http://www.euronews.com/ With Europe still mired in recession, euronews asked the former President of the European Central Bank, Jean-Claude Trichet, to consider the results of efforts to stabilise the region, and if he still thinks the eurozone is taking the right medicine.
Giovanni Magi, euronews: "Are austerity policies really the best solution, or, as some economists are saying, are they simply an application of counterproductive dogma?"
Jean-Claude Trichet, former ECB President: "I believe that words count. We talk about austerity as much in the United States as in England, or even in Japan, in a country with a very big current account payment deficit, like Greece or other countries which are in excess. The term [austerity], I think, is inappropriate.
"There is a need for wise, healthy management, when one is spending more than one is earning. For what reason? It is not really a choice but an obligation, because, I'd say, generous donors are no longer to be found - eternally ready to finance the countries that spend far more than their income. And it seems to me that sound management is the best way to lay the groundwork for future growth and job creation in the future."
euronews: "But we get the impression that, on the world chess board, Europe seems to stand alone with its obsession for public accounts."
Trichet: "No, I don't think we can say that. There is major pubic debate in the United States, over whether the first thing to do is to place the stress on putting the public finances back into working order, or not. This is also under debate in England: austerity or growth. Europe is still the epicentre of the global crisis of sovereign debt risk and, therefore, budget crises. Unfortunately, that is partly its own fault, because, in some cases it was negligent.
"It was and still is the epicentre, if I may say. But I think we still have to look at things clearly: Europe has made enormous progress. It is still at the very crux of this crisis but it has distanced the risk of catastrophe thanks to the decisions it has taken - governments, the European institutions and the Central Bank. Therefore, we are now at a stage where we absolutely must consolidate everything which might permit a return to growth."
euronews: "What lesson can we draw from the Greek or Cypriot crisis? Perhaps some economies were too feeble to be admitted into the euro zone? Or are the stronger euro zone economies not ready to pay a high cost to protect the poorer members?"
Trichet: "First of all, saying that countries are necessarily richer or poorer is debatable, you know. Our problem today is that there are countries, fortunately relatively numerous, that are competitive, that sell their goods and services comfortably on the domestic, European and world markets, and have good reasons for that, because they have a good grip on their costs and structural reforms; and then there are countries that have mastered their costs far less well, and which have not reformed structurally, and these countries are evidently in difficulty.
"So, I believe that the great lesson is that there has to be a staggering improvement in the economic and budgetary governance of the whole euro zone. It has to be very firm when this or that country becomes dangerous to itself and to the entire zone."
euronews: "Are you in favour of a European economic and budgetary federation? What should its criteria be, and do you think that would be a realistic route for Europe to take today?"
Trichet: "I do believe we need to go further along the path of a European economic and budgetary federation, which obviously would mean a new change in the Treaties. Personally, I think there are several possibilities to consider. One of them seems imaginable to me, though I don't say it's the only one, and I'm not saying it's necessarily the best, but I think it fulfils three criteria.
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