Europe’s back from the years of crisis in the euro area thanks to German-led prescriptions of reform, Finance Minister Wolfgang Schaeuble said.
Greece, the epicenter of the sovereign debt crisis that emerged in late 2009, is making progress on its long road to recovery “that wouldn’t have been thought possible two years ago,” Schaeuble told an audience on Friday in the Swiss resort of Davos. “Against all expectations,” policy makers have managed to solve the crisis of confidence in the euro, he said.
“Against all end-of-the-world scenarios, we led the euro out of the crisis,” Schaeuble said. “Europe is no longer the center of worries about the stability of the global economic development.”
Sovereign borrowing costs in parts of Europe’s crisis- ravaged periphery dropped to a euro-area record this month after Ireland exited its international bailout program. At the same time, record unemployment continues to blight countries such as Greece and Spain as the 18-nation euro region struggles to emerge from recession.
“We still have our problems, we still have many jobs to do,” said Schaeuble, 71, who was reappointed to the finance post last month in Chancellor Angela Merkel’s coalition with the Social Democrats. “Look at the yields for Ireland, Portugal, for Greece, for Spain, for Italy, how they developed in the past years. We’re no longer the main cause of worries for the financial markets.”
Politicians can only respond to the “new challenges that are posed every day and to try to keep the balance,” Schaeuble said. In comparison to Germany’s economic contraction in 2009, the biggest since World War II, “any danger that might come from Greece would be manageable; but we’re doing everything to avoid that.”
During Merkel’s third term, Germany won’t alter its fiscal policy, he said. He rejecting international criticism of its export-driven economy for running up excessive trade surpluses. Germany’s power, as Europe’s biggest economy, is one of the factors behind Europe’s recovery, he said.
“If we were to export less, the economic development in our partner countries would suffer a lot,” he said. “That’s part of our European responsibility, that we’re an anchor of stability and an engine of growth and at the same time do what we can, together with others, to advance Europe’s integration.”
German President Joachim Gauck has referred to 2014 as a year of remembrance for Europe, with commemorations due to mark 100 years since the start of World War I, 75 years since WWII began and the 25th anniversary of the fall of the Berlin Wall.
Schaeuble, who helped negotiate reunification of East and West Germany in 1990, said that Europe must stand together if it is to compete in the 21st century of globalization. “If we want to fight for our interests in this world, assume our responsibility, we can only do this together,” he said. “One day even Switzerland will participate in a bigger way and the UK will remain integrated” in the European Union.