Germany on Europe’s aid to Greece: ‘We don’t see it as a bail-out’

| September 2, 2010 | 0 Comments
German Ambassador Georg Witschel

German Ambassador Georg Witschel

German Ambassador Georg Witschel presented his credentials just over a year ago and since then the career diplomat with a PhD in international law has developed a great love for Canada — so much so that he spent six weeks of his summer on vacation in the Maritimes, as well as Newfoundland and Labrador. His wife, Sabine, and daughter, Christina, are also very comfortable in their temporarily adopted country. Diplomat editor Jennifer Campbell sat down with him for a wide-ranging chat about his home country.

Diplomat magazine: What are the biggest concerns to Germany about the proposed EU-Canada trade deal?
Georg Witschel: Germany was a driving factor in the European Union to have these negotiations start. It was in 2007 when the EU-Canada Summit took place in Germany that the whole thing was launched. Now if you ask why so, the EU Commission had prepared a quite thorough study about the benefits of a comprehensive trade agreement for both sides. Of course, if you open markets, you will always lose something, but the benefits were pretty clear and they amount to 0.08 percent for the EU area in GDP terms and 0.07 to 0.08 percent for Canada. That means more trade, more turnover, more money, more profit. That is why we thought economically it makes a lot of sense. Also, we thought it makes sense to have open markets among partners which are otherwise so close. We are NATO partners, we have intensive trade and investment, so why not really open up completely and have a kind of integrated market?
We have no major problems or concerns with CETA (Comprehensive Economic and Trade Agreement) and we are hoping that the EU and Canada will make steady progress. So far, there have been four rounds of negotiations and everything is on the table. It’s a very intensive discussion with about 100 experts on both sides. (It’s) interesting that on the Canadian side, the provinces take a very active part.
We want an agreement which then will be implemented by all the provinces. That is a prerequisite. If one or more provinces bail out, I don’t think CETA will happen. That is why we’re quite happy the provinces are taking an active part. We hope Newfoundland will take a more active part. For the time being, they’re observing the whole thing but aren’t really active.

DM: What does Germany see as the benefits?
GW: It’s not really tariffs because most of the tariffs are flat anyway but since CETA will be much further-reaching than just free trade, we hope the government procurement area will be much more liberalized than now, and that means federal government, provincial government and municipalities. The second point is agriculture which won’t be easy with the very special system here, particularly on dairy products. The third area is intellectual property. We know from our pharmaceutical industry that they are quite reluctant to invest in Canada because they perceive that the protection of their intellectual property is less tight here than in many of the OECD countries and that is a voice that one should take seriously.

DM: So the German concerns are basically the same as the concerns of the EU as a whole?
GW: Probably. I would say that geographical appellations is also a point for the EU — specifically for Italy (with its Parma ham) and France (with its Champagne). On the other hand, we do see that the Canadian side has its issues — let’s take the export of agricultural products such as meat or GMO. It’s not that the German or European side is the demander, but also the Canadians who have a number of issues and demands, understandably so.

DM: When do you think it will be finalized?
GW: I don’t dare make predictions but so far it’s been good — good progress and a good atmosphere. Let’s agree you come back with that question after the stock-taking in October. I do see that it will be done in a decent period of time. Two years is a tough timetable but maybe it’s possible.

DM: The German parliament gave strong approval for the Greek bailout. Can you talk a little bit about Germany’s role in an economically weak EU?
GW: I wouldn’t consider it to be a bailout. The German parliament adopted the necessary decisions to allow the handing out of major credit lines to Greece and other countries to enable them to lend at normal market interest rates and not to pay exorbitant interest fees. It’s not a bailout, it’s credits being given by European institutions. Behind them are directives that enable them to keep the interest rates at a normal market level. That means these countries have to repay their debt and I’m quite sure that they will. It was not a German action, alone; it was all European countries.
If you look at the situation now, the economy in Europe isn’t that bad. We had, all over Europe in the second quarter of 2010, an increase of two percent, compared to the first quarter of 2010. So the GDP does rise. In Germany, we had 2.2 percent in the second quarter, which is a really interesting growth. We are predicting GDP growth of three percent for Germany for 2010 and 1.9 or two percent for the EU.
Of course, there are factors we can’t predict that easily. If the U.S. housing market leads to a new recession in the U.S., that will have repercussions on the Euro-zone. Our economic recovery has been driven mainly by exports to Asia, which have picked up quite considerably, and domestic demand. That means imports have increased more than exports, so we’re also helping other European partners who export products to Germany, to get their economies in better order. We have pretty strong growth in Germany and reasonably strong growth in the Euro-zone.
The Euro has stabilized nicely. But we still need a lot of budgetary and fiscal discipline in quite a number of countries. We are in for a pretty tough budget in Germany in 2011. Like Canada, we are fighting to get our house in order.

DM: What was the reaction of the German people to the credits given to the Greeks?
GW: The man in the street wasn’t happy initially but that has calmed down and it has been more or less accepted.

DM: Can you talk about Germany’s role as Europe’s economic engine?
GW: First, whether we want it or not, we are Europe’s economic engine. We’re by far the largest economy in Europe and we’re the fourth largest economy worldwide, second largest exporting country. We came under fire when we announced that from 2011, the stimulus packages would end and we would start to go into austerity, softly, so it would be slow and step-by-step. We will tighten our belts in order to achieve a balanced budget by 2016. People said we’d make it harder for other European countries to recover because imports would go down. The facts are quite different: The moment we made these announcements, the economy stepped up. Imports stepped up further and quicker than exports.
The theory that the more debt you have and the more stimulus, the more you will revitalize the economy seems not to be correct. Why? A lot of people realize that if the government finances ever more debt, it will come back to (haunt) them. It won’t be the tax of today but of tomorrow. What a lot of citizens do, if they don’t trust their government financially, is reduce their spending.

DM: Your defence minister recently backed proposals to cut the German army by a third and suspend compulsory national service. Can you comment on that?
GW: Defence minister Karl-Theodor Freiherr zu Guttenber and his department are preparing models to reshape and reform the federal army. Why so? The coming austerity budgets mean there must be major savings with regard to the armed forces. We have major changes in our demographic development — fewer young people, more old people. We have no need to conscript an entire generation. We only draw on 25 per cent of those eligible.
The old days of Warsaw Pact Soviet armies are over and the army has no room for 60,000 conscripts. We have a number of missions abroad, Afghanistan among them, and we have hardship to support these missions with the necessary money, well-trained manpower and equipment. The level of ambition we now have might be too high for the present structure of the armed forces so there are various reasons why there is a clear need to reform the armed forces.
Reform with savings means cuts in terms of numbers but there are four to five models under discussion. It’s downsizing and a major restructuring — cutting ranks in the hierarchy, slimmer structures, which might allow to set free some more money for investing in equipment. The whole thing is under discussion in the cabinet, with the chancellor and parliamentary committees. Nothing is really set yet.

DM: Would you say it’s a change in philosophy?
GW: It’s an ongoing change in philosophy. Conscription was part of Germany’s post-war system until the fall of The Wall.

DM: Will it affect your service in Afghanistan where you have the third largest national contingent?
GW: No, I don’t see that. We have about 3,000 soldiers in Afghanistan. We have a discussion about how and when to exit from Afghanistan — someday we will have to (withdraw).

DM: German Chancellor Angela Merkel — not to mention Nicolas Sarkozy — have made it clear they oppose Turkey’s entry into the European Union. Can you talk about the reasons for that position?

GW: That is a long-standing issue. We do have a very special German interest in improving and deepening both bilateral relations with Turkey, which are pretty intensive anyway, and the links between Turkey and the European Union. This interest is there. Beyond that, the negotiations between the EU and Turkey are ongoing for quite a long time. To my knowledge, there are 13 out of 35 chapters, regarding the integration of the European Union, under discussion between the two sides. One has been closed (on scientific cooperation) and the others are not yet even open. Which means it will be a long process. This is something where I wouldn’t dare to make any predictions.
DM: But Germany generally opposes their entry.
GW: All I can quote is the (government’s) coalition paper, which says that “Germany has a specific interest in deepening mutual relations with Turkey and with linking Turkey closer to the European Union. The negotiations, which have been started in 2005, with the aim of an accession, are a process with an open end which does not render any ultimate decision and whose result cannot be guaranteed beforehand.”

DM: Can you talk a little bit about German-Canadian relations? How is the relationship?
GW: As someone who spent six weeks vacation in Canada and sees Rockcliffe as home, it’s clear that I’m happy here and that’s true for the whole family. There are no problems in bilateral relations. We have no stumbling blocks whatsoever.
I mentioned a few trade-related issues but that’s dealt with under the EU framework. We might, here or there, have an issue with provincial legislation, such as local procurement, but that’s nothing to the overall relationship. We have very intensive cooperation in various areas. In science, we’re establishing a German-Canadian centre for innovation in Alberta. We have established, with Helmholtz Association, one of our largest think-tanks, a long-term project with the University of Alberta on the recultivation of open-air pits and water systems.
Oil sands drilling and open-air pits have a negative impact and Germany has a lot of experience with it. For example, one particularly problematic issue was with uranium mining done by the Soviets. There was a tremendous amount of hazardous substances on the surface of waters and lakes which we have repaired and recultivated. We will continue the cooperation that we have (with Canada) in Afghanistan which is, across the board, pretty good. We have a strong increase in political contacts.
If you had asked a year ago, I would have told you that relations are good but so good that neither side bothers to visit. That has changed. We’ve probably had more visits in the last year than we have in the last 20.

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