Guy Verhofstadt in interview - we need 'radical' pro-EU movement

The man tipped to be the next president of the European Commission talks exclusively to PublicServiceEurope.com about his ambitions for a truly federal Europe and a more proactive EU foreign policy as well as the need to question the state of Russian democracy, Chinese human rights, the rise of nationalism and a possible European Freedom of Information Act

Some commentators suggest your early political career was aligned with neoliberalism beliefs before you moved more towards the centre ground. Do you think that the economic crisis we are still in the middle of proves that neoliberalism has failed – and, as communism has also failed, what ideologies are left for Europe to pin its hopes on?
"The financial crisis, not the sovereign debt crisis, clearly indicated that self-regulation of markets wasn't working – as had been the assumption in the years leading up to 2008. Everybody thought that economic growth comes from the markets and that they would self-regulate. That just did not happen. But the crisis does not spell the end of free-market economics. For me, it is just the repetition of what Adam Smith said in the Wealth of Nations; that the free market needs a number of basic rules and regulations. That's not a new idea, only in the years before the financial crisis did we think that these rules could be organised by the markets themselves."

But there just do not seem to be any effective concrete measures to regulate the markets that operate across international boundaries. It almost seems like we will be in an eternal cycle of boom and bust because the political will does not exist to introduce adequate regulations?
"Since the crisis started, we have tried to create a supervisory system to deal with these problems. The whole package for markets, pensions and insurance is going in that direction. And as to increasing the liquidity requirements of banks, there has been an important move to regulate derivatives and other financial instruments. We have the financial crisis but, in my opinion, the sovereign debt crisis is the second tsunami that was provoked by the first tsunami; the financial crisis. That is not about ideology, but the lack of European unity.

"I always compare the main economies in the world. I can see that the debt in the eurozone is 87 per cent with a fiscal deficit of 4 per cent – compared with the United States, where there is a debt of 100 per cent and a fiscal deficit that is nearly double that of the eurozone. And then you look at Japan, which has a debt of 226 per cent and at the same time the lowest interest rate worldwide. So it is true that debt in a number of countries is the trigger of this crisis but we cannot deal with the problems we have in Europe because we have a monetary union, but not a fiscal and economic union – with one federal authority behind it that can create confidence in the markets. We need to solve that problem. That 87 per cent of debt can create such a mess in the eurozone whereas a 100 per cent debt in the US or Britain – or even 226 per cent of debt in Japan – has no consequences; well, the reason for that is that there is a real authority in those countries in which the markets have confidence behind the currency. And that is not the case in the single currency area. A state without a currency is possible, but a currency without a state is not possible."

But the three countries you refer to – the US, the United Kingdom and Japan – are all in trouble as well – as are most developed nations. It is not as though they can be flagged up as best-practice models to follow
"Yes, but not in the sense that the currency system is under attack. Look to the interest rates, for example, and you see that. What is happening is that markets are using the tensions with the single currency zone to speculate, to gain money and to destroy the whole system. That cannot happen with the dollar or sterling, that is my point."

You have often been suggested as a possible candidate to replace José Manuel Barroso as president of the European Commission when his 10-year term ends in 2014. Does that role interest you and is it an ambition for the future, given that you have such clear views on the direction of travel that Europe should be headed in?
"My active goal for the moment is to create a pro-European, strong, political force and if possible a majority in the European Parliament. We shall see afterwards what the future holds. If tomorrow, they came to you and asked, then you don't rule it out. It would be stupid to rule it out, but it is not my ambition for the moment."

The reason I ask this is because we both know that, aside from the Council of Ministers, the commission is really where the power base of the European Union sits. The European Parliament has little power comparatively speaking – so for a man of your pro-European sentiment, it would seem like the place to be?
"Perhaps, but I can tell you that I have more influence today as the leader of the third group in the European Parliament than I did as a single member of the council when I was prime minister of Belgium."

Actually, I was going to ask you as an interesting exercise – could you set out how being an MEP and group leader of the Alliance of Liberals and Democrats for Europe in the European Parliament compares with being a prime minister?
"As a prime minister, you are just one of 27 and we know how it works in the council - the big countries decide and the others can change some of the detail and that's it really. In the European Parliament, we co-legislate now since the Lisbon Treaty. As group leader together with your colleagues, you decide on the overall and general position that the EP is taking on a number of issues – international agreements and so on. It is not just that you are one of more than 700 MEPs here; a group leader can help decide 'yes' or 'no'. You can be the kingmakers and put conditions down.

"I think, honestly, I can do more here to go forward with European integration that I could as a single member of the council. Of course, it's different if you are a single member at the council representing France or Germany. I am talking more as a former prime minister of Belgium when comparing the influence you have."

You support the Spinelli Group and its ambition for a more federal Europe, but public sentiment seems to be turning away from integration towards protectionism. Will the EU just have to power on with the integration agenda despite the fact that it is going against public opinion?
"I am not so sure that European integration is against public opinion. Until now, Euroscepticism had been a very clear and loud voice but there was no clear and loud voice for a federal Europe replying 'no, we need more Europe to solve this problem and not less Europe'. That voice now has to be created. All of the pro-European were saying 'yes, it's not so bad what we have and it has created peace for 50 years'. But that is the old pro-European language. We now need a far more radical federal language to explain that is far more important than that, because we are at a crossroads and we have to make a choice. Either, we stop the euro and go back to the nation state and we make a sort of confederation of nations as the Americans started to do in 1776 with the unanimity rule and so on. Or you go in the opposite direction, which is my proposal, and you create a real federation.

"If you give this choice to people, I think you will be surprised. There is already a shift to a place where citizens say they want to keep the single currency because they realise it is in the interests of their nation to do so – and they say 'we need more Europe'. That was not the case two years ago, there has been a change in the public mood because of the economic crisis. This could be a crisis that can create a pro-European tendency, a tendency to move in the direction of more European integration. Never waste a good crisis. This is the moment to do it. If we don't create a European federation now, it will be a huge mistake."

So how far can the EU go in terms of widening and deepening – policy wise and from a geographical perspective?
"It will depend completely on how we go forward from the financial crisis and how political leaders in Europe react to the pressures we are seeing. It is very clear that the crisis is not over as most political leaders thought a few weeks ago, when they thought we had reached a turning point. The European Central Bank just bought time and now we are in the middle of the crisis again, if you look to the spreads and the interest rates. We have to strengthen discipline further - we did the six-pack, the two-pack and the fiscal compact. But what we need now is to create a real economic and fiscal union based on solidarity and mutualisation of the debt. We have to look at the idea of a redemption fund to mutualise debt linked to a deficit reduction plan over 20 years and also to develop a growth strategy. As the individual member states do not have enough money to finance it, we have to find money on the European level.

"After the summer break, we will see enormous pressure from the markets because they have a very clear indication of the end game in this crisis. And the end game in this crisis is mutualisation of the debt. I think things are now going forward in this respect. The US State Department and the International Monetary Fund realise that this is the only real solution to the crisis."

But if this mutualisation does not happen - is there a real risk that the eurozone and the EU could collapse, if the economic malaise and leadership vacuum continues?
"Yes, exactly, it's one or the other. I just don't believe that you can keep the euro unless you go ahead with this. A currency is not something you can keep without doing a number of things. And one of those things is the mutualisation of the debt."

Are Eurobonds part of the answer to the crisis also – what part can they play?
"Well, then Eurobonds is the next step. In fact, a redemption fund is already the same as Eurobonds. The only difference is merely on the debt that is past 60 per cent. If the redemption fund is working well, then you could go further with Eurobonds."

Would you like to see even greater intervention from the ECB and do you think Germany will be forced to allow that if, and when, the crisis reaches a tipping point – it is obvious to everyone that all of this hinges on Germany?
"Yes, I think if there is huge pressure on the euro to the extent where the Germans have to make a choice or not on whether to go in that direction. The alternative does not really bear thinking about."

Just to go back to the question about widening the EU – how far geographically can things go; are we simply talking about the Balkans or will Turkey eventually join the European club despite the current opposition from Germany and France?
"Of course, I am in favour of all this but in the short to medium-term what we are talking about is the Balkans. There, it is better to put them in the European family and have peace rather than put our soldiers in the territory. As to Turkey, I hope that we are not talking about many decades and that it can be faster than that – but the political reality is what it is."

What's your view on the way Europe has responded to the Arab spring generally – and, more specifically, what's your opinion on the way Catherine Ashton's European External Action Service has reacted to the uprisings in the Middle East and North Africa?
"There is a lack of European foreign policy. Although, Iran is a good example of what could be achieved. But what we have in the EU is actually foreign relations, rather than a foreign policy. It seems to be about networking and agenda setting. But policy is something different, it is not only managing your agenda. There are also problems within the neighbourhood of the EU that should be key priorities, if you have a real foreign policy. How can you continue without addressing Macedonia, the non-recognition of Kosovo, the problems in Bosnia and the Cyprus issue? We have a lack of policy there too."

And what about Ashton herself, do you think she is the right woman for the job given the criticism she has faced from all sides?
"She faces huge problems, it is not all her fault. She is confronted with the 27 different member states and an intergovernmental system – that is the problem. But she is not spending enough time developing policy, it has been too much about announcing all of the meetings she has, but that is not policy. It's more 'I saw this person, I saw that person, we are concerned about this situation'. Well, yes, very good but it's not policy."

Given the recent political happenings in France and the Netherlands - do you see signs that nationalism is starting to rear its ugly head across Europe once again as the far right parties capitalise on the mess created by the main parties – in relation to the economic crisis?
"Nationalism has been on the rise for the last few years. We've had the True Finns in Finland and similar situations in Sweden, Belgium, the Netherlands and France too. But already these movements are on the way down because they are not capable of doing what is necessary in a time of crisis and that has been proved very clearly in Holland. In France, it is the case that the outgoing president Nicolas Sarkozy has fuelled all of this by talking about migration, Schengen, the Roma, Halal meat and so on. Then we are surprised that the original far right party gains votes. Well, if you copy somebody, the original wins not the copy. Indeed, it is still a threat and a key fight in the years ahead. We have to show the public that it is not through nationalism and populism that we will solve the crisis."

You have written a number of books on Europe in the past. Do you have any texts on the go at the moment relating to Europe's role in the world or the financial crisis?
"Yes, I have a book coming out after the summer break. I can't give you a working title for the moment, but it is about the very themes we have been talking about today; the need for a radical pro-European stance if we want to solve this economic crisis, and how to be as radical as the opposing Eurosceptics are in their arguments. It is about how to dream of and reach a post-national future for Europe."

It sounds a bit like an audition for the commission top job, in the same way as Barack Obama auditioned for the US presidency by writing The Audacity of Hope
"I don't think it really is a good audition for the commission job as normally they are not taking the guy who wants to go forward with Europe, you know."

You have spoken out about the corrupt nature of Russian politics previously. Given Europe's dependence on Russian gas, most political leaders seem to be reticent to be too critical of Putin – is that the impression you get from your peers?
"There is huge concern over this because it is very clear that Russia is not a real democracy and the latest changes in electoral legislation really are going in the wrong direction. Europe is dependent on Russian gas and on Chinese goods despite the concerns over democracy and human rights. The stance of avoiding criticism, coming from European leaders, is a bad calculation. It could come back to haunt us in future. We should not underestimate these countries that have become heavyweight economic powers because they could also become heavyweight military and political powers."

Europe does not seem to be coping well with the geopolitical shift of power we are seeing from the west to the east. Do you have any ideas for a more proactive and progressive strategy to dealing with the rise of the emerging nations like the BRICS – Brazil, Russia, India, China and South Africa?
"This is, perhaps, the most difficult question of all. It may be in the future that countries like Britain and France will have to understand that it is better to have one seat on the United Nations Security Council. That is the end game. First of all, we have to put our own house in order and to put a real federal union in place – and then we can talk about what comes next."

What do you think of the fractured state of politics in your home country of Belgium?
"There is a government now and the politicians are doing what they have to do. I think we can finally see that there has been progress and they are on the right track when it comes to the economy and the other issues."

In terms of the EU, there have been a number of lobbying scandals involving MEPs and the recent Brussels Business documentary suggested that the European Commission is doing the bidding of big business when it comes to its secretive legislatory processes. Would you like to see more transparency in the EU and, perhaps, even a Freedom of Information Act?
"Yes, why not have a European Freedom of Information Act. We have now concluded on a code of conduct for the European Parliament after the recent scandals. That was a step in the right direction, but there is still not enough openness and transparency. We can always do better."

Yes, I understand the point about the code of conduct for MEPS but the European Parliament is already the most transparent organ of the EU. But what about the commission itself, all of its work is kept secret until the very final legislator stages?
"That is true, I agree, the commission should be a lot more open than what we have at the moment."

Finally, the European Commission has called for a 6.8 per cent budget increase for the EU. If you had to guess, what do you think the final figure will be – given the horse trading between member states that we are now likely to witness?
"I would think it will be the same as last year (2 per cent). The outcome is more or less the same every year, the same as inflation. It could be that there is a need for a little more money because we are at the end of the seven-year spending programme. But I don't think the budget for 2013 is the biggest issue. The real issue is the next multi-annual financial framework that starts in 2014. We will then have to look at whether we should change the nature of the MFF so that there is a direct financing of the EU by citizens, rather than the national contribution system that we have today – which always creates this mess between recipients and contributors."

But how would you do that practically – it sounds very much like a system of new EU taxes?
"But EU taxes already exist. To citizens, it doesn't make any difference whether they pay the money to their nation state or exactly the same amount to Europe. The only real difference is that for the first time citizens would receive real control over EU institutions. It would mean the influence on the MFF shifts from nation states to citizens. We know that those that are paying for something become interested in it, they want to know what they are doing with the money they are paying. It would be a shift of power from the states to the citizens. That is the basis of democracy. The discussion only just started under the Polish six-month rotating EU presidency and is continuing with the Danish EU presidency. It is going to take some time though; I don't expect a conclusion on this in 2012."