Dutch Finance Minister Sigrid Kaag and her German colleague Christian Lindner.
(Photo: REUTERS)
Brussels Is Christian Lindner a hardliner that the EU colleagues have to fear? The German finance minister grins when asked that in Brussels. No, he’s not a “scary hawk,” he replies. At most a friendly hawk.
In Brussels, attention is paid to how Lindner behaves. Because Germany could be decisive when it comes to reforming the Stability and Growth Pact, which is enormously important for many EU countries.
Germany is being courted from two sides. On the one hand there is France, which holds the presidency of the Council this six-month period and can bring the issue back onto the agenda again and again.
France’s Finance Minister Bruno Le Maire set the tone for the debate as friendly as possible on Tuesday: “We’re all in the same boat,” he said. “We need investments and rules. And we will find a balance for it together.”
Top jobs of the day
Find the best jobs now and
be notified by email.
But it is also clear that the French want an effective reform of the debt rules. Their national debt is around 115 percent of gross domestic product, well above the specified 60 percent. If the rules currently suspended due to the pandemic come back into force without changes, the EU Commission would warn France to pay off its debts year after year.
One option is to exempt investments in green technology from the rules. The transformation will cost several trillion euros in Germany alone, and the state will at least have to contribute a large part, if not bear it itself. In Germany, too, it is questionable whether it will be possible without new debts in the long term.
Lindner is diplomatic
Lindner was diplomatic after the end of the finance ministers’ meeting: “The German government is open to meaningful further development,” he said. “In the future we must pursue the idea of growth as well as fiscal stability and the sustainability of public finances.” Something could be achieved by “applying and interpreting the existing rules”. He practically ruled out contract changes.
One of France’s biggest opponents is Austria. Finance Minister Magnus Brunner said that when reforming the pact, you have to be “very careful”. Austria is thinking about simpler rules that are easier to control, not about loosening them. “We strongly advocate a return to a serious, solid financial policy,” he said.
Austria belongs to the group of the “frugal four”, which also includes Denmark, the Netherlands and Sweden – although the continuation of this constellation is questionable. After the formation of a government in the Netherlands, the finance ministry there is no longer headed by a Christian Democrat, but by Sigrid Kaag, head of the left-liberal party D66. “Frugal Four” is a “pretty title,” she said in Brussels, hinting that The Hague’s willingness to negotiate had increased.
The French can certainly hope for a new dynamic. And definitely count on support from Italy. French President Emmanuel Macron, along with Italy’s Prime Minister Mario Draghi, co-authored an op-ed for the Financial Times in December, in which both warned that the rules should discourage non-essential investment. “We need more room for maneuver for sufficient future investments and to secure our sovereignty,” they wrote.
This is probably how it is seen in Spain too. But the Spanish Prime Minister Pedro Sánchez has deliberately not officially sided with France. Instead, he ensnares German Chancellor Olaf Scholz. “I don’t think it’s good when there are blocs of countries with different positions,” he said during his visit to Madrid on Monday. “It is important that all governments work together.” Spain wants to take a constructive stance.
Fund could complement debt rules
A complement to reformed debt rules could be a fund that finances investments in the green transformation. Such plans are currently being examined by the EU Commission. In this case, it would itself borrow money on the financial markets. The EU states would have to submit investment plans and would be paid accordingly.
The Corona reconstruction fund also works according to this financing method. In this way, money could be paid out relatively quickly and unbureaucratically by EU standards. However, the first experiences are very different. Some countries are already investing billions from the fund. Others have not yet been able to agree on an investment plan with the EU Commission. And Poland and Hungary have concerns that the money is not adequately protected against seeping away down dark channels.
Some governments are emphasizing that they see the Corona recovery fund as a one-off project. Finnish Prime Minister Sanna Marin said that another fund was “an absolute no-go” for her country.
More: The future of the euro does not depend on rigid debt limits