Well, in the end, what makes a sovereign risk undoubted is the lender of last resort. And in the Eurozone, the European Central Bank is not the lender of last resort. And the Germans seem determined not to allow the ECB to be the lender of last resort. And unless you have that, then lenders to the countries that are members of the Eurozone simply do not have the confidence that whatever happens they will be repaid. So, actually, while this sort, you know, fiddling about is helpful to market confidence, it is not going to solve the fundamental problem, which is that if you have a sovereign, which the Euro is trying to be, then you need to have the ability to have the lender of last resort that will always ensure you meet your obligations. And until they have that, they will not solve this problem.
Could the issue of Eurobonds be the solution to the crisis?
Well, it could if those Eurobonds were unlimited and guaranteed by all member states. That would be the effect of the lender of last resort but that would not be the case. Each country that issued Eurobonds would have a ceiling and of course, for those that are most indebted that ceiling would not be enough. So, it only delays the problem. It does not solve it.
There are many strikes all over Europe mainly against the pension reform but in Greece, in Spain, in Portugal in general against the reforms for the financial stability. How strong are European governments to implement the reforms no matter what the public resistance?
In the end, if they do not, then Europe’s time is over. We had the decline of the Roman Empire, we had the decline of the Chinese Empire and it would be the decline of the Western Empire unless we implement those reforms. There is no doubt about that. China, Brazil, Russia, India, their GDP is growing very fast; their economies are growing fast. We have passive trading balances, huge net services, we have huge trade deficits. Unless we are willing to solve this now, then our time is finished and we are destroying our children’s future. So, for my part, we have absolutely no choice other than to go ahead and to ensure that we create a sustainable future for our children.
Britain has supported the enlargement of the European Union. Now the enlargement seems a little bit stopped. How do you see the future of this process?
Well, actually, just last week we voted to commit Croatia to accede to the European Union. You know, Britain, under this government, is very keen to see an enlargement of the European Union and we believe that the trade possibilities are very good and that we should continue to increase that group of trading nations. Obviously, there need to be checks in balances and particularly, around free movement of labour and the issue over human rights and justice. And in fact, next week in Parliament we will be discussing the European arrest warrant, because we have some big concerns in Britain that the arrest of British citizens in some Eurozone countries has been unfair and they have been subjected to very bad treatment, unjustly and subsequently they have been found to be innocent. So, there are some concerns in this country about some of those laws. However, we do believe as a trading nation that the bigger the European Union trading area, the better it is for all of those who are within it. So, we continue to support that. Well, again, there are certain standards that any country that wishes to accede to the European Union must abide by. And for the Balkans, I think that it offers a huge opportunity for them to put that terrible past behind them and to move forward in step with the European Union, embracing the principles of freedom and democracy and free speech and human rights. And so, in order to be in that position, they need to make certain reforms.
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