The vice-president of the European Commission responsible for the Promotion of Employment, Growth, Investment and Competitiveness, the conservative Jyrki Katainen (Siilinjärvi, 47 years old), seeks employment. After being Minister of Finance and Prime Minister of Finland, next October 31 he will leave his current position in the Community Executive to make way for the new team of Ursula von der Leyen. "I still don't know what I'll do now, I'm open to anything, I don't have any work in mind, "he explains in an interview with EL ESPAÑOL in which he takes stock of the legacy of the Commission of Jean-Claude Juncker, of the commercial wars unleashed by the president of the United States, Donald Trump, or the slowdown that threatens the economy of the eurozone.
Five years ago, at the beginning of his term, Juncker presented his team as "the Commission of the last chance." Have they lived up to the expectations created?
I can honestly say that we have responded well to this perception that we were the Commission of the last opportunity. We must bear in mind that Russia has put pressure on us: it has interfered in many democratic processes in Europe, it has financed political movements, it has been aggressive. President Trump has changed the way the world works: he has destroyed or tried to destroy the world order based on rules. China has never been as strong as now. So there has been a lot of external pressure and we have still managed to defend our interests.
For example, we have managed to sign a large number of trade agreements with third countries, we have created new policies such as the circular economy or defense and security. And we have deepened our internal market in digital or energy matters. The general economic situation, what is in our hands, has improved significantly. So I think we have managed to continue improving Europe and strengthen its position despite external pressure.
And what is the main problem pending?
The biggest problem is our internal difficulties in terms of values. There are governments such as those in Hungary or Poland – and also Romania has been quite problematic in this regard – whose political leaders have jeopardized the rule of law or some of our main values. And this is the biggest threat that I see for the future of Europe. Because if we don't agree on our core values, then we can't trust each other and that will make our common life more complicated. I hope that the new Commission will address these harmful trends and have the support of the Member States.
What is the main failure of the Juncker Commission?
I don't know if there are specific failures. Some things we have not been able to take forward, but it is due to the opposition of the Member States or the Parliament. Then we have had issues such as the erosion of the rule of law that I have just mentioned, but it is not our fault: some Member States or political leaders have created these problems. And there are external challenges or also the brexit, which we could not have avoided. Maybe someone else is better placed to see our failures. I do not see exactly failures, but there are negative events that we have not been able to face.
Talking about brexitShould the European Union give another extension to the United Kingdom if the Boris Johnson Government asks for it forced by Parliament?
It depends on the will of the member states. But my personal opinion is that, given that a brexit chaotic would be devastating for everyone, it would be bad for the United Kingdom and for the Member States, why should we push London (outside the EU) on purpose? If there is any opportunity to find a solution that will approve the Withdrawal Agreement, we should take advantage of it. In that sense, being pragmatic, I think it makes sense to give them an extension if they ask for it. Of course, we cannot do anything on behalf of the United Kingdom. But from the point of view of the 27, if there is something that politicians can do to limit the damage, it is usually useful for them to do so.
You have been primarily responsible for the Juncker investment plan that was launched to get out of the previous crisis. Has Spain taken advantage of it taking into account that it was one of the most beaten countries and still has a high unemployment?
Spain was one of the first countries that started using this Juncker plan, very actively from the beginning in 2015. In fact, the Juncker plan has mobilized 44.8 billion euros of investment in Spain. 130,000 small and medium enterprises have benefited from the improvement in access to financing. And Spain is the third country in absolute figures where more investment has generated the Juncker plan, which means that it has used this opportunity successfully. In addition, the Official Credit Institute (ICO) has worked very well when using the Juncker plan. The last agreement signed by the ICO with the European Investment Bank was in January this year and will make available up to 1,100 million for the financing of midcaps (medium capitalization companies).
Now that it seems that another crisis is coming, is more investment needed in the EU? Should Member States increase public spending?
We still don't know if it's a crisis or a slowdown. At the moment it seems more a slowdown than a crisis. But countries that have fiscal space could invest more in research and innovation. And in some cases also in physical infrastructure. There is room for maneuver. For example, Germany is one of the countries that could invest more in infrastructure and especially in R&D. We have also recommended that Spain invest in innovation and research and energy efficiency. At the same time, we encourage Spain to continue on the budget adjustment path and focus on structural reforms.
In some of our Member States the problem has a double aspect. First, external economic growth is declining, which has an impact. But in addition some countries are not quite competitive. So, while a country, to stimulate the economy, invests more in R&D or energy efficiency, it must continue making reforms that improve competitiveness. Italy is a typical case in which reforms have not been made on the necessary scale and that is why the Italian economy has been chronically 1% below the average growth of the eurozone since the launch of the euro. Italy's problems are not cyclical but structural and that is a sad thing. I hope that Spain remains on the path that has been followed so far by responsible fiscal policy, reforms in the country and more attention to future investment.
Germany is one of the countries that could invest more in infrastructure and especially in R&D. We have also recommended that Spain invest in innovation and research and energy efficiency. At the same time we encourage Spain to continue on the budget adjustment path and focus on structural reforms
In this context, should the rules of the Stability Pact relax, as the Italian Government asks, for example, to invest more?
I do not believe that the Stability Pact should be more flexible because it has already been extremely flexible, for example with Italy. When the Commission said that Italy could invest more public resources to boost growth, they stopped making reforms. And that didn't help Italy. The problem is not that the Stability Pact is very strict but the lack of reforms in many countries. There is already a lot of flexibility available at the moment.
But I do encourage countries and the next Commission to examine whether the rules can be simplified and made more understandable. The current rules are created in the midst of the economic crisis. I was Minister of Finance at the time. And it is quite obvious that those rules we created 10 years ago are not the best possible: they are quite complicated. In short, no more flexibility is needed but simpler, more understandable and transparent rules.
Returning to the situation in Spain, is the Commission worried about political paralysis and the inability to form a government?
I don't want to comment on the political situation in Spain because I don't want to interfere in the political debate. We limit ourselves to examining whether Spain, like the rest of the countries, is fulfilling its economic commitments in accordance with our rules.
But in the current context of economic slowdown, can Spain afford to repeat the elections and spend many more months without government or budget?
I don't want to comment on this. I wish you the best.
One of the main causes of this worsening economy is the commercial tension between the United States and China, will the EU be infected?
President Trump tweeted a while ago that trade wars were good and easy to win. Now everyone can say he was wrong. Trade wars are bad and very difficult to resolve. We can all see what Trump's policies lead, because he doesn't believe in a rules-based world order and wants to use the power of the strongest instead of setting common rules for everyone. The economic slowdown in Europe is due to trade tensions, as you said, and I hope that the impending presidential elections will encourage Trump to resolve the situation and try to find a solution with the Chinese.
That said, we agree with the Americans on the problems that China is causing in some sectors. For example, overcapacity in some industrial areas or the dumping or harmful business practices. These are real problems, but we don't believe that imposing tariffs or unleashing trade wars is the good way to solve them.
Will Trump impose tariffs on European cars from November or are we still in time to avoid it?
We hope that President Trump does not impose new tariffs on our industry. We have had a positive discussion environment with the US administration. President Juncker and Trump agreed to start work on a trade agreement limited only to industrial products. And in the meantime no party was going to impose harmful surcharges on the other. On the contrary, we have tried to create a better commercial climate between the EU and the US. It is true that it is not improving rapidly, but we maintain a constructive dialogue. I hope Trump doesn't do anything that makes things worse for Americans and Europeans.
Trump tweeted that the trade wars were good and easy to win. Now everyone can see that he was wrong: trade wars are bad and very difficult to resolve
What will be the reaction of the EU if in the end these tariffs on cars materialize?
When Trump imposed tariffs on steel and aluminum, we reacted with compensatory measures. And this is the way to respond, based on the rules, to increases in unilateral and aggressive tariffs. So I guess our reaction will be the same if there is any other increase. But we want to maintain a constructive atmosphere and promote trade negotiations with the Americans because it is a situation in which we all win, unlike what happens with unilateral measures.
But more than a year has passed since the agreement between Trump and Juncker – it was in July 2018 – and the commercial negotiation has not even started. What's going on?
We have clearly told Americans that we are willing to go faster. But I think that your business negotiators are currently focusing on the issue of China. In addition, they have given priority to an agreement with Japan that we already have, which means that North American companies are in a worse situation than European ones and that is why they want to accelerate. So they have focused mostly on Japan and China and that is why negotiations between the EU and the US are slower.
Is agriculture still a problem?
It has been clearly agreed that agriculture is not part of these negotiations and that will not change. There are people on the American side who still say they want to open the agricultural chapter, but that is not agreed, so insisting on it is a waste of time.
President Macron has threatened not to ratify the newly closed EU trade agreement with Mercosur claiming that Brazilian President Jair Bolsonaro does not do enough to combat the increase in fires in the Amazon, do you agree?
I disagree. If the fires in the Amazon have increased due to the political support of President Bolsonaro, that would be completely unacceptable. We strongly condemn it. But the current fires have occurred without a commercial agreement. If the trade agreement we have negotiated applies, we would have a stronger position to influence Brazil and the rest of Mercosur countries. For example, the Paris agreement to combat climate change was an aspiration for Brazil, but now it has become legally binding thanks to our trade agreement.
Our trade agreement includes a chapter on sustainability issues according to which Brazil is committed to reducing CO2 emissions or reforesting the Amazon. With this agreement in force, if there are problems, we can say that a certain policy is against our legally binding agreement and we will have more power to negotiate and discuss with Brazil. In that sense I agree with Spain that blocking the ratification of the pact with Mercosur is not the right answer. Those who want the EU to have a stronger negotiating position on sustainability should support this agreement.
I agree with Spain that blocking the ratification of the commercial pact with Mercosur is not the appropriate response to the increase in fires in the Amazon
Do you expect a difficult ratification process?
Yes, I think it will be difficult. Partly because of the current crisis in the Amazon. But also because there are other sectors that can oppose. But Spain is one of the main beneficiaries of the trade agreement because it will facilitate many sectors in Spain to sell their products to Mercosur countries. Also the question of language is an important factor. In addition, Spain is quite well established in these countries: machinery, car parts, wine, cheese and many agricultural products will have it better to be sold in Mercosur countries thanks to this agreement. But although there are significant benefits for European producers and consumers, I believe that the political situation can make ratification more difficult.