Jean-Claude Trichet: Dear Ladies and Gentlemen, it is a great privilege and pleasure for me to open today’s meeting and welcome Valéry Giscard d’Estaing, the former President of the French Republic, and Helmut Schmidt, the former Chancellor of Germany, to this discussion on “The future of Europe – views from founding fathers”.
Dear Valéry Giscard d’Estaing, dear Helmut Schmidt, you are both Founding Fathers of the euro and of European economic integration. When studying in preparation of this event your long careers, I was again struck by the close parallelism in your lives. You both were Ministers of Finance and you both became heads of your own country and government at strikingly close dates: Helmut Schmidt took office as Chancellor of Germany on 16 May 1974, and Valéry Giscard d’Estaing was elected President on 19 May 1974. You were close friends already when appointed and you worked very much hand in hand during all your time in power. You displayed impressive statesmanship in both looking beyond national borders. You showed an impressive capacity of developing a long-term vision.
I was struck to see the rapidity with which you succeeded in your first joint endeavours at the international and European level. There are a lot of young people in the audience who have known nothing else but a united Europe, who were not yet born when the Iron Curtain fell, who may not even know another currency than the euro. But it didn't come automatically. You have shown that history is not made overnight, but only through a succession of vision, determination and courage.
There are three achievements that stand out in your long service for Europe:
Let me add something more personal. I was myself in the cabinet office of President Valéry Giscard d’Estaing at that time and I have a vivid memory of not only the very close cooperation between your countries, reflecting your remarkable meeting of minds, but also of the personal friendship and mutual confidence that you had developed. At the time I was a humble advisor who had the privilege to witness this friendship.
In the ECB and the Eurosystem, we can all see ourselves somewhat as your children. After ten years, the Governing Council, the Executive Board and the staff of the ECB is here to show that we try to do our best for the single currency in order to be a good instrument to the service of Europe and European unity. We maintain the value of the currency and we preserve price stability to the service of our fellow citizens. It all started with a meeting of minds between the two of you. You convinced your fellow heads of state and governments in Europe. Now we are sixteen countries and 329 million people using the single European currency, the euro. And we know that it is to your vision that we owe the very existence of, first, the European Monetary Institute (EMI) with Alexandre Lamfalussy, and after that, the European Central Bank (ECB) with Wim Duisenberg.
We are here today to benefit from your lucidity, vision and wisdom. We are in a very difficult period and we are convinced that all you could tell us would be inspiring for the present period and therefore be very valuable to us all.
Now permit me to thank not only the ECB staff for the organisation of this encounter, but also all the participants and in particular the students from the Johann-Wolfgang-Goethe University Frankfurt, the European Business School Eltville and the European School Frankfurt for having accepted our invitation.
Without further ado, let me give you the floor for your introductory remarks.
Valéry Giscard d’Estaing: I am not accustomed to speak in an opera. I was in many political places or meetings, but an opera – no. So I wondered if you would ask us to speak or to sing...
It is really a happy moment for me to be a witness of ten years of the euro, because it is something which we endeavoured and which can now be called a success. At the time, many believed that the ECU will not succeed. In the US, before the introduction of the euro, I had to explain in universities and intellectual circles what we were doing. I was received with scepticism, absolute scepticism. I remember Alan Greenspan, who at the time was at the height of his fame. He said: “It is a good idea, but I can tell you: First, you will not do it. And then, if you do it, it will fail.”
I went to the University of Chicago and I again explained what we were doing, but no one expressed any confidence in the euro, not one. And now, ten years later, we can say that we did it.
What was it we were looking for? As you remember we were in a monetary turmoil in Europe. Every six months, the “headlines” changed: usually the French franc went down, the lira went down, the Deutschmark went up. And this was in absolute contradiction with the single market. We said to ourselves: "We cannot have a single market like this! There is no single market if currencies cannot function." So we tried first by several means to make it function. But finally we came up with the idea that the only way to achieve a single market is to have a common currency, a single currency. It was very difficult to sell, because all central bankers were against it. [Turning to J.-C. Trichet] You yourself were too young….
Helmut Schmidt: You are right on both counts!
Valéry Giscard d’Estaing: And the business community in Germany was quite irritated, because Germany had a strong currency, which was an expression of its successes, its reconstruction and its economic stability. And they thought that the other currencies – those more to the South – could not be trusted in the same way. And of course you had to convince the Germans. Helmut did it, with the help of friends.
So, the first thing we did was to end the monetary turmoil in Europe. For most of you in the audience, it may not matter much because it is long ago. But Europe, or the single market would not have survived if there had not been a single currency, the euro.
Second, we wanted to send a strong signal of European identity. Because the construction of Europe was something to be done step by step rather than as an administrative process. A single currency was the most difficult means of identification for Europe. So, we were pleased to see Europe having an instrument of identification. I remember the first day of the introduction. I was going to Spain and in the plane suddenly I thought: “My goodness, I have forgotten to take pesetas with me….”. And now we travel with the euro. It’s quite a change if you take into account habits that have lasted for centuries.
The third element was to have a currency that will help to ensure stability and growth. And if you look at the situation now, after ten years, that is the case. It is what we hoped for and what we got. So we are very pleased today. Not pleased because we commemorate ourselves, but because we commemorate the result.
And I would say there was something we did not anticipate: It is the ability of the President of the European Central Bank and his team to lead the process.
I am still impressed that starting from nothing, ten years later it is an institution. It is recognised in the world. It is the second currency in the world. It functions in a dignified and competent way. I must thank you, Mr President, and the team of the European Central Bank for your work.
Jean-Claude Trichet: Thank you very much.
Helmut Schmidt: I agree of course, in the first place with the historical reminiscences of Jean-Claude Trichet, and also with your evaluation, Valéry.
As regards the immediate future, it seems to me that right now, among the great currencies of the world, the euro is the most stable, inward-looking as well as regards the exchange rate. Maybe it becomes a bit too stable in a couple of months; you know this better than me.
Secondly, right now, the European Central Bank is the only institution in Europe that functions well…
Valéry Giscard d’Estaing: No Helmut, in all honesty I would add the European Parliament. The European Parliament is elected and we started the elections jointly in 1979. I think we can refer to both the European Central Bank and the European Parliament as functioning European institutions.
Helmut Schmidt: Setting up a European Parliament was your idea, and it was a good idea… But the European Parliament has no right to take initiatives so far, and this is a great deficit. I would like to give the European Parliament this right – it is about time to do that.
But there is another deficit in present-day Europe, and that is the fact that the European Central Bank does not have a political counterpart. The European Commission in Brussels is responsible for 27 countries. Jean-Claude Trichet is responsible for the 16 countries of the euro area. There is no political and economic counterpart. President Sarkozy has been correct recently when he touched upon this lack of political counterpart, and referred to it as a problem. And it seems to me, that right now, there is no answer to the problem.
Jean-Claude Trichet: If I may comment on two points. One is on the team. There is not a single decision at the ECB which is not taken by a colleague, either the Executive Board, by all six of us with one-person-one-vote, or by the twenty-two members of the Governing Council. When we had to decide to intervene on the 9th August 2007 with a loan of 95 billion euro for 24 hours, the six of us in the Executive Board took the decision. And all the decision we are taking on interest rates are taken by the members of the Governing Council. This collegial decision relying on collegial wisdom is a well-designed construction enshrined in the make-up of the ECB.
Secondly, I would say that the executive counterpart of the ECB obviously depends very much on the functioning of the Eurogroup of euro area members’ governments. It depends very much on the determination to respect the Stability and Growth Pact, and of accepting peer pressure. We could of course make a bigger jump and we would be extremely keen to know what your long-term vision on the political unity of Europe is, because we certainly could improve a lot. But with the present structure of the political framework of Europe, it seems to me that we basically have what is necessary to have a good coordination and cooperation between the members of the euro area. But of course it only works if executive branches, if governments accept peer surveillance and peer recommendations.
Valéry Giscard d’Estaing: Well, I am not sure that unanimity is good in itself. Most of the questions you have to solve or to address are difficult and need an intellectual approach. And then, you may have dissenters, you may have debates and all that. We all got too much accustomed to be very pleased when there is unanimity. Of course, it is easier. But what is important is to have is a stable majority, which you have in well-working institutions, and a Council which is debating different aspects of things.
Let us move to the present crisis: the ECB has been, among the major central banks of the world, the most efficient. Clearly. Since the beginning, since the summer of 2007. What you did very quickly, in fact, and to an extent, which was not anticipated by public opinion or members of government in Europe, has been brilliant. During the crisis you introduced some new approaches, which you called...
Jean-Claude Trichet: ... non-conventional, or non-standard, ...
Valéry Giscard d’Estaing: ... non-conventional measures! You have the reputation of being a little conventional...
But it indicated an ability to adapt to the crisis, in which Europe up to now is less profoundly affected than the US and the British. I think the monetary policy has been quite an important factor and the best way forward, considering of course the circumstances. And for now, I would like to see the central bank giving credit to the idea that this crisis will come to an end.
There is a very useful word by Lord Keynes. Lord Keynes, speaking of what we feel, what we debate, used the term ‘animal spirit’. It means we have ‘rational spirit’ in one sense, calculation and all that, but we have also ‘animal spirits’, i.e. fear, hope, trust, conviction and these words have not been used enough in this crisis.
Probably, for instance, in the month of November and December 2008, there were the animal spirits, that were on the move. When people said: “Let’s stop buying, let consumption decrease sharply”.
It was not because of the resources. The resources are not changed. It was because of the animal spirit. It was only because of the fear and lack of confidence. And it is the role of a big central bank for a big number of people to inspire or create confidence. It is one of your missions. And so, I wish, that you indicate, in one way or the other, the timetable and the process by which we will progressively get out of this crisis. Because the crisis is a banking crisis. It is not a classical crisis of supply and demand. The triggering factors are purely within the banks. So being a central bank in a continent which has shown some resilience, you should indicate how and when the European banking system will be able in this part of the world to support and sustain again growth and stability.
Helmut Schmidt: I take up the catchword “confidence”. You put an ashtray in front of me, so I have the confidence that I’m permitted to smoke…
The confidence in the network of banks has dwindled all over the world. Banks don’t trust each other today. One necessity in my view in order to regain confidence in the banks, is to assure the public that the present banking crisis will not be repeated in a couple of years. We have seen the crisis of the savings and loans associations in the United States. Ten years later we had this so-called New Economy where shares of companies were sold to X, Y, Z without the companies even existing. We have seen the rescue of the Long-Term Capital Management fund. By the way, it should have been called Short-Term Mismanagement Fund... We have seen all these crises. And the lessons have not been hidden.
And this time I think it’s necessary that the European governments insist on regulation and supervision of financial institutions of several kinds, including big insurance corporations, investment funds and pension funds. And if the American political class maintains its resistance to that, it will become a necessity for the Europeans to do it in Europe. It is unthinkable for me that in the long run we carry on with a system where one country does have a functioning regulation and Ireland has not. Or where the Germans think they have a functioning supervision but it does not function with regard to 6 or 7 Landesbanken...
If you have a European-wide market for money and capital, for financial markets as a whole, you need a European-wide system of regulation and supervision. And this brings me back to the earlier remark: it can not be done by the central bank alone. And obviously it cannot be done by the Brussels’ Commission. Who is the one who has to do it? That body doesn’t exist yet. The central bank needs somebody. You mentioned the Eurogroup. But the Eurogroup doesn’t have any authority vis-à-vis the public and doesn’t have the authority vis-à-vis the lawmakers, the Chamber in Paris, the Bundestag in Berlin or the Italian or Dutch Parliament. And I think this is one of the necessary tasks of the future. By the way, Valéry, you quoted John M. Keynes. There is another proverb which he pointed to: “In the long run we are all dead”. And I do not trust too much on the very long run... I want some action today...
Valéry Giscard d’Estaing: Since we are only 10 years old, you know there is time left. You will see.
Helmut Schmidt: When he wrote his famous book "The General Theory of Employment, Interest and Money", I was 18.
Valéry Giscard d’Estaing: We will disagree in front of you. Because I disagree with Helmut on the last point. When you say there is no structure that could make this work. Personally, I believe the only institution that could perform this work is the European Central Bank. Of course the national central banks are not in a position to define the rules that would be applied all over the euro zone. The politicians and even parliaments are not equipped for that. The regulation of securitisation, of hedge funds, of toxic assets. This can not be handled by the European Parliament. It must be handled by a very technical institution. And we are looking at one, which is the European Central Bank.
Though the political decisions must of course be taken on the political level. But I think the mandate should be given to the European Central Bank to coordinate this process. And I would call upon to the European Central Bank to do it rather quickly. Because I don’t see any benefits in proceeding slowly in that field.
All these questions are now known. We know of all the speculative instruments you were speaking of, Helmut. And that people would be very pleased if a respected institution has the power, the ability and the will to correct all this. What happened is not that the banking system made mistakes.
The banking system changed its function. It became a financial speculative instrument. So this branch must be cut. And the main function, which is to provide the economy, investors and people with normal financing, should be restored. Like you said, Helmut, we realise in this crisis that our economy can not function without a good banking system. Profit only is not enough. We need to eliminate the speculative instruments for now and for the future. And it will not be easy because the people who used it are still there. And if they could start again, they would be delighted...
Jean-Claude Trichet: I fully agree.
Valéry Giscard d’Estaing: And sometimes, very innocently, they even say so...
People in the street want clarification. It’s not about creating a new capitalism. It’s to cut the speculative power of the banking system which created the crisis, which ruined certain people and which diverted the banking system from its normal role. And therefore I think the European Central Bank should have a mission to guide this process.
Jean-Claude Trichet: Thank you very much for this suggestion, Mr President. We are actually working in the direction you are suggesting. Jacques de Larosière has chaired a group and he has recommended that, under the auspices of the ECB, a macro-prudential entity should be created. This group would be as lucid as possible in the field of financial stability risks associated with the absence of appropriate macro-prudential rules and behaviours. In the field of micro-prudential supervision the idea is to have in the future a much more intimate connection between national supervisors. I trust that the European Commission considered that it was impossible to get a consensus to create a single entity. But as far as the European Central Bank is concerned, we are working actively together with the European Commission.
Helmut Schmidt: I could imagine a system where the ECB is made responsible for macro-regulation, macro-supervision. But this then means that for micro-supervision, you have to rely on national authorities. And you will find that some are functioning and others are not...
Jean-Claude Trichet: We could see that this was your strong sentiment, Mr Chancellor...
Helmut Schmidt: And there is a danger of conflict of interests in central banking. On the one hand, you are responsible for the money supply, for the level of interest rates. You are indirectly responsible for helping out a country like Ireland or a country like Greece, or later on, a country like Estonia or Hungary. If the sky breaks down, all the sparrows will die. Then all the former Treaties of Nice and of Maastricht may become obsolete to some degree.
But hopefully, the sky is not falling down. Then this concentration of responsibilities in the European Central Bank is dangerous, also for the Bank.
Jean-Claude Trichet: You can count on us for the Maastricht Treaty not to become obsolete. I think it is clear in the eyes of all external observers that there are responsibilities that are in the realm of governments and executive branches and that there are responsibilities that are in our own realm, according to the division of labour. So, I think there is no doubt of that.
I am sorry to interrupt you but I would ask your permission to have questions also from the audience.
Valéry Giscard d’Estaing: Just one word on this. I think it is honestly fascinating to see the largest crisis in the last 30 years not having been anticipated anywhere, neither in the US, nor in Europe. So, it indicates clearly that the warning system is not adapted to such situations.
What I would recommend is a compromise between what Helmut said and what President Trichet said. It is to have an institution which existed in the past in Europe, in Rome or in the Far East, in China. It is to have an institution of censorship, that means, a few people who have very wide powers of investigation, who can go everywhere, ask questions. They would be people of a very high-level. And they would be questioning the people, the leaders and to try to feel in advance what are the dangerous evolutions of the system. And then, report at the same time to the bank and to the national authorities. But what we have not at this moment are free-moving people with investigating powers, able to go and to discover what happened. When Lehman Brothers collapsed, the situation of the bank was extravagant. The proportion of leverage funds and the capital – unbelievable. But no one knew it. If you had a sort of censorship, people going there, speaking up, you would have probably known. And then, you could have warned the US and in Europe, the European Central Bank.
Jean-Claude Trichet: Thank you for this suggestion. If you agree, we invite the audience to ask questions. I see a hand which is there.
Question from the audience: I have a question addressed to President Giscard d’Estaing and to Chancellor Helmut Schmidt. Following up this interesting discussion on how to establish the right framework and conditions for the financial system and behaviour in the financial system. First part of the question: Should it be done as an international or a super-national task? Could it be done on a cooperative basis or would the authority have to be transferred to existing or new institutions? And second, can it be done without tying it to a common economic policy and maybe the beginning of a common fiscal policy?
Valéry Giscard d’Estaing: Well, Helmut will answer ...
Helmut Schmidt: I would say three things. Number one: Some people have used this afternoon the term “the financial system”, the “banking system”. But it is not a system. At best, it is a constellation. It is an unsystematic so-called system that has developed by chance.
Secondly, a supranational regulation and supervision is very unlikely to happen in Jean-Claude Trichet’s lifetime, and he will have another twenty years, at least.
In the third place, it has to be an international system, but it is very unlikely that we can convince the Americans and the British. It ought to be done internationally, inside euro land and inside the European Union.
Valéry Giscard d’Estaing: The people speaking of global regulation are the people who created the existing system. We know that it is impossible, as Helmut said, to have world regulation and added to this, world control.
If you have a bank which is located in four, five places in the world with different legislation, different currencies, it is impossible. So, if we try to do this, we will do nothing, we will fail. Of course, there is a need for internationalisation, which this gentleman expressed. But then we must have large zones. And the euro zone is a large zone, 330 million people, and it has the second highest level of income in the world after the US. That is big enough to have a system of regulation that enables and is open to consultations between the Federal Reserve System and the European Central Bank. You cannot have a sort of legalistic system above it. It will not function. But, of course, it will already be quite a progress to have a multi-national system in the euro zone or even in Europe, if it is possible. Then the connection with the rest of the world will not be made by mandatory legislation, but by the regular connections and contacts between the main central bankers.
Jean-Claude Trichet: Thank you very much. The G20 is reflecting precisely on improving that – we will see what will be decided at today’s G20 meeting.
Helmut Schmidt: Next question.
Jean-Claude Trichet: Next question!
Question from the audience: I have a question to all three of you. President Giscard d’Estaing said it is extraordinary that for thirty years, we had all kinds of institutions and were not able to foresee what happened. It reminded me of the sentence by President Kennedy who ran into big trouble in 1961 in the “Bay of Pigs”, which was a disaster, and afterwards, he said that: “If I had had one man in my team who would have said, don’t do it, I would not have done it, I would have re-thought it.” And my question is, isn’t the reason that we are in trouble, because we all think alike, and because nobody dares to show any other different ways and procedures and possibly institutions to move forward. Do we not need more variety of thinking?
Helmut Schmidt: As far as I am concerned, I am all in favour of a variety of thinking and I am also in favour of having leaders who listen to criticism. But on the other hand, I do believe it is necessary to take decisions afterwards. By the way, the “Bay of Pigs” was not the only mistake he made. Under Kennedy’s leadership Vietnam was the other one. And that reminds one of the fact that a charismatic leader does not necessarily take all the right decisions.
Jean-Claude Trichet: Thank you very much indeed. Do we see other hands?
Question: We want to address a question to Mr Giscard d’Estaing in view of the outcome of the Irish referendum. It seems as if Europe has lost its sense of direction. What would you suggest to put Europe back on track?
Valéry Giscard d’Estaing: The Irish people wanted to vote “no” to their Government, not to Europe. Like the French who wanted to vote “no” to their Government and to their President in 2005 and not to the Constitution.
But of course the media system and the leaders in the world prefer to say that people vote against Europe and not against them.
I went to Ireland a few weeks ago. And I heard people in various conditions and in various places. I came back with a conviction that the day when an adequate Government – because they are not in a very comfortable political situation at this moment – will again ask the question to the Irish they will overwhelmingly vote “yes”. Their demands are to keep their values: They are Christians, mostly Catholic. They have family values which they cherish. They feel that some aspects of the European policy could be dangerous for that. But of course this is not true. There is no European competence in fields like these. The constitutional Treaty even contains provisions to avoid this. They want to keep their neutrality which is a historical factor due to the terrible situation in the 19th century. We don’t mind because there will not be an enormous contribution to European security anyway.
So, they want to keep some expression of the Irish identity. But I told them: I’m like you, I want to remain French. You want to remain Irish, Helmut wants to remain German, it’s absolutely normal. But you can be both. You can be Irish and European. The “No”-campaign was done in an unfair way, by lobbyists and by extremists. By people coming from other countries. They can not do it again. It works once, not twice.
And the question of the size of the European Commission is not at all at the centre of the debate. So, the idea to go back to a European Commission of 27 is very counterproductive, because a Commission of 27 will not function. It is impossible to debate, to reach consensus.
Helmut Schmidt: Particularly if you stick to the unanimity rule.
Valéry Giscard d’Estaing: Yes. You know the Commission in the last years, they never voted. Never. So we need to have an institution more adopted to the modern functioning and similar to the governance of the central bank. And then the Irish will vote with a wide majority in favour of the Lisbon Treaty.
More difficult question could be what British will do. Because there are doubts as there are elections. And the new government could again ask the question of the Lisbon Treaty to the British people with a referendum. And then it is quite possible that the answer would be negative. It would create a real problem in the process. But in a way this is not so important. Let’s live like historians. If it takes 2 years or 3 years, what is the problem? Most of the provisions of the Constitution of the Lisbon Treaty will be in force only in 3 years, 5 years anyway. A delay is not a real problem. So I think the institutional problem will be solved in the future. And I wish that after the European election and the local election that will take place in Ireland that it will express the real view of the people. There will be a new vote and I believe the vote will be positive.
Jean-Claude Trichet: Thank you very much indeed. Other questions?
Question: I have a question for Mr former President and Mr former Chancellor and also for President Trichet about the reform of the international monetary system. We talked about the reform of the regulation system. But how about the monetary system? Recently the Governor of the Central Bank of China proposed that there is need for discussion in the international community to promote the use of SDR as international reserve currency. This is in view of the shortcomings of the current system where one country’s currency and consequently the monetary and economic policies have an overwhelmingly consequences for the rest of the world. And we have seen a lot of negative consequences to the rest of the world. So there is a need to promote an officially agreed new international reserve currency and assets denominated in that currency to be promoted on the international market. And I would like to ask your view on that.
Helmut Schmidt: I would like to say first that I regard Mr Zhou, the central banker in Beijing, to be a first-class expert. Secondly, I think he is quite right about the slow decay of the hitherto dominant role of the American dollar. You don't need any prophecy to foresee that. Thirdly, I’m very hesitant about the idea to make SDR the one and only reserve currency all over the globe. I do foresee instead that we are developing slowly into a constellation in which three major currencies have to cooperate. This is the American dollar, this is the European euro and the Chinese renminbi. It’s necessary and difficult for the Americans to understand the coming importance of the Chinese renminbi. It may take 10 years, it may take 15 years, but it will happen.
Valéry Giscard d’Estaing: We must remember that the monetary world was always stable when there was more than one unit of reserve. At least two or three. When there is just one, it is dangerous. In the past we saw gold and a currency, gold and the sterling, gold and the dollar. Since 1917 there is in fact only the dollar. So it’s by nature an instable system and can not be based on one single currency.
And Helmut is right. But I would like to add something because of this anniversary. When we started to think about the European Monetary Union and its single currency, we had absolutely not the intention to create a reserve currency. Not at all. The Americans believed that we wanted to compete with the dollar. But that was not at all the idea. But in fact since we are the largest trader in the world, the second group concerning the GDP, our currency will play a major role. Of course we wish that the people who are in charge of the policies will not try to accelerate this. Because there are no benefits for us. And probably, like Helmut said, there will be another constellation of currencies in the future. At this moment it is the dollar, the euro and the yen. Probably in 10 or 20 years it will be the renminbi, the Chinese currency. But of course the Special Drawing Rights might be useful also, because they are linked to another function of the international monetary system, which is the lending to countries in deficit. It can be used. So it’s a mix that must compose the future monetary reserves. If it is well handled, it could be a stable system.
Jean-Claude Trichet: I would like to echo what you were saying and mention the policy that we are pursuing. We are not campaigning for the international use of the euro. We introduced the euro for the sake of prosperity and stability of Europe. And I have to add that very regularly I said that it is important in the present relationships inside the constellation of major currencies that the US authorities are saying that a strong dollar is in the interest of the United States of America.
Perhaps we could take a last question and then if you would agree, Mr Chancellor, Mr President you could have the last words of course after this extraordinary dialogue. Do we have a last question?
Question from the audience: President, Chancellor, the G20 gathers in London. And before the meeting President Sarkozy and Chancellor Merkel said that they will speak with one voice. 30 years ago during summits of the industrialised countries did you always speak with one voice? If not, what were the issues you disagreed upon?
Jean-Claude Trichet: Good question. On which items did you two disagree?
Valéry Giscard d’Estaing: On the smoking!!!
Helmut Schmidt: The two of us did not disagree between each other. But sometimes we disagreed on the approach of our American counterpart. Not as long as Gerald Ford was at the top. But growingly so under Jimmy Carter and even more so under Ronald Reagan.
Jean-Claude Trichet: Can I ask a question if you permit? The European Parliament was an invention of your period. Chancellor Schmidt said, “It was your idea, Valéry”. What would you suggest in terms of institutional framework for the European Parliament?
Valéry Giscard d’Estaing: We are continent building, if you will, using the wording of the Americans who speak of country building. What we do is continent building, which is more difficult because of the diversity of cultures, standard of living, wealth, etc. So, we must proceed in improving successfully all our institutions. In the beginning there were 3 institutions, but the European Parliament was only a consultative assembly, with no power. In modern times this is impossible. You need to find a way for people to express, by voting what they believe, what they are asking for. So, we decided to organise elections and give additional democratic features to the European Parliament. In the new Treaty, the Lisbon Treaty, there will be additional powers for the European Parliament. The European Parliament will become a classical parliament. The problem with that is the structure of the Parliament. It must be very strict that it limits itself to the European competence and that it is not mixing its functions with national or local competence, which is always a tendency for all assemblies. But it will be a normal Parliament. No decision can be taken by the Council in the future without being in accordance with Parliament.
The two other branches which need to be reformed are the European Council and the European Commission. What we propose for the Council is to have a permanent President. The difficulty would be to find the man or the woman for that. Because we do not have a voting process. America has a long and brilliant process with selection by both parties, the voting people and local voting. And we do not have all that. And we cannot have a President, man or woman, who will be designated in a caucus in an afternoon within just two hours, it doesn’t make sense. So, we need to improve this. And it can be done without changing the Treaty, especially for regulations by the Council itself. There must be a bureau. There must be a Vice-President or Vice-Presidents, i.e. a sort of executive structure. And this can be done, if the Council itself decides to do it.
And at this moment the balance is that the Council is going up and the Commission is going down. Why? Because of the number and because of the pretence that countries are represented in the Commission. It’s a false pretence. The Commission is a multinational centre where the best people of Europe are gathering to express the common European interest. Jacques Delors said the best figure would be 12, because these people should be chosen for what they are, for their European conviction and to express the European view, not the French view, not the Italian, not the British, but the European common interest. Unfortunately, this part of the reform is in danger now because of the pressure to have the Commission representing all EU member states.
So, what we need is institutions and the people to lead them. And we need to have a political will, a European political will. And in view of this anniversary I can say that the euro and this institution have been satisfactory, just like we expected. But for the other reforms the political leadership is not there. The building process, which started with the Schumann statement, called for political will at the end of the process. So I agree with what Helmut said that you can not have a currency without a responsible political system. You can not have harmonised economic policy if there is no political will to do it. So what we need is to introduce again in the European system the political will which is necessary to give it its final structure. I hope this will happen in the coming years. And if we commemorate it in 20 years, Helmut and I will be happy to join…
Jean-Claude Trichet: You have a standing invitation!
Helmut Schmidt: When I flew into Frankfurt this afternoon, thinking about meeting my old friend Valéry Giscard d’Estaing once again, it came to my memory that more than 60 years ago I was listening to an outstanding Frenchman. His name was Jean Monnet. It was either in 1948 or 1949, more than 60 years ago. And it seems to me that it is still correct what he told his audience 60 years ago. There may be many factors, positive or negative factors which may be decisive on the further evolution of the European Community or the European Union as it is called today or a continental Europe as Valéry said a minute ago. There may be different factors and conditions. But one condition is absolutely necessary. Without that one the whole thing will never function. That is the close cooperation between the French and the Germans. If there is no cooperation and no mutual confidence and trust between the French political class and the German political class, between the French public and the German public, the whole thing cannot work. Therefore it is necessary that our present leaders understand that this is an absolute necessity. And it is in the long-term strategic interest of both nations.
Jean-Claude Trichet: This dialogue between and with you was absolutely fascinating. You mentioned Jean Monnet. I remember that he said in his memoirs that nothing is possible without men and women, and nothing is sustainable without institutions. You were institution builders and we are an institution which is the child of your vision.
We have to thank you very much, which I do on behalf of all the colleagues of the ECB and the Eurosystem. It was absolutely fascinating. Thank you very much indeed.