a matter of opinion. What we asked the French was to give up quite a large part of funding which was planned in the 2002 package. So we reduced funds allocated in the 2002 agree-programmes much more easily, but we all know that in politics too early is just too early. People like to make decisions when they consider that they cannot do things any differently and that they are obliged to act. So I wouldn't over-dramatise the non-success of the last European Council too much. It certainly, I repeat, would have been better to reach a decision. Now we have to see what will come out of the situation.
We are also entering a period of debate. We have to see what will happen with the constitution. I'm still confident that the constitution has not definitively been taken off the agenda. I think that if we work well, we can change the overall attitude in Europe and switch again to a more globally positive attitude towards the European Union and specifically towards the constitution.
Mark Breddy and Stephen Evans: Mr Juncker suggested that all EU expenditure be reviewed as from 2009. Did this mean a complete, binding rethink of all spending including CAP, rebate etc?
Nicolas Schmit: What we did to come closer to the British position was that, on the basis of the overall compromise which we had tabled, we had agreed with the British that there could be some opening on the whole financial aspect of different policies, including the financing of the Common Agricultural Policy. This could have started around 2009-2010. You cannot just enter a new broad reform package like that and end within two or three months. You need quite a bit more time for this sort of thing. When you start ment to Bulgaria and Romania from eight billion euro to three billion euro. I think even the Germans, with their very particular situation, had to accept that they did not get what they wanted, in terms of the reduction of their own contribution. It goes without any doubt that one of the major issues in this negotiation was the British rebate. Nobody really supported the British on the rebate. This was shared by 24 countries, not only by France and Germany. All the others, including the new member countries, put into question the way in which the British rebate was calculated, how it was presented.
So we knew and I would say that the present presidency should know they will never reach an agreement without touching the British rebate. Even Tony Blair has recognised it. The point he is making now is to say 'OK, I'll put the British rebate on the table and therefore, for that reason, we have to put everything on the table, the whole financing of other policies, especially the CAP. But he does not contest, as he said, that the British rebate is an anomaly comparable to the anomaly that is the CAP (well, that's his view), therefore it has to be discussed and reformed.
Mark Breddy and Stephen Evans: For a man that was perceived all over Europe as an honest broker, Mr Juncker used some rather undiplomatic language during his speech at the European Parliament. Has he lost his reputation as an honest broker?
Nicolas Schmit: I'm not responsible for Mr Juncker's comments. He was certainly tired and disappointed and when you are tired and disappointed it can happen that you are harsher. I think the disappointment was shared and that (Juncker) believed he had put forward a fair deal, even on Britain's terms. We did not propose to abolish the British rebate or to replace it with something else. We just wanted to reduce it and do no more than freeze it by taking out the new (expenses) of enlargement. And even then, not all elements of enlargement, because we suggested that the cohesion part of enlargement should be taken out of the calculation of the British rebate, keeping, for instance, the part on agriculture, for good reasons. So I think that was why perhaps the disappointment was so big.
This request came at the last moment: 'if we talk about the rebate, we have to talk about everything. We all know that it is not realistic to have this kind of a deal at such short notice. One has to say that in the letter signed by the French and the British and four others, this was never mentioned. It was never mentioned for good reasons, because they would never have been able to sign a common letter if both elements (the rebate and the CAP) had to be mentioned, although the letter recognised the 2002 deal. So this was a bit of a surprise and the reason behind the disappointment. And therefore it was presented as a position too close to the Franco-German position, which it was not meant to be at the beginning.
Mark Breddy and Stephen Evans: Some have said that the changes in the Stability and Growth Pact rules have set a precedent for EU rules to be ignored by powerful countries. How do you counter this argument?
Nicolas Schmit: We had to reform the Stability Pact. We had to make it more flexible, align it more to economic and financial constraints in Europe, otherwise it would have anyway been out and nobody would have taken it seriously any more. This also partly came from the position of two big countries having difficulty abiding by the constraints put into the Stability Pact by the Commission in 2003. What was done in the end was not to abandon the rules, but to perhaps make it easier to apply the rules, by taking into account that budgetary policy is strongly linked to the economic situation. That was the major idea behind the reform of the Stability Pact. It means that if the economic situation and the overall economic environment is not very favourable, you should have a larger margin to adjust public finances. But, on the contrary, when the economy is healthy, then you should have a stricter and restrictive budgetary policy, providing a larger margin for the periods when you are having difficulty in bringing down your budget deficit. So I think we now have to see if this is workable, if it can be applied.
We have seen with Italy that the Commission has said 'well, OK, we will give you one more year to start adjusting your public finances'. We cannot deny that Italy is in a bad economic cycle with a very low growth rate. Forcing Italy to reduce her budget deficit dramatically now would certainly worsen the situation. So I think we need to have a more flexible approach in applying the Stability Pact, because it's not only called the Stability Pact, it's Stability and Growth Pact.
I think we also have to keep an eye on growth. What is the major weakness in continental Europe? It's the problem of unemployment. I fully agree with Tony Blair that this is where Europe's real challenge lies and that we have to do something for growth and to bring people back into jobs. I'm not convinced that economics is an exact science like physics (although some people say that physics is not an exact science). You need some political margin to manoeuvre. Even in Britain, where you do not have exactly the same constraints, there is a very good political management of the economy, which has been successful for a very long period, bringing growth that is superior to what is the case on the continent. You cannot manage the economy like an accountant. That's not economics, that's accountancy.
Mark Breddy and Stephen Evans: Why have Luxembourg's voters apparently turned against the constitution? The evidence appears clear from both polls and from people's comments.
Nicolas Schmit: You say apparently, I do not trust polls and evidence gained from talking to people is anecdotal and non-scientific. I meet people who are in favour of the constitution and I meet people who are against the constitution. We knew from the outset that we would not get 90%/100%of will change back. We are entering a period of serious debateon Europe which will give new impetus to the European project. There were many elements which were used by Tony Blair which can be helpful in this respect, particularly in the economic field. He said we have to have a debate on the social model. Lets have it. Let's discuss what the major models of the European Social Model are or should be, what should be developed, what should be preserved and how it should be preserved. I fully agree that we need a strong economy, as without it we can not sustain our social model.
So by that argument the tide may change again so that we have a new perspective of Europe which would allow the process to start after a delay of perhaps a year. This delay is regrettable, but then the French have to say what they want. They virtually all say they want more and better Europe, so we will have to see. Perhaps they will have to vote again, we can see what can be amended, but this has to be discussed at the right moment.
Mark Breddy and Stephen Evans: So with a Luxembourg no. the process still continues?
Nicolas Schmit: If there were a 'no' it would be a serious blow, as all 'noes' have been, therefore it is important to have a yes as it will show that a referendum can be run and that a new push can be given. But then I can't say that just because Luxembourgers say no that should prevent the Polish people, for example, expressing themselves. We are a small country, but a founding member and so this would be an encourage-Luxembourgers in favour. Certainly, there is the influence of opinion from neighbouring countries and the 'no' votes. There is now a very strong campaign from the 'no' camp bringing in all, kinds of 'no' sayers from France. But I am quite confident that a majority of Luxembourgers are committed to the constitution representing a certain view of the European integration process.
I think if we lose the constitution, I cannot say where we would go or what would happen. Would we work on another one, would we keep some elements of this one. Or will we just go on with Nice with all its weaknesses and without a strong political framework which is one of the major aims of the text. I think the major issues is 'do you want to have some certainty that Europe evolves in a certain direction for more political integration, a stronger institutional background', or do we enter a phase where we do not know where Europe is heading. Having said this, I do not think we would retreat to the EU just simply becoming a free trade zone. I think we have a big responsibility. We have a common currency and we have to show that Europe is a political entity and it is important to consolidate this.
Mark Breddy and Stephen Evans: What are your hopes for political integration, because, for example, we have had a framework for common foreign and security policy since Maastricht, but still there is little unity of action.
Nicolas Schmit: We started in Maastricht and we all know that Europe is a process and everything canment to the rest, showing that this process is not dead. It should give others confidence that if Luxembourg is riot afraid of being suffocated by Europe, why should a big country feel the same way? We certainly have to adjust certain policies and certain ways in which Europe is managed. There is a need for reform in Europe, but then we need to find which reforms are needed.
Mark Breddy and Stephen Evans: Do you think referendums are the best way for countries to decide on such complex issues?
Nicoals Schmit: [Pause] Well. [Pause] It's a very difficult question. When I am out in the villages talking to people I am asked 'why did you ask us, was it really necessary? You have approved all the previous treaties, why now?' That's right, but on the other hand we need to open a debate to move "Europe forward again and there is probably no better way, even if you run the risk of failure. Out of these failures we can take some lessons which will lead to positive decisions. For example, yesterday I was in a meeting in a village with over 100 people who had read the text and were asking all kinds of questions. That is very stimulating. For years we have never had such a political debate here as it was always a non-issue. People have started to be interested and we have to maintain this.
Mark Breddy and Stephen Evans: Will the constitution allow for the European Court of Justice to act in a legislative fashion?
Nicolas Schmit: Will law be decided by judges? [Pause] We have to be cautious on that, because there is the principal of a not be achieved at once. Now, with the constitution we would have gone into a new phase, not only institutionally speaking, with the possibility of a foreign minister bringing things together being more capable of defining common orientations for foreign policy, but also strengthening the military element of the European political union. So this is a long way from what was in Maastricht.
Mark Breddy and Stephen Evans: If there is a Luxembourg yes, how could you envisage the constitution being passed by all 25 EU Member States?
Nicolas Schmit: Luxembourg would be the 13th country to ratify, which leaves us with ten countries to undertake ratification. The process has gone on and it has not been stopped and why should it have just because the French had a problem. We have to see how we can solve their problems and any others which may occur, but we are in a different situation than in 1954, when the French rejected the Defence Community, as we now have a more pluralistic union. We have to go on now. A lot can still happen and I have not lost hope that the situation will change back. We are entering a period of serious debate on Europe which will give new impetus to the European project. There were many elements which were used by Tony Blair which can be helpful in this respect, particularly in the economic field. He said we have to have a debate on the social model. Lets have it. Let's discuss what the major models of the European Social Model are or should be, what should be developed, what should be preserved and how it should be preserved. I fully agree that we need a strong economy, as without it we can not sustain our social model.
So by that argument the tide may change again so that we have a new perspective of Europe which would allow the process to start after a delay of perhaps a year. This delay is regrettable, but then the French have to say what they want. They virtually all say they want more and better Europe, so we will have to see. Perhaps they will have to vote again, we can see what can be amended, but this has to be discussed at the right moment.
Mark Breddy and Stephen Evans: So with a Luxembourg no, the process still continues?
Nicolas Schmit: If there were a 'no' it would be a serious blow, as all 'noes' have been, therefore it is important to have a yes as it will show that a referendum can be run and that a new push can be given. But then I can't say that just because Luxembourgers say no that should prevent the Polish people, for example, expressing themselves. We are a small country, but a founding member and so this would be an encouragement to the rest, showing that this process is not dead. It should give others confidence that if Luxembourg is not afraid of being suffocated by Europe, why should a big country feel the same way. We certainly have to adjust certain policies and certain ways in which Europe is managed. There is a need for reform in Europe, but then we need to find which reforms are needed.
Mark Breddy and Stephen Evans: Do you think referendums are the best way for countries to decide on such complex issues?
Nicolas Schmit: [Pause] Well. [Pause] It's a very difficult question. When I am out in the villages talking to people I am asked 'why did you ask us, was it really necessary? You have approved all the previous treaties, why now?' That's right, but on the other hand we need to open a debate to move Europe forward again and there is probably no better way, even if you run the risk of failure. Out of these failures we can take some lessons which will lead to positive decisions. For example, yesterday I was in a meeting in a village with over 100 people who had read the text and were asking all kinds of questions. That is very stimulating. For years we have never had such a political debate here as it was always a non-issue. People have started to be interested and we have to maintain this.
Mark Breddy and Stephen Evans: Will the constitution allow for the European Court of Justice to act in a legislative fashion?
Nicolas Schmit: Will law be decided by judges? [Pause] We have to be cautious on that, because there is the principal of a social market economy. The market has a social dimension. So how far can this be evaluated by a judge? All our constitutions (except the unwritten UK constitution of course) have a lot of general principals and declarations. Europeans have much in common and we have to identify ourselves with some values and common objectives. In Britain it may not be common to talk of a 'social market economy', but what people expect from an economy is social welfare. The UK invented social welfare in many ways, as the country which invented the welfare state after the Second World War. Think of Beverage. So there a lot of differences between the continent and Britain, but there is a lot in common.
Mark Breddy and Stephen Evans: But having these words in the text, is it not largely meaningless?
Nicolas Schmit: It's not meaningless, as it gives a general orientation.
Mark Breddy and Stephen Evans: But one person's view of what makes a social market economy is different from another's.
Nicolas Schmit: But that is politics and you cannot expect from a text such as this more than it is able to give. It is up to politics to give some content to this text and this is the best solution.
Mark Breddy and Stephen Evans: But this is a legal text.
Nicolas Schmit: But some of these points are not legal notions.
Mark Breddy and Stephen Evans: Does the Luxembourg Constitution talk about the social dimension?
Nicolas Schmit: There are principals, but it is an old constitution. We have the right to work, but it is not a legally binding commitment. There is a political .commitment to do as much as possible to achieve this at as high a level as possible. ' But you can't say 'I was fired, this is against the social market economy.
This is why we had to keep the third part of the constitution, which are the present treaties and they represent the more mechanical and legal aspects, but on the other hand we have to keep a broader view. The US constitution talks of the right to happiness.
Mark Breddy and Stephen Evans: The US constitution is not hundreds of pages long either.
Nicolas Schmit: The American constitution, if you compare it, is part one and part two of the EU text. Part three is a very special addendum which should never have been added to the other two parts. Well, I take (out) the fourth part because it is just the provisions of the constitution.
Mark Breddy and Stephen Evans: So would it not have made more sense to have people express themselves on these general principals rather than on the technicalities?
Nicolas Schmit: This is one of the major mistakes: we have put together things which do not really belong together. I think we should have said to the Europeans: 'we now have a fundamental treaty or law and this is part one and two and this is what you have to decide upon. And the third part is what we (already) have – the mechanics. We can't just skip this as then we couldnt manage the system. We mixed all the protocols and declarations and enlargement, which confuses people.