Handelsblatt Interview Oettinger: Germany may have to pay more to EU

EU Commissioner Günther Oettinger has a reputation for budgetary prudence, but in an interview with Handelsblatt he warns that the European Union will have to rethink its finances after Brexit.
Günther Oettinger sees a new budgetary day dawning since the British voted to leave to EU.

Günther Oettinger, the new EU Commissioner for Budget and Human Resources, is considered in Germany to be a trusted pair of hands in Brussels. In an interview with Handelsblatt, the 63-year-old political veteran and member of Bavaria's Christian Social Union discusses the financial impact of Brexit, the costs of the refugee crisis, and the chances of success for European populists.


Mr. Commissioner, you’ve changed portfolios in Brussels – from the digital realm to budget and human resources. Is that a step up?

It’s a shift to an office that requires a certain type of experience that I gained as EU commissioner, first for energy policy, then for digitization. In the last seven years in Brussels, I was also in contact with many top officials, so I’m also familiar with personnel issues.

Could the particularly German virtue of disciplined saving have anything to do with your appointment?

Not really. That tends to make a few members of the European Parliament distrustful. I’m sometimes considered to be an austerity politician.

Are you?

Well, I’m proud of the fact that I pulled through the debt brake, along with the Social Democratic parliamentary floor leader Peter Struck. That is part of the reason that, for the third year now, the federal government is accruing no new debt and the states will manage to incur no new debts from 2020.

Now you are responsible for the European budget and are drawing up the multi-year EU budgetary framework. When will your draft be released?

Our rules specify that the draft be made public before the end of the year.

Why so early? The new financial period begins only in 2021.

Perhaps we’ll change the timetable. If Great Britain exits in the spring of 2019, the start of the new financial framework could be pushed up by a year to 2020. Moreover, there is something to be said for shortening the financial period from seven to five years.


The European Parliament has long been calling for the EU financial framework to be brought into line with the five-year EU legislative period. Brexit is providing a further reason: British payments into the EU budget won’t end all at once with the exit. The British will have to co-finance all the projects that they jointly decided upon until their completion.

Which could mean Great Britain has a departure bill of up to €60 billion.

After leaving the EU, the United Kingdom will have to keep paying for several years. So it makes sense to begin with a new financial framework in 2026 without British participation.

When the British stop paying, Brussels will be short some €9 billion per year. Will Germany and other net contributors have to compensate for that shortfall with higher payments?

The EU budget can only be passed with the support of all member states. I don’t believe the countries that up to now have been net contributors are prepared to take over the British payment completely. But Poland and other net receivers also won’t accept that assistance to structurally weak regions be reduced by €9 billion per year. Some middle ground will have to be found.

So things will get more expensive for Germany?

Brexit will hurt Great Britain most, but will hit other countries too. The other net contributors will have to pay somewhat more.

That certainly won’t put a smile on citizens’ faces.

In the EU, the state quota is around 50 percent. That means that if you earn €100, €50 of it go to the state as taxes or fees. But only €1 of that amount is passed on to the EU. The money is used in Brussels. Germans are certainly interested in our ability to finance important expenditures – for example, a secure EU external border in Greece.

But there could be reductions elsewhere such as with agricultural subsidies, which still eat up almost 40 percent of the EU budget.

Agricultural subsidies have been declining for years. At the same time, the EU states in central and eastern Europe are gradually becoming eligible for full agricultural subsidies. That means the old member states including Germany automatically get somewhat less.

So everything is remaining the same in agricultural policy?

No. We’re going to talk about a new orientation and cuts in some programs. Because we are faced with new challenges.

Overcoming the refugee crisis?

Yes. Securing an external border; the registration, administration and integration of refugees; the establishment of an efficient asylum system – these can’t be had for free. And the EU intends to invest more in common defense and the fight against terror. These tasks have to be funded. We calculate a figure that is at least in the single-digit billions. It will have to be partly achieved by savings in other areas of the budget. But perhaps we will also need additional funding on top.

Why not save even more – for example, the billions in EU structural funds that go to Poland and Hungary, since those two countries refuse to take in refugees?

Budgetary policy shouldn’t be used to impose political penalties. The structural funds are for making weak regions more competitive. And a large part of every euro the EU gives Poland comes back to Germany. The Poles use the money to place orders with the German construction industry, to buy German machines and German trucks. So net contributors such as Germany should be interested in the structural funds. From an economic perspective, Germany isn’t a net contributor but a net recipient.

For a long time, we thought our Western model of society was secure. Now we are suddenly noticing that we are engaged in competition with other social orders and other political leaders who link power to their persons, prefer planned economies and don’t think much of global trade.


Germany’s finance minister Wolfgang Schäuble wants to link the structural funds to requirements concerning economic policy. A good idea?

Yes, we are working on it. In its annual reports on individual countries, the EU identifies shortcomings in the member states – for example, in educational system or infrastructure. In the future, the structural funds are supposed to be invested to address those specific deficiencies. We want to make this compulsory.

Which would mean Brussels is putting the shackles on national economic policy.

I’d say more golden reins – not imposed by the European Commission, but decided upon by the Economic and Financial Affairs Council.

The Brussels budget recently shrank to just under €1 trillion in the current seven-year financial period. Will the EU overall need more money again in the future?

Before I answer that question, I want to first point to the added value for Europe achieved by our expenditures. Our experts are now examining every budget item from agricultural subsidies to foreign policy as to whether the EU can in fact perform the task more cost-effectively than the member states.

Wasn’t that ever checked before?

Not formally. The EU intends to spend more money for external border protection, military research or developmental aid in the countries refugees come from because it can meet these responsibilities more efficiently than can member states. If this proof can’t be furnished, then the respective responsibilities must be returned to the individual states.

For example?

I can only tell you that when we’ve completed our assessment. Maybe one thing in advance: The EU doesn’t spend much money on promoting tourism. But I believe the competency and financing should be in the hands of the regions. They can do their own marketing better.

Considering its many new responsibilities, will the EU need a new source of revenues?

At its inception, the EU lived primarily on customs duties. But with its expansion, more and more borders and hence customs duties disappeared. This trend continued – quite intentionally – with the trade agreements. Therefore the EU has become increasingly dependent on contributions from member states, which now make up 70 percent of the EU budget. We would like to change this structure; the commission of experts chaired by Mario Monti has made nine proposals in this regard.

Mr. Monti is proposing taxes for the EU. Are you in favor of that?

That is an extremely sensitive political issue. No country freely relinquishes its fiscal sovereignty. So I don’t support a new tax for the EU.

And instead?

If the CO2 emissions certificates are being reduced in number and therefore made more expensive, it would make sense to direct part of the added revenue to the EU. It’s also worth considering the reservation of part of the tax on fuels for the EU – for example, 1 or 2 cents per liter.

German Finance Minister Wolfgang Schäuble already called for that and ruffled many feathers.

It’s not a matter of increasing the tax burden overall. If the EU were to receive part of the fuel tax directly, then net contributors such as Germany could simultaneously reduce their payments to the EU budget and use the saved money to reduce taxes.

That sounds like giving with one hand and taking with the other. How are citizens supposed to understand such complicated interrelations?

That depends on governments. Politicians have to stop posturing in opposition to the EU. They should actively support the European project. Austria’s president van der Bellen and the French presidential candidate Macron are showing how to do that.

In France, Marine Le Pen's popularity is on the rise, and the Netherlands is threatened with an electoral victory by Geert Wilders. What does this mean for the EU?

In the Netherlands, the other parties have positioned themselves in opposition to Mr. Wilders. So he can’t get his hands on the government. Marine Le Pen will clearly lose, latest in the second round, if all other parties support the sustainable candidate regardless of whether he is named Macron or Fillon. What is crucial in France is that the new president attains a stable majority in the subsequent parliamentary election. President Hollande would have liked to reform the country, but he didn’t get the necessary majority in parliament.

That could happen to Mr. Macron as well, especially since he doesn’t have the support of a large party.

That’s why Mr. Macron will have to approach other parties if he wins, either the right or the left, and perhaps invite them to participate in the government. I’m thinking of the office of prime minister.

Populists are becoming stronger and stronger. Will the EU survive this?

For a long time, we thought our Western model of society was secure. Now we are suddenly noticing that we are engaged in competition with other social orders and other political leaders who link power to their persons, prefer planned economies and don’t think much of global trade.

Leaders like Donald Trump, Vladimir Putin and Recep Tayyip Erdogan?

Yes. We must once again defend our values, our democracy, our rule of law. The EU brought peace to the western Balkans. It provides the foundation for hundreds of thousands of Romanians protesting against corrupt officials in their country being immune to prosecution. We have to point to such achievements.

Chancellor Merkel doesn’t speak of different values but of a Europe with different speeds.

It can make sense for small groups of EU states to jointly take a step toward integration and convince others of their success. The euro zone and the border-free Schengen Area are examples of this. But this increased cooperation can only be the solution in individual cases and must not become the rule.

Will Europe be an issue in the German electoral campaign?

That could happen if crises flare up again.

What do you fear?

The banking world is still not stable and the European Central Bank has meanwhile used up most of the means at its disposal. Nervousness has again increased on the financial markets. Then we have the issue of Greece. But I’m confident we can progress constructively here. The Tsipras government has perhaps not yet done enough, but it’s still accomplished more than any previous government. All in all, the EU has become more economically stable, but risks remain. If we keep these risks under control, Europe won’t be an electoral issue and national concerns will be in the foreground.

How do you explain the skyrocketing prospects of Martin Schulz of Germany's center left Social Democrats? The Christian Democrats and your party, the Christian Social Union, continue to remain at 34 to 35 percent. But the SPD support has soared.

Yes, but not at the expense of the CDU/CSU. The losers are the Green Party and the Alternative for Germany (AfD). Schulz has made the SPD appealing again.

But shouldn’t Angela Merkel be worried about staying in power?

The question is whether we’re capable of forming a team. Citizens don’t like quarreling in the front row. If we can avoid that, then I’m sure the Union will be the strongest party by far, without which a government can’t be formed.

So will there be another Grand Coalition?

No one is aiming fpr a grand coalition, but that depends on the electoral results. I believe there are several possibilities.

The CSU opposes a coalition with the Green Party.

I advise everyone to remain open on the coalition issue.

Would you switch to federal politics if after the election you were called upon?

No. I don’t want to move to yet another place of work in politics. There is no sense in a shift from Brussels to Berlin. I still have more than two years in my position and I can make a significant impact in Brussels.

And a move into the private sector?

In principle, I do have the ambition of remaining professionally active after my time in Brussels. In terms of location, I’m quite flexible.

Sven Afhüppe is the editor in chief of Handelsblatt. Ruth Berschens heads Handelsblatt's Brussels office, leading coverage of European policy To contact the authors: [email protected] and [email protected]