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The Future of Europe

The Euro and the European Union

The Octavian Report: Do you think Europe has now passed the point of crisis or are there still problems that need to be addressed?

José María Aznar: In my opinion, the key is that there is no doubt at this moment about the future of the euro.  The future of the euro is clear. The construction of the banking union is a guarantee for everybody everywhere, and this produces a feeling of more tranquility in the markets and in countries.  This is good news.

Another thing is the capacity to grow in Europe and that I believe in this moment is very limited.  The economy is in a process of recovering some degree of growth but at very low levels, and it is maybe not enough to produce a very serious reaction in all economies.  There are differences among countries: in the countries that have the possibility to make important reforms to gain competitiveness and flexibility, the situation will be better than in others.

OR: Do you think the euro can survive in the long term without a real political integration now?

Aznar: I believe this is indispensable.  Because if you decide to create a single currency, you must finish building it.  If you decide to build a house, it is absurd not to finish the roof.  It is necessary to finish the Eurozone.  And to finish the Eurozone means in the first place to create a banking union.  The resolution mechanism recently approved is a new step in this direction, but we need more steps.  We need the Eurozone to function as an integrated monetary area and as one financial system.  Now, there are seventeen financial systems. That the value of the euro is the same in Italy as in Germany as in France as in Spain is indispensable as is more political integration among the members of the Eurozone.

The other political question that is very important is to establish bridges between the members of the Eurozone and the members of the European Union that are outside of the Eurozone.

OR: Do you see a scenario where eventually foreign policy and political governance are integrated in a federal Europe?

Aznar: Well, not exactly a federal Europe. I think that we need a more integrated Eurozone and more flexibility in the European Union, maybe with more competencies for national parliaments and national governments in some areas that will permit countries such as the UK to live more tranquilly in the European Union.  If we establish this balance, I think the future of Europe will be safer, more secure and more prosperous.

OR: Tension between the core and the periphery of the Eurozone – especially with Germany – has receded somewhat.  But certain states would like to see more aggressive monetary intervention.  Do you see these frictions flaring again?

Aznar: The problem between the core and the periphery is always there in the European Union.  But I share the idea that if you are a member of a club, you must respect the rules of the club.  The problem in some countries is that they do not respect the rules of the club.

In my view, the two key rules for the euro are, on the one hand, discipline, on the other hand, flexibility.  If you lose discipline, you have a problem.  If you lose both, you have a disaster.

In my view, the second important thing is taking the decision to put our house in order, to clean the house.  To clean the house means to recover discipline, competitiveness, to make reforms, labor reforms, fiscal reforms, to very seriously manage the budget and so on.  But in parallel, we must build the Eurozone.  If not, this is absurd.  We must build the Eurozone.

In terms of political power, there is a very serious difference in Europe today than fifteen years ago or ten years ago. The power of Germany has increased and increased.  The situation of the European Union is weak, and the crisis has affected other countries’ ability to establish some balance of power in Europe.  The position of the Germans is increasingly more important in Europe.  This is the reality.  You can like it or not, but this is the real situation in Europe in this moment.

The Rise of Nationalism

OR: There are a number of high profile secession movements and referenda in Europe, including the recent one in Scotland and efforts in your country in the case of Catalonia and the Basques.  How serious do you think the threat is of a political break up of not just the EU but of individual countries?

Aznar: It’s a real threat. I think it’s the most important threat at this moment in Europe.  Traditionally in our history, in European history, nationalism has been a catastrophe. It means a catastrophe. The explosion of nationalism in different countries is very serious.  And this is a threat for these countries and a threat for Europe.  It is a focus of potential conflicts in the future.

I think that it is impossible to organize the European Union and the coexistence of Europe without respecting the historical legends of Europe, because our history, the history of Europe, is a history of our nations.  It’s the history of Spain, of France, of Germans, of Italians, of Britons, of Poles.  And trying to eliminate this, it is absurd.  Trying to reinforce the reasonableness of the boundaries of states inside the European Union, respecting the founding rules of the EU – that is, reasonable coexistence between nation states – is the right path and continues to be a good idea.

For the people that created the European Union or for my generation, we understand that the European Union from the beginning historically means peace and prosperity.  Why?  Because the history of Europe is a history with more conflicts than peace.  Europeans wished seriously to have a period of prosperity after two world wars and so on.

But for the young generations, they don’t understand this because they have always lived in peace, and they have always lived more or less as well in prosperity.  For them, it’s more complicated to understand the historical sense of the European Union.  We must explain this to the young generation, not only the original objectives of the European Union, but that it is indispensable to guarantee there is not a new explosion of disintegration in Europe.  If not, we’ll have a lot of very serious problems.

Working with twenty-eight countries sitting around a table and managing decision-making is complicated. But imagine a hundred regions.  It is totally impossible.  It’s only a chance for conflict. I have a very serious concern about this.  We must reestablish coexistence of the national states and our commitment to the European Union.

OR: Do you see any risk in the near term of a sudden political change in Europe?

Aznar: I hope not. The most important question at this moment is the decision of the UK [whether or not to stay in the European Union]. I personally believe that for Europe, it’s better to have England inside the European Union and for the UK as well.

I always consider that all the economic crises are political crises and finally, we must resolve the political questions. We need attention because in one part, there is nationalism and in another part, there’s radicalism. The strength of the idea of Europe is, in my view, too weak politically.

The Atlantic Basin

OR: You’ve also been a big advocate of closer integration with the United States and with the Atlantic Basin in general.

Aznar: I am a total supporter of this idea because I cannot explain my country without the Atlantic. I cannot explain Europe without the Atlantic.  I cannot explain the existence of the European Union without the Atlantic.   There is an essential relationship between Europe and the US, North America, even Canada, not only in political terms but in security and economically.  If you look at the level of investments and trade between Europe and the US, it’s very impressive. Together we sum up to fifty percent of the GDP in the world.

Well, now we have ahead of us a very serious decision, the TTIP [the Transatlantic Trade and Investment Partnership] between Europe and the US.  It is strategically totally indispensable.  The current situation where you are looking at energy, at the situation of Russia, at the volatility in the Middle East or at the ambition of China and other emerging powers, is bringing this idea to the forefront in my view.

We must also try to expand the Atlantic policy.  We should ask, is it enough to base our policy on the relations in the North Atlantic?  We must look as well to the South Atlantic, to some countries in Latin America and in Africa, to look at the Atlantic as a basin and try to enlarge this combination of values and political, economic, and cultural interests that we share.

OR: So, do you think the United States should be focusing more on the Atlantic than on the Pacific?

Aznar: No. But I consider that the future of the United States will continue to be decided in the Atlantic.  Obviously, if you look in the Pacific in economic terms and political terms, the presence of China and India, of three billion people, it changes the situation.  But some people think that the future exists only in the Pacific.  This is not true because the Atlantic Basin is the area with more reserves of oil, of gas, raw materials, food and natural water and investments and trade of goods and services and cultural values, and this is the force of this area. For our way of life, for our system of values, this idea of around the Atlantic, continues to be vital in my view.

OR:   What do you think the chances are the free trade agreement actually passes?

Aznar:   Well, it depends on politics as always. The November elections in the US present some difficulties. But strategically it so important, this idea, that this is a time for the statesmen or stateswomen to take the situation very seriously, to look to the future.

Ukraine and European Security

OR: What is the future of the European role in NATO?

Aznar: In terms of security, we must transform the idea of NATO to be more flexible. I think it’s indispensable that Europeans make more of a contribution to defense because the situation is really very sad.

OR: Do you think it’s a financial issue or is it more that the United States has retreated so Europe is following?

Aznar:  Both.  It’s easier to spend money on social questions than on defense, but people must remember as well that defense is vital to keeping social welfare. And after the Second World War, it’s a traditional position in Europe to be a complement of the US.

The problem is one day, you open the door and there is no US.  In this moment, what happened?  How did it happen?  This exists as a threat to security for Europe.  When I look at the situation in Ukraine and Crimea, I personally share the idea that it is necessary to reinforce – not to escalate a crisis but to reinforce – the defensive capacities in some countries that are in the center of Eastern Europe.

OR: Do you think the Ukraine crisis will be prolonged and do you see it expanding further?

Aznar: The crisis will continue because the position of Ukraine, I believe, is untenable in the future, and the pressure of Russia will continue. Russian policies said, “I cannot accept that you put your hands in an area that I consider an area under my influence.”  Okay.  But if everyone defends this same policy, we have a problem.  It is fundamental to respect the rules.

ECB Chairman Mario Draghi miqu77 / Shutterstock.com

Another problem is that the Western Allies said, “I don’t like problems.  We don’t like problems.” But obviously, Russians take note of this, Koreans take note, Iranians take note, Venezuelans take note, Cubans take note, and this is a very bad situation.  In politics, serious problems will prevail if you don’t establish very articulate policies to avoid more problems with people that don’t respect the rules.

OR:  Do you think there is a perception overseas that the US is in retreat and disengaging from the world?

Aznar: I believe that in a lot of countries this is very disconcerting.  For instance, there is not a lot of interest in Europe in this administration to the desperation of the Europeans, because the Europeans were in general extremely favorable in the beginning to this current administration.  But the absence of this administration in the Middle East is a problem.  This concerns a lack of trust.

One thing is to redefine policy and another thing is the absence of leadership.  The only country at this moment with some capacity to establish some order in the world continues to be the US with its allies.  If not, we will find more and more problems in the future.


OR:  Do you feel Spain has turned a corner and that the recovery is sustainable or do you still think there are significant reforms that need to happen?

Aznar:  We are on the way to recovering competitiveness, to recovering some part of the ground that we lost in the crisis, but we need more time.  I hope that the government will be taking more decisions to stimulate growth and create jobs and to make reforms and to take advantage of the opportunity to change a lot of things in the Spanish economy and improve the opportunities for the people.

Politics means, in economic terms, to create opportunities for the people. To be more precise, to create jobs.  But to create opportunities and to promote reforms vital to the society, we needed political tranquility.  We have a majority in this moment.  We have problems with separatism in Spain, but the majority of the country is against this possibility of secession.  We must continue to reinforce the unity of our nation, to recognize a plurality in the nation, but to respect the rules essential to our constitutional system.

My experience in the government, in this sense, was a good experience.  We created almost six million jobs, new jobs, in eight years.  The transformation of the country was very impressive.  Imagine that almost fifty percent of the jobs that exist were created during the eight years.  The transformation in my country was enormous.  The mentality of the people changed totally and there was then an optimism in the country, to say as a people, “We are capable of doing a lot of things. Now, we have a place at the table with the people that decide the important things in the world.”  That is a different mentality and this is what we must recover.

OR: Do you feel that there is more of a sense of optimism now in Spain or there is still concern?

Aznar: Maybe in the economic sense, we are more optimistic.  Politically, the concerns are serious.

OR: Do you think that the tough reforms will happen politically?

Aznar: This is a responsibility of the national government but is the responsibly as well of the ECB.  The intervention of the European Central Bank and Mr. Draghi has been extremely correct and decisive.  And the idea that there can be intervention by the European Central Bank to stimulate growth or to avoid deflation, I think is extremely important.  If we can turn these words into decisions, I think the situation will become better more quickly.

OR: When you left office, Spain’s debt was among the lowest in Europe. It’s now approaching one hundred percent of GDP.  Do you think that will continue to be a drag?

Aznar: Indebtedness – public and private – continues to be important in Spain, but the capacity to attract new investments in the country is very strong at this moment.  But we must continue to reestablish discipline in public life and to decrease the level of indebtedness in the private sector.   And we need time.  We need to combine this with the actions of the European Central Bank.  This is one of the questions because if you combine deflation with indebtedness, it is a very serious concern.

OR: So what do you think is the biggest risk for Spain going forward?

Aznar: I think it’s political risk.  I think that the major risk is we don’t establish a very strong national policy that continues the history of the success of the thirty-two years in Spain until 2004.  That transformed the possibilities for the Spanish people.  I think the risk is political.  It’s not economic.  It’s political where you combine secessionists on the one hand and the unemployment on the other hand especially for young people.  This is one of the reasons why we must move very quickly in this.

OR: Do you see a risk of social unrest?

Aznar: No, but we have the combination of different problems: unemployment, problems with immigration, decisions that limit the extension of the welfare states.  Again, they can be used by the extremists and this is the worst situation.

OR: Do you think the banks are now in decent shape?

Aznar: I think the banks are in a much better situation, but we must recover the normalization of credit for companies, for families and for people in general.  This is the normal activity of the banks. This will be a consequence of more stability in the economy and the decision of the European Central Bank and the evolution of the Eurozone.

OR: You’re definitely seeing more foreign investment.

Aznar: The capacity of the country to demonstrate trust in the future and that there are a lot of opportunities for foreign investment is very impressive.

photo by Berit Kessler

The Middle East

OR: Switching topics, do you think that Iran is eventually going to get a nuclear weapon?

Aznar: Personally, I think yes.  But these are two questions.  One is capabilities.  That is important.  And the other is intention.  I think the intention of the Iranian regime is to become a nuclear power.  And they’re building capabilities to become a nuclear power.  I think what is important is not the exact date.  What is important is the intention and for this reason our negotiations with Iran are complicated and very serious.  For the record, the Iranian regime has demonstrated that their willingness to respect some agreements is limited.

Economic sanctions against Iran were working very well and if Iran is reacting, it’s a consequence of these economic sanctions and their impact on the Iranian regime.

OR: Do you think there’s no solution without regime change in Iran?

Aznar: I think regime change in Iran was the right solution, but in this moment, politics is in another way.

OR: Did you think there will be military action at some point?

Aznar: Well, this is out of the reality at this moment.

OR: Can you talk a little bit about the Friends of Israel Initiative that you started and the work you’re doing there?

Aznar: We created four years ago this organization, the Friends of Israel Initiative.  I am very proud to be the president of this Initiative.  The majority of the people who are members of the initiative are not Jewish people, beginning with me.  But it expresses the idea that the future of Israel is our future.  That Israel is a Western country.  It’s a democracy.  Israel has the right to exist, to live in peace.

And we’re trying to avoid all the temptations of the policies to try and to delegitimize Israel or to eliminate the existence of Israel, or to isolate Israel.  I will defend for Israel the same that we defend in our democracies, the right to live in peace, to build prosperous democracies, and to not leave them under threats, and under rockets, and under missiles, and problems every day of these threats from people who say continually, “We wish to eliminate and to wipe Israel off the map.”  This is the purpose of the Initiative in public activities and private activities.

We just celebrated our annual meeting in Israel.  It’s extremely important because we have a global vision of the different problems about the Middle East, about Iran, about the negotiations with the Palestinians and about the new situations, these tectonic changes in the Middle East.

OR: Do you think there will eventually be a peace agreement?

Aznar: We can exist with partial agreements or interim agreements.  But I personally consider that there is not a possibility towards a peace agreement without the recognition of the right to exist for Israel.  If Israel decides to recognize a Palestinian state but the Palestinian side does not recognize the existence of Israel, it is impossible to draw a peace agreement, totally impossible.  I cannot imagine signing a peace agreement with people that do not recognize my right to exist.  It is absurd.

Interim agreements would be possible. It is very clearly the will of Israel to recognize a Palestinian state, to recognize a lot of things in favor of Palestinians, to continue to promote prosperity in, for instance, the West Bank.  More problematic is the question in Gaza.  This is an expression of division in the Palestinian side.

I wish the best for the Palestinian people, but the recognition of the right to exist for the State of Israel is totally basic.  Without this it will be very, very difficult.

OR: Have you been making progress in Europe convincing people of that?

Aznar: Trying to explain this is important.  The relationship between the European Union and Israel is very close.  The relationship between NATO and Israel is very close.  But then the capacity or the will for some people to defend publicly some positions is very weak.  But what’s important is finally in the facts.  And I believe that this question is an essential question: The right to exist and to live in peace and to live in peaceful coexistence with neighbors and build together democratic systems and prosperity.

I spend my time on this project because I consider that one very important part of our future is in Israel.  And I have a moral obligation and a political obligation to defend a democracy that every day must demonstrate its capacity, its capability to exist under threat.  And this is, in my view, for me as a democratic politician a moral obligation and a political devotion.

OR: Well, you’ve not only said that since you’ve been out of office but while you were in office as well, which shows very unusual statesmanship.  And hopefully we’ll have more leaders like you. Thank you very much.