What is behind the pro-European turn of the German Government?

This question is answered by Sven Giegold, economist, MEP and head of economics for the German Greens, interviewed by Eric Bonse, freelance journalist. In the interview, Giegold explains what is behind the recent Europeanist turn of the German government and why the Greens are trying to take the political authorship of Merkel's recent turn. From Lost in Europe

First the "Bazooka", and now "the momentum": almost all taboos have been broken in German financial policy. But Berlin has also moved in the right direction at European level, according to the Greens' economic and financial policy officer Sven Giegold. An interview.

Bonse: The EU Commission intends to finance a EUR 750 billion reconstruction programme in debt. Chancellor Angela Merkel has also spoken out in favour of an EU debt - even though she has always been strongly opposed to it until now. What does she think of this reversal?

Giegold: It is a 180 degree reversal of Germany's European policy. Incidentally, it is a late echo of last year's European elections. The voters then voted for more Europe. And now a whole series of false German taboos about Europe are in fact falling. It is hard to believe that Wolfgang Schäuble and Friedrich Merz have meanwhile also become in favour of a debt-financed European programme! It has been a success for us pro-Europeans.

Bonse: what taboos are you referring to?

Giegold: I am referring to European taxation, which could also be in the form of a European digital tax, non-refundable subsidies instead of loans and shared responsibility. The Christian Democrats and especially the CSU had never wanted a European tax before, and now suddenly there is a great openness on this issue. Germany, too, had never wanted transfers before, but now there will be EUR 500 billion in grants. And as far as debt is concerned, until recently, people in Berlin kept saying again and again: we will never make coronabonds, and under no circumstances! But now there are common bonds coming in times of coronavirus. And this strengthens Europe!

Bonse: but debt should remain an absolute exception, Merkel talks about a one-off special measure.

Giegold: all budgets are unique. The important thing is that we now have a completely different narrative in Germany. European cohesion needs a fiscal policy and common, solidarity-based investment in Europe. Only the FDP and AfD have not yet felt the blow...

Bonse: how do you explain this turning point?

Giegold: we do not know what the real reasons were. But I believe that the ruling of the German Constitutional Court on purchases of government bonds by the European Central Bank played an important role. I think that this ruling is questionable and dangerous for European law, but it has triggered a debate in Germany about the fact that we cannot leave it to the ECB to resolve all crises. Mr Voßkuhle perhaps deserves a bunch of flowers, after all he has done ...

Bonse: what role did French President Macron play? For years, after all, he has been trying to convince Merkel to adopt a different European policy, has he succeeded?

Giegold: it was a serious mistake on Merkel's part to have failed to respond to Macron's initiatives for so long. In the end Macron changed course and involved other countries - not only on coronabonds, but also on climate policy. In doing so, she put Merkel under pressure. But Italy probably made a big impression as well. The fact that during the crisis caused by the coronavirus support for the EU in Italy collapsed in Berlin triggered the alarm. And then, of course, GroKo also reads the opinion polls. And then it is clear to everyone that most Germans are not as stingy as one might think. Most understand that help is necessary.

Bonse: But there is also a downside to the aid: the EU will have to repay its debts until 2058, the EU budget for the coming years will be frozen, subsidies will be linked to economic policy conditions...

Giegold: debt repayment is spread over 38 years. It is so long that repayment will have no macroeconomic role. The fact that the EU's financial framework is not being increased is a concession made to the "Four frugal countries". But the EUR 750 billion for reconstruction actually means a higher EU budget. There could also be wrong sacrifices. For example, the Erasmus exchange programme may not be expanded. Parliament will have to fight on this issue.

Bonse: what about cross-compliance? The EU Commission wants to enforce them with the help of the 'European Semester', but this is a massive intervention in the budgetary powers of national parliaments, without democratic control!

Giegold: right, that is why it is now a question of parliamentarising the European Semester. It would be good if the European Semester were not just a bureaucratic exercise without any binding effect, as it has been until now. Many of the recommendations from Brussels have so far had too liberal an imprint. The recommendations will therefore now have to be adopted by Parliament. Otherwise there is a risk that investment priorities will be set without Parliament's approval.

Bonse: what about the European Green Deal? Many in the Greens, but also the Social Democrats and Linke are critical of the fact that the Brussels draft has been watered down.

Giegold: The danger is real, as only 25 % of the next EU budget will be explicitly earmarked for the fight against climate change. Climate protection must be the material to be used for economic reconstruction. Merkel and von der Leyen must do more for the climate if they want approval from the European Parliament. This is not only about the amount of subsidies, but also about the quality of spending. We have not yet reached the point.

Bonse: what about the thrifty Four and the other EU states? They have yet to give the go-ahead and could again water down the reconstruction fund and the Green new Deal.

Giegold: Austrian Chancellor Kurz is already giving the first signs in favour of a compromise. At least I interpret it that way when he talks about a debt union - because nobody has foreseen it! But even if Kurz were to get in the way: in the end Austria and the "frugal four" do not even reach 10% of the population. The big EU countries, Germany, France, Spain and Italy support the proposal. The fact that an agreement has been reached despite the renationalisation in the Coronavirus crisis is a big step forward.