Interview of Paolo Gentiloni, EU Commissioner for the Economy

Interview of Paolo Gentiloni, EU Commissioner for the Economy, with John Papageorgiou for Athens Municipal Radio and The Athens Digest

Q: After your meetings with the Greek authorities, you highlighted the reform-friendly agenda of the Greek government. You were also rather careful, referring to the issue of the potential reduction of the primary surplus targets. On the one hand, I think there are some strong claims as a base for the Greek government. On the other hand, I understand that creditors, at least some of them, stick to the post programme commitments. So, in your opinion, are there good chances to have the Eurogroup’s approval by the end of the year? Or to be precise, by the time that Greece will submit its 2021 draft budget?

GENTILONI: Well, I think that it is not to the Commission to take such a decision. What is clear from my point of view is that in Greece, we are on the right track. We have good results on the economy. This will allow us to begin to deliver with a first step in the Eurogroup in June. And the issue will be the use of profits coming from SMPs, AMFAs for investments. This could be a consequence of the report that we will have at the end of this month from the fifth mission of the post surveillance programme. I am referring to this first step only to say that we need a gradual approach. And I am very happy to have the same view with the Greek government from this point of view. The Greek government is saying “ok, we are on a track, we respect our commitment, we will raise issues with the Commission and with the Eurogroup”. The Commission answers, “yes, you are on the right track. We will take a first decision in June and then we will support your intention to open this discussion”. But the conclusion of this discussion is not a decision for the Commission to take. I think that the Eurogroup after the summer will discuss the possibility of further steps apart from the one that are already in our scheme of work.

Q: Let’s turn to the broader EU agenda, and specifically to the Green Deal. We are aiming to trigger huge amounts of private capital. I think, especially in the short term, this is an ambitious goal. Are there effective ways to make such investments attractive for investors? Can you share with us some specific ideas of how this can be achieved?

GENTILONI: Well, I think that investors all over the world are very clearly understanding that this green transition is absolutely the defining challenge of this decade. And we could look to several aspects of our day-to-day life: from housing to cars and transport means, to food, to energy sources. And we will see how the world is transforming towards climate neutral targets. So, this is not a bureaucratic invention in Brussels. This is what is happening in the real world. There are a lot of investments, a lot of initiatives for companies. What the European Union will give is tools to promote these private investments with public finances and with regulation, taxation, new rules of state aid. And at the same time, we will also give to the Member States targets to reach on the greening of their budget and on this transformation. So, I think that there is an availability in the financial markets (which is) very clear. What the financial markets are looking for is certainty on timing and on rules of this green transformation.

Q: Are you worried that some stakeholders who do not respect the same mentality and the same goals may have a competitive advantage?

GENTILONI: Yes, I share this concern and the reason why we are studying the adoption of a mechanism, which is a mechanism avoiding this unfair competition _ a carbon board mechanism to the borders of the European Union _ is exactly the reason is exactly this one. If we are serious and we are serious in this transformation, we will have standards on emissions, on environment _ very advanced in Europe. We can’t allow unfair competition by companies having different standards. And we can’t also accept the idea that European companies go elsewhere because they found lower standards. So, in the interests of future generations, but also in the interest of the European economy, we have to avoid these forms of unfair competition and we will do it.

Q: Last Wednesday, you as well as Vice President Dombrovskis announced a consultation about the revision of the current framework of the EU fiscal rules. You referred to both the need for fiscal stability and the need for public investments. So having also in mind the Green Deal, do you think that showing some flexibility regarding the investments, the expenditure for the Green Deal, especially for countries which will not have fiscal space, is an option?

GENTILONI: I think that this will be one of the issues at the center of the discussion that we will have in the next five months. The idea is: We have our rules. These rules are 10 years old. And in the meantime, our economic situation has changed at least three times. We had a deep crisis, then we had several years of stable growth, and then, since one year (ago), one year and a half, we have a slowdown in growth. Not in Greece, but in the overall of the euro area. So, now, I think our rules should have two targets. One is how to face the slowdown of the growth. And the second one is how to tackle the big challenges that we have in front (of us); first of all, the Green Deal. And for sure, investment is a keyword for both these issues, for both the idea of relaunching growth and the idea of transforming to a more climate-friendly economy. How we can find forms to facilitate investments without obviously undermining stability in our economy will be at the center of our debate. But we can’t say that everything is going well, we will not change anything. Because the need to relaunch growth and to facilitate investment is very clearly there.

Q: Going one step ahead, do you think that it is the right time to introduce, let’s say, a euro area safe asset?

GENTILONI: Definitely yes. But also definitely I am aware of the fact that to build consensus among member states on this necessity will not be easy. The starting point I think should be: We have now a very different situation towards the public debt in different groups of European countries. And it’s not one single country. It’s two relevant significant groups having different situations. So, we can’t accept the idea that the countries having high debt are exposed to different risks from the others. We have a common Union, we have a single currency. We should complete this common Union and this monetary union. How to complete it without a form of safe asset? It’s very difficult.

Q: Are you expecting an agreement on the MMF shortly?

GENTILONI: Well, I appreciate the effort of President Charles Michel to convene an extraordinary European Council to try to find a solution. I do hope that this would be possible. And I’m sure that even if this would not be possible immediately in this European Council, this European Council will pave the way for an agreement very soon after.

Q: Your best-case achievable scenario?

GENTILONI: I think that the proposal of the Commission is very realistic. Someone describes it as too ambitious. But we know that it is not too ambitious. We can’t ask the European Union a lot of things and at the same time, imagine to have after Brexit a lower budget than we had in the previous seven years. We have new tasks. We should have a realistic budget. It’s not an ambitious budget. It’s a realistic budget.