Spain's Ambassador in Sofia Jorge Fuentes: Bulgaria Should Be Cautious with Adopting the Euro

Novinite Insider » INTERVIEW | Author: Ivan Dikov |February 25, 2010, Thursday // 09:42
Bulgaria: Spain's Ambassador in Sofia Jorge Fuentes: Bulgaria Should Be Cautious with Adopting the Euro Spain's Ambassador to Bulgaria, Jorge Fuentes. Photo by BGNES

Interview with Spain's Ambassador to Bulgaria, Jorge Fuentes. By Ivan Dikov with Milena Hristova

 

The Spanish Presidency is the first to work under the Lisbon Treaty and with a permanent EU Council President in place. Two months later, how smoothly does the EU function? Who is really in charge of the EU executive – the EU President, the President of the European Commission, or the Chair of the rotating Presidency?

It is certainly not the European Commission because the European Commission has a very specific job. The decisions have to be taken by the member states which are represented in the Lisbon Treaty by the President of the Council, Mr. Van Rompuy, and temporarily – by the rotating Presidencies. We will see how this phasing out will progress.

I agree that there is a moment of overlapping and a little bit of a confusion which is, by the way, unavoidable, as new institutions are being established and the rotating presidencies are vanishing. However, I think that this operation is being done correctly, and we don’t see any serious issues, not even the ones that appear, according to some media.

The EU-US summit which was supposed to take place in May in Madrid has been postponed as US President Barack Obama said he would not attend. European media reported this had resulted from bickering between the EU Council President and the Spanish Presidency. Has there been a conflict between the Spanish Presidency and the new President of the EU Council?

I really don’t think so. And I am very sincere. The Spanish Presidency has demonstrated all kinds of facility and flexibility in transferring the bulk of activities to the permanent Presidency headed by Mr. Van Rompuy so that it can start its work properly.

In my opinion, the reason for the cancellation was that the President of the United States had come to Europe too often – six times over the last year. In my opinion, not every single of those occasions was totally justified.

I understand that apart from coming to Europe to reinforce the relations with the EU, the President of the United States has some domestic duties as well, and they are not very easy. I think this is the reason the EU-US Summit visit of Barack Obama was canceled, and we shouldn’t speculate on that.

The EU economies are struggling as result of the global crisis. Spain itself is facing very high unemployment. What measures is Spain undertaking on the national and the EU level (i.e. the Spanish Presidency) to tackle these social issues?

I agree that in spite of being the eighth most powerful economy in the world, a country like Spain also has tremendous economic difficulties now, especially as the unemployment rate is nearing 20%. It is difficult to put this forth as a model that is able to correct all deficiencies of Europe.

But the reality is that since we are hit hard by the crisis, we are also well-aware of the counter-measures, at least theoretically. Thus, Spain is planning a number of things in two different aspects.

One of them is to hold several seminars – eight or nine round tables on a very high political and expert level. Some of them have already taken place to see how we can surmount the economic crisis, and how we can tackle unemployment in Europe.

Remember that in Europe we probably have 50 million unemployed, or 10% of the population. This is something that is affecting every single European country, of course, some more than others. In Bulgaria you are reaching 10% which is also very serious.

The second aspect is to create new areas of permanent and high-quality employment. They are classified in different areas so we have to be imaginative. If we are not able to construct one million apartments per year – which was the rate in the past – what can we do?

We are thinking of various new areas of employment such as white-collar, blue-collar, and green-collar, and new areas of activities – the “green” ones having to do with the new renewable sources of energy. Spain is probably number one in the solar energy field, and, by the way, many of our businesses working in this area are coming to Bulgaria. We will push with combating unemployment because this is becoming a major political issue for Europe.

The Lisbon Strategy failed to make the EU the most competitive global economy by 2010. Is the new Agenda 2020 better? How can the EU compete with the USA and the East Asian states in terms of productivity and research and development?

We can be very impressed with the performance of the USA, China, Japan, etc. but let’s not forget that the EU together is the strongest economy in the world, and this is a fact.

Of course, in order to have the strongest economy in the world, we have to unite 27 countries. Among them are some of the most powerful – five of the top eight – Germany, France, Great Britain, Italy, Spain, the Netherlands – very strong countries.

However, the challenge is there, and we cannot believe that just by continuing to do things in the same way, we are going to win the race. So the competition is very keen, and we have to be very careful. I wouldn’t say particularly because of the United States – since the US and the EU are fighting with similar weapons: a free market, similar wages, etc.

The great challenge is going to be China because they have a qualitatively different approach. The salaries there are very low so they are producing goods that are very inexpensive, and, to tell the truth, they are often of very low quality.

For some people this doesn’t matter – if it is of low quality, they just use it for a few years, and that’s it. Our challenge is to be of better quality and to win people thanks to that – quality, specialization, sophistication in the different areas that are extremely hard to achieve.

For this reason, I am confident that in 2020 Europe will continue to be in the position that it is now. The conferences of Stockholm and Copenhagen will help in this sense. We have to give the EU an impulse in all areas – especially in the ones that you mentioned.

Drawing from Spain’s own experience – can and should the EU accommodate as many immigrants as the US – which prides itself on being a “melting pot”? Are the struggling economies and the demographic crises in the EU signs of a waning civilizational model?

You are right that Europe has become a sort of a strange melting pot but the American pot is neither well “melted.” The differences remain tremendous, and there is still segregation, separation, etc.

In Europe the situation is not brilliant. It is particularly complicated in some countries such as, let’s say, Spain. Why? Because we reached the level of 12% of our population being immigrants in a very short period of time. Only ten years ago Spain had about 2,5% immigrants in its population. In just a few years Spain reached a high percentage of immigrant population that took others decades to reach. This can be too much.

Let’s take another example – Bulgaria or other countries of this region, i.e. the new EU member states. In a few years, you are going to have similar problems. Bulgaria’s GDP will grow and it will see immigration in the country. You already have some but you will have the kind of immigration that Europe has – people from Africa, Asia, America.

In Europe we now have about 50 million immigrants. In a few years we are going to see Europe with a new human landscape. Of every five EU citizens, one will be an immigrant coming from a different part of the world.

This situation is not negative. I am going to tell you an anecdote. There was a Spanish politician who was the President of Catalonia who used to say that the future of Europe will be represented by an old European man or a woman in a wheelchair pushed by an immigrant whose contribution to the social welfare will guarantee the pension of the person in the wheelchair.

There is going to be a tremendous interdependence between the immigrants and the native Europeans. This is going to create a de facto melting pot.

There might be animosity, xenophobia but this is another story. In Spain, which is not a xenophobic country, and we have proven this, we have to recognize one thing. There is a considerable percentage of delinquency in Spain that is in the hands of immigrants. The the crime rate amongst immigrants is higher than it should be, and than it is among the general population.

For example, these days we see that in Spain and other European countries there are a lot of gender victims – i.e. women or men killed by their spouses. Last year we had about 57 women in Spain killed by their spouses. Half of them were not Spanish – neither the perpetrator, nor the victim.

Why does this happen? Well, the difficulties of integration, the bad economic situation, etc. We are going to have a completely different human landscape in Europe, and it is going to be very interesting. I recommend that you follow this topic.

Do you think that this new situation will endanger the civilizational model of the EU?

I don’t think so. Honestly, I think it would be very bad if we receive more immigrants than we can integrate. For example, going beyond 20% of the general population would be a little tricky because to these 20% you have to add another 20% of Muslims when Turkey will join the EU, which I believe it will.

But if having more immigration than we can handle could be a disaster, a much worse disaster would be if the immigrants decided to leave suddenly. Can you imagine what an economic catastrophe there would be in Europe? We cannot pass without immigrants nowadays. Spain is a good example of that.

Why does Spain support so strongly Turkey’s EU accession?

First of all, Spain has a historic contact with Islam – the presence of Arabs in Spain for seven centuries. The positive consideration of this legacy in the Spanish culture makes us understand better Islamic countries. Spain and Turkey have presented to the UN the proposal of Alliance of Civilizations, which is advancing quite well.

We do believe that the inconveniences of having Turkey in the EU outweigh the inconveniences of having Turkey out of the EU. Because if Turkey is in, we will have to make an effort for a combination of cultures. Let’s accept it – the Turkish and Ottoman culture is extremely interesting. I recommend that everybody should visit Istanbul because in my opinion it is the most beautiful exotic city in Europe. Probably Paris is the only city which is more extraordinary.

The consequences of not having this culture accepted in Europe would be that Turkey will tend to make alliances with other countries in the region and those will be extremely detrimental to Europe.

Why is Spain opposed to the recognition of Kosovo’s independence? When is it going to recognize Kosovo? Can Kosovo’s independence really spur separatism in Spain itself?

I don’t think so. It is really ridiculous to compare the case of poor Kosovo with some of the regions in Spain where some people claim independence in Catalonia or the Basque land. Catalonia and the Basque country are two of the most developed regions in Europe, not just in Spain. Kosovo is certainly the poorest part of Europe, with dramatic unemployment levels.

Spain’s position is a matter of principle. It is a matter of admitting the fact that self-proclaimed independence is not valid. Even though many countries might be supporting this move, this is legally incorrect.

So we are expecting the decision of the Hague Tribunal which, however, I don’t expect would be very clear. Because you can imagine – if it rules that Kosovo’s independence is illegal, this would be a catastrophe. The USA and a number of other countries have recognized Kosovo, and this will be really dramatic. If the Court rules that this is legal, it will create a precedent that is really dangerous.

I think that a precedent has already been created, and I think that if we had not had Kosovo, the separatism in Georgia would not have happened. As a whole, Spain does not have the intention of recognizing Kosovo. For the time being, there are about 60 that recognize it, and about 130 that do not.

In your view, should the EU become a full-fledged great power – i.e. with a UN SC seat, nuclear weapons, military bases securing access to energy rich regions such as Central Asia? Would such a development serve better EU’s interests?

What is quite obvious, as many have remarked as early as 20 years ago, is that the EU is an economic giant, and a political and military dwarf.

Now the reality is a little different. The EU is an economic power, a considerable political power, and is still militarily a dwarf. Maybe we are economically powerful because we are a military dwarf.

This means that we have devoted our money to economic affairs, we are the main donor globally. And we have trusted our American friends to take care of military problems. The American army is the only real army that exists in the world. There is no other country that can support a war 5 000 miles from the homeland for years.

As a whole, I believe that Europe will have to take up its own responsibilities but without jeopardizing its relations with the United States – the States are going to be our best friends forever. And also without jeopardizing NATO.

The fact that NATO is in place makes the creation of an EU army extremely difficult. I was Spain’s Ambassador in Brussels for this purpose, and I know what I am talking about, and I know it will be a very different thing to reach but there will be progress towards it in the next 20-30-40 years.

Yet, the EU has already had several military operations. How do you evaluate their impact? For example, how do you see Mission Atalanta aimed at coping with the Somali pirates?

The fact is that the EU has some armed forces – EUFOR, EUROMARFOR, etc, created by the Western European Union in the last 20 years, and they have performed several operations correctly.

Indeed, there will be a moment when some crisis might be resolved by the EU forces. But there was no political will to do so.

I do remember that we didn’t reach a consensus – for example on the crises on Kosovo or Macedonia. The stage was set there for the Western European Union to resolve them but there was no consensus because we did not want to start replacing NATO. Because the collaboration with the United States is very firm in Europe, and the EU countries want to continue it.

In the case of Operation Atalanta – we cannot say that it is very successful. Several countries are participating but for many reasons it is not that successful. One of them is because fishing ships move freely and go out of the reach of the protecting boats.

Everybody should be a little more disciplined and accept that this is a risky area, and we have to be careful because then there are ransoms to be paid, and, of course, we don’t want to abandon our people under any circumstances but by paying we are enforcing the operational capacity of the pirates.

As far as Bulgaria is concerned, would you say that the Borisov government is doing better than the Stanishev government? Have you seen any improvements in Bulgaria since the Borisov government took office?

I came here just in the last weeks of the Stanishev government so I was able to deal a little with them but, of course, I was aware of what was going on here.

I think the previous governments did some things which were OK. For example, we have to remember that it was the government of Simeon Saxe-Coburg that Bulgaria joined NATO, and it was under the three-way coalition that Bulgaria joined the EU.

These two steps were extremely good. Now, we can ask if Bulgaria’s EU accession wasn’t a little premature but that is OK. More applause for the governments which were able to get Bulgaria into the EU even though the country was not in a perfect condition. I think this is the most positive aspect of the Stanishev government. Of course, there were cases of corruption and mismanagement that are now being exposed.

As far as the present government is concerned, since it has been in power for six month now, it is probably still too soon to issue definite verdicts. But what we see is that the good intention is clear. Of course, this is not enough, you have to be able to implement your intentions.

I think the Borisov government is fighting clearly and openly against corruption and organized crime, and this is a very serious asset of this government. We can say that they know what they are talking about – PM Boyko Borisov and Interior Minister Tsvetan Tsvetanov.

Regarding the economic and financial aspects, I think that Bulgaria is doing well because you have a very moderate budget, you are aware of your economic reality – the Ministers of Finance, of Economy, of Regional Development, etc. They know that you have to be modest.

What you cannot do is spend more than you have. In this way, you are going to succeed. The inflation is limited, even the unemployment is OK, you are moving below the EU average.

For the time being, I would say that we have to believe in the present government, and we have to hope that they are going to continue in this way. We, the diplomatic corps here, particularly of the EU, are all the time trying to support them, to stimulate them, to back every decision that we believe is in a good direction.

You have recently warned that Bulgarian policy makers should be cautious about entering the single currency club. What are the risks if the country adopts the euro too early? When would you recommend that Bulgaria make that step?

In principle, there is no doubt that being in the Eurozone seems to be convenient for the countries – even though not every single EU country thinks the same way. You know there are at least three countries that are not in the Eurozone.

There is a clear advantage of being in the Eurozone – it is that you are protected against the risks of inflation, deflation, exchange rates, etc.

I am convinced that in the present crisis some of the members of the Eurozone would have had tremendous devaluations of their currencies if they were not in the Eurozone. I don’t want to point to any country in particular but maybe devaluations of 15-20%. As a whole, the euro has remained stable. In this respect, it will be very good for Bulgaria to adopt the euro.

But of course, there is an aspect which is more “reality”. It is that when joining the Eurozone, in spite of all mechanisms and recommendations, there is something which is almost unavoidable – it is the fact that everyday life will become more expensive.

Bulgaria still lives in a special situation - meaning that the cost of living in Bulgaria is much lower than in other countries. Of course, the salaries in Bulgaria are also much lower. So the economic reality here is quite different.

If you adopt the euro without the necessary preparations, including the necessary level of salaries, you are going to find yourself in a situation where the salaries could rise a little bit, and the prices can rise a lot. The final result would be that your standard of living would deteriorate seriously.

This is the only risk that I see, and I warn Bulgaria to be careful because now you are used to your living standard. Of course, the salaries are low but the cost of living is still reasonable, and Bulgaria is one of the least expensive countries in the EU.

Sooner rather than later, you should recognize that you cannot base your economy on low wages in the Chinese style, let’s say. Of course, I am exaggerating because in China the salaries are really low, and they work 14 hours a day. Here the salaries are more European. But sooner or later you will have to make an adaptation in this respect.

Do you think that outpacing such countries as Poland in the euro adoption could raise eyebrows in Brussels and other European capitals where Bulgaria remains synonymous with corruption and organized crime?

First of all, Poland seems to be not eagerly interested in adopting the euro for the time being. I think that maybe they are realistic in this sense, maybe they are influenced by the British and the Swedish and for the time being they are not in a hurry.

Other countries are not prepared yet. The two that seem to be ready are Bulgaria and Estonia. So good luck! Your timetable is objective – 2013 for joining the Eurozone, 2011 – for joining Shengen, and for removing the Cooperation and Verification Mechanism – next year. Again – take it easy because the CVM is helping. Don’t be in a hurry.

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Tags: Jorge Fuentes, Spain, Spanish Ambassador, Spanish EU Presidency, Eurozone, euro adoption, Boyko Borisov, Sergey Stansishev, NATO, EU, unemployment, Operation Atalanta
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