José Manuel Barroso, former European Commission President - interview transcript

In conversation with James Lewis, IBA Director of Content, José Manuel Barroso, President of the European Commission from 2004 to 2014, calls the refugee crisis the most important challenge ever to face the European Union. Defiantly rejecting predictions for the end of the euro, he emphasises the powerful potential for lawyers to work for a global order based on rule of law. He also reminds us why, having received the Nobel Peace Prize in 2012, the EU continues to achieve far more than just free trade.

James Lewis: Someone who has held your position has strong thoughts on what the European Union should be doing. It’s facing a lot of challenges at the moment. My feeling is that the refugee crisis is probably of primary concern. What’s your opinion on what the EU should be doing?

José Manuel Barroso: It is indeed a primary concern. I think it’s the most important challenge we have been facing over all these years. Much more serious than, for instance, the financial crisis. And why? Because it’s much more difficult to find a stable solution.

On one side, we certainly have to welcome many of those people who have reached or are trying to reach Europe. It’s a moral issue. It’s a humanitarian issue. We have to make space for the refugees in our societies. At the same time, we also know that in some of our countries, there is strong resistance to that because the people are simply not used to dealing with this kind of problem. And we also have, let’s be honest, extremist forces, sometimes xenophobic forces that will use this as something for them to instigate a position not only to the refugees, to the migrants, but also to Europe, the EU as a concept, even.

This problem is not specific to the EU. We will have refugees with or without the EU, with or without the Schengen rules. But many people try to make that equation – ‘it’s because of the free movement in Europe that we have the problem’. That’s not the case. When I was President of the Commission, I went to some refugee camps, for instance in the north of Jordan in Zaatari Camp. I interviewed many of those Syrian people, middle-class people who have seen their homes destroyed, and they simply escaped because they wanted to give a minimum of conditions to their families.

And I say myself, and I have said it already publicly, if I was a Syrian with three sons as I have, of course I’d do anything I could to reach Europe or to reach a place where I think I could live at least in peace, if possible, with some life of prosperity. This is a major challenge and I believe we need to act in different phases. We need proper sequencing.

We have shown our resilience. It was possible to resist all those challenges, and namely to keep the European Union as a project for peace

Now, the most urgent thing is the refugees. And I think basically the European institutions are doing the right thing. They are trying to have some burden sharing, because those refugees cannot stay in the countries where they arrive, there simply is not the capacity in Greece or even Italy, which is much bigger and much richer, but it’s not possible to have all these refugees there. So some kind of burden sharing is necessary.

But then you have also to think in a medium- to longer-term perspective. In the medium term, we need to have plans that require some proper financing, for the training of these people, including in our languages, so that we avoid new ghettos [and people] becoming marginalised. And also teaching them some kind of profession in case they have none, some professional training. The Germans, for instance, are already doing that. They are planning that. And they have a very good system of apprenticeship, and Austria also has a very good system of apprenticeship. So why not have some programmes now specifically devoted to these refugees or even migrants?

And then, of course, the comprehensive solution can come only if there is peace and stability in those regions affected by the conflict, from Syria to Libya and Iraq. And that is a major effort that requires the commitment of the parties in the conflict, but also the original players and the so-called international community, including the United States. The reality is that the situation in that region is very bad. It is tragic. And I don’t believe it’s going to get better in the near future. Most likely, it is going to get worse before it can get better.

JL: Thank you for that. All of that is a major challenge to the EU, and one of the fundamental challenges is on the front of collective action. There seems to be a failure of collective action. You have separate states deciding to take a different line on this. And you’re here to speak to an audience of lawyers – there are fundamental rule of law issues, for example in the response of Hungary, which I assume must concern you quite deeply.

JB: Yes. The point is that refugee policy is basically, in Europe, a national policy. So in the end it is the government who has the right to give or not to give refugee status. It’s not something under the competence of EU decisions.

JL: Does that have to change?

JB: What you are seeing is that there’s already some change in terms of burden sharing and so on. But in fact migration is one of the last unregulated matters in the world, not only in Europe. I remember having a very interesting conversation many years ago with Kofi Annan, who was then Secretary-General of the United Nations. And I was asking him, why are we not doing something more in terms of migration, because, after all, there are regulations for almost every sector of life, sometimes probably too much regulation, but for migration, when we see people coming from one country to the other, what are the rules? What are the basic requirements, basic standards that we should observe?

He told me at that time, Kofi Annan, the Secretary-General of the UN, that there was strong resistance from some countries to that, precisely because of the so-called sovereignty principle – ‘I control everybody that is going to my territory. And I don’t want any kind of international organisation telling me what I should or should not do.’

JL: And it’s the wrong priority when you have a human rights crisis happening.

JB:Yes. You have mentioned Hungary, because it raises concerns for us. I mean, they made very harsh comments and some attitudes of those authorities were really deplorable, I really say with regret, because they are not in line with the usual pattern unfolding in Europe, mainly EU institutions and EU countries.

Having said that, to be honest, we have to recognise that’s a more general problem today. The resistance to migration, to foreigners, is a matter of concern in all parts of the world. Recently, in Malaysia, people found secret graves. Some people were coming secretly, illegally, to Malaysia, and they were buried by the people that were there. They don’t want them to enter the country. And you have also seen in the United States a leading candidate in the polls making comments against Mexicans. The Mexicans that are migrants, probably illegal migrants, but many of them migrants to the United States. He made comments about migrants that are simply racist. They would be considered racist remarks in most European countries, and he would probably risk prison for these kinds of remarks.

JL: So your point is that this isn’t a problem that’s unique to Europe, that this is a global problem. Where do you feel that the EU can take the lead on this – moral, ethical leadership?

JB: That’s what we’re trying to do now. For instance, I really welcome the position of principle taken by Chancellor Merkel. She’s facing some resistance inside her own party and in Germany, but basically she defined the position, a moral position, a position of principle. Of course, that also had an effect, and that’s why I say this issue of refugees is extremely difficult to manage, because it can call more migrants.

JL: And this was going to be my next question. That she’s decided, off her own bat, to sweep aside any limits on immigration. And she is getting very roundly criticised for that. But you would support her, wholeheartedly?

The crisis is not in Europe. The crisis is in the Middle East. The crisis is in Libya. That’s where the crisis is. And not only a crisis, it’s a tragedy

JB:  Well, I support her on that matter. And I think it was extremely important, that position coming from Germany itself. And it was a way, also, of others being at least more constructive. In fact, there was some kind of agreement in the summit of the European Council already, a first general agreement about some kind of burden sharing, even if it is made on a voluntary basis. So I think it was helpful, that position. And I hope this also follows the same position.

JL: Just to round off on this issue for now, I want to put to you what George Soros has suggested, that given the scale of the crisis in Syria and the surrounding area, the EU may have to think of taking on as many as a million refugees a year for the foreseeable future. Do you think it’s on that scale? And, if so, can it be coped with, financially and logistically?

JB: I think it’s not all the EU. I mean, why should it only be the EU? First of all, we have very rich countries that are Muslim countries that can do their part. In fact, they should do more, because really, let’s be serious about it, sometimes it makes problems of integration receiving such big communities from other cultures or religion. So I think rich countries of the region should also do more. And some of them have the means. They have the means.

JL: Is that where EU efforts should be focused then, diplomatically persuading those countries that have been reticent so far?

JB: Yes, they are doing something. Also the United States, because in fact the United States is much bigger than any European country individually. And according to the recent announcements I have seen, they are ready to receive much less than, for instance, Germany, which is a much smaller country than the United States or even Sweden. So we have countries in Europe, Sweden, Denmark, very small countries in terms of population, all their population is smaller than New York. And they are receiving many more refugees than all of the United States.

So, of course, they come to Europe. Why? People say the crisis is in Europe. But, in fact, the crisis is not in Europe. The crisis is in the Middle East. The crisis is in Libya. That’s where the crisis is. And not only a crisis, it’s a tragedy. In Europe, in general, people live well and live in peace most of all. And that’s why they come to Europe, and it’s closer. But I’m sure many of them can also go to other parts of the world. For instance, Brazil is receiving people from that region. There is, by the way, a tradition of Syrian and Lebanese people in São Paulo where they have had an extremely active and well-integrated community for many years.

And so I think, of course, Europe should take the lead, no doubt about it, and I think it is taking the lead, even if some voices are not really as cooperative as I would like.

JL: As long as we look at Germany rather than Hungary, yes. Okay, let me change tack. You talk about crises being relative. People have talked about the crisis in the eurozone. It’s nothing compared to Syria, but it is a major issue. I wanted to get your assessment of how that crisis led to the drama with Greece, most recently, and talk of the Greece exit and the end of the euro. How have we got to that point?

JB: First of all, those that have predicted the end of the euro should now be apologising, I think, because they were wrong. And also those that predicted that Greece was going to leave the euro around 2011/2012. I remember in 2012 organising a European Commission brainstorm session with the chief economists of the major banks operating in Europe, European and American banks. And the dominant opinion then was that Greece was going to leave immediately in 2012. Not yet – it has not happened.

And at least half of them were predicting if not the end of the euro, at least a major, let’s say, reorganisation of all the euro area. And what happened was that the euro area has been enlarging. Just to give you an idea, to put things in perspective based on my experience – I was President of the Commission from 2004 until 2014. In 2004, there were 15 countries in EU. In 2014 and today, there are 28. So, during all those crises, we have almost doubled our membership. And now we have in the euro area 19 countries, more than we had in all the EU in 2004. Typically an organisation that is enlarging is not declining.

So the euro is, and will remain, a very strong, stable and credible currency. In fact, it’s the second currency in the world, and it was established after the dollar and in a very short period, very recently. And I have no doubts about it. And that’s the point that many analysts have underestimated, I think. They have underestimated the level of economic integration in the EU, and
political commitment.

They had a point, and the point I fully agree with, and in fact was working to correct, is that we had the monetary union, namely the Central Bank, but we did not yet have other instruments of integration in the euro area. So we had to create them from scratch. Not only new rules of governance in the euro area, but new financial mechanisms for financial stability, including the creation of new entities for the bailout programmes, like the European stability mechanism that has now €700bn in case they are needed.

And, as I said at that time, we have been building those lifeboats in the middle of the storm, which is not very comfortable to do. But in the end it worked, with the exception of Greece. I say it worked because the countries that have asked for support – Ireland, Portugal and Spain – they have completed with success their programmes. They recovered the confidence of the markets and now, in fact, they are growing, in some cases in particular, they are growing clearly above the level of the other countries in Europe in general. And in spite of all the criticisms that were made of austerity, the reality is that those countries that were tough on the fiscal side are doing better now than others that were not so tough.

 Greece had a specific issue, I think, basically for political reasons. There was very bad management politically. I mean, the last government with its incredible finance minister, they did something that [showed] not only a lack of experience, but a complete lack of sense of responsibility. And what he has done to his country is really… I mean, it’s incredible, because he made Greece lose billions of euros with all his comments.

Having said that, and before the announcements of referendums in the middle of the turmoil, I have nothing against referenda! But when there is a situation of panic in the markets, as we had in 2011, announcing a referendum and putting everything in suspense, of course it was going to generate what it generated. It’s a kind of panic in the markets and a lack of confidence in the Greek system.

JL: That seems to sum up quite a lot. I mean, the Greek crisis, if we can call it that, seemed to be one of democracy against the markets. Greece seemed to be trying to do things democratically, going back to the people. And yet what you’re outlining is a very realistic view that it was going to create turmoil in the markets. But is democracy not a value worth supporting in that context?

JB: Democracy is fundamentally important. For me, it is the most important thing in any political system. The question now is that Greece is not the only democracy in Europe. We have other democracies. And what happened was that we had a new government. It was elected and wanted to change all the decisions taken by all the others. And the others are as democratic or at least as democratic as Greece. That was a complete mistake, because when we are in a system of democracies, we have to take in consideration not only your democracy, but the commitments taken by your country towards the others.

The euro is, and will remain a very strong, stable, and credible currency. In fact, it’s the second currency in the world

The euro is a shared currency, so it’s not only from Greece. And it was Greece that asked to join the euro. Nobody imposed the euro on Greece. And, by the way, the Greeks, they continue to believe they should stay in the euro, even with all the pain and the sacrifices that they went through. Unfortunately, because of irresponsibility of some of their political leaders, they found themselves in this incredible situation. But the situation was not created by the euro. This is very important to understand. With the same euro, other countries are doing extremely well. And countries without the euro also had the financial crisis. It started, in fact, with the United States. It’s not a member of the euro. The Lehman Brothers was not provoked by the euro. Or in Europe, with Iceland, a country that had to face insolvency, and they are not a member of the euro, not even members
of the EU.

So it’s a complete mistake to suggest that this crisis was created by the euro. It is true that the financial crisis and the sovereign debt crisis has posed specific challenges to the euro, because we have countries sharing a currency, but not yet with all the instruments necessary for the implementation of coherent policy.

JL: Do you think that’s, in large part, because of what you were saying – that the expansion went too far and too fast to keep that unanimity, to keep that collective action, to avoid the issues of democracy that I’ve alluded to?

JB: No, democracy was always respected. All the decisions were taken democratically in the EU. In Greece, they have elected their governments. Nobody has put anyone there.

JL: And that’s where that tension comes in.

JB: The problem is that the government that was elected was trying to implement a policy
that was not realistic. And then they have changed completely. The fact that we are elected democratically does not allow us to take decisions that afterwards are not consistent with reality. That’s the point. I mean, there are differences among policies. And democratic governments, they make mistakes, as do authoritarian governments,
by the way.

JL: Let me ask you about the assessment of the facts and the reality, as it were. One of your advisors, Philippe Legrain, has suggested that the financial crisis was misdiagnosed as a debt crisis rather than a banking crisis, which has led to the policy prescriptions that’s led to high levels of unemployment, particularly in Spain. Poor growth is what he refers to, austerity measures, etcetera, which you’ve already talked about countries like Ireland having to go through to get their economy back on its feet. Do you agree with him, that there was a fundamental misdiagnosis?

JB: The crisis was financial crisis, debt crisis. There were many factors.

JL: So a banking crisis and a debt crisis, simultaneously.

JB: Of course. When countries like Greece or Portugal have debt over 110 per cent of GDP at that time, that’s a problem. But when those countries have problems of excessive private debt also, and the banks in bad situations, not only what happened in Ireland, I mean, the private debt, it caused a problem. Or in Spain where we had, in fact, a bubble in the real estate market, so it was a private debt crisis as well. And in the United States what happened with Lehman Brothers or with Fannie Mae and many others. It was an issue of private debt. Excessive debt. In fact, that’s the problem on that. And my position on that is very clear.

In the long term, high levels of debt are not sustainable, be it private or public debt. And it’s simply irresponsible, simply irresponsible, to continue to advocate, in these circumstances, expansionary policies, because sooner or later, they will have an impact. And what happened was that before the financial crisis, we had some countries growing, but it was an artificial growth because it was fuelled by excessive debt, be it private debt or public debt. So an adjustment would have been necessary.

Now, of course, we can discuss if we could we have done it with less austerity. I wish we could. I come from Portugal, so I felt the difficulties in my own country around implementing that programme. But we had to do that in the framework that was decided by the Member States, how much money they will be ready to lend countries in difficulty, and by the IMF, present in the troika, and the IMF was always defending some levels of what they called ‘depth of stability’. So the criteria of the so-called DSA, debt stability analysis. So in all those frameworks we have to adapt to some conditions. I would have wished for a less, let’s say, abrupt correction. But, basically, it works.

JL: I wanted to ask you whether you feel enough flexibility is being shown currently to Greece?

JB: I think basically there was debt flexibility for the debtors. That did not work with Greece for the reasons I’ve mentioned that are indigenous to Greece. In fact, Greece is already in its third bailout programme and other countries have done it with one. So it’s not because of lack of flexibility. It is because there was a lot of hesitation in the implementation of the policy and, in some cases, not executing the policy. In fiscal terms, they’ve made a great sacrifice and a good effort. But in terms of the reforms, in fact they were postponing all the time. Tax reform and decision reform, it was not credible. And I hope now the conditions are there for it to be successful.

JL: Let me ask you specifically, then. You’ve touched on some of the areas here, but what needs to happen to rectify the crisis in the EU? You’ve talked about the stability mechanism. Regarding the role of lawyers, perhaps there are areas of regulation that need to be tighter around the banks, for example, Basel III, those types of areas. Perhaps you can talk me through what should be done.

JB: I think basically what has been done is in the right direction. It was a holistic response. First of all, financial regulation supervision. We have adopted in the EU, proposed by the Commission, more than 30 new pieces of legislation, including some completely new ones for the so-called banking union. I remember the first time I mentioned banking union, some colleagues of mine in the European Council, some Prime Ministers told me, you cannot go ahead with a banking union, because that’s not in the treaties.

And I said, look, I know a banking union as such is not in the treaties, but to fulfil the goals of the treaties, we need a banking union. And indeed now, we have a common supervisory system around the European Central Bank. We have a single resolution mechanism. And so we have the basic elements of a banking union, but it’s not complete. We need also a common guarantee. And we need now also to go forward and this Commission is trying to push a
so-called capital markets union. So we need to have all the systems we have in one country for a common currency now extended at least to the euro area, and the other countries not in the euro area may decide if they are there or not.

This is what has to be completed. Afterwards, we will have created a new system of bailouts, so we have a kind of European IMF, a European stability mechanism, which has enough financial fire power now for the time being. With strict conditionality, I think it’s good and credible. And we also have new rules for governance in the euro area, including more powers for the Commission, which makes it more difficult for governments to… not respect the rules. But what happened was incredible, including Greece. They were presented accounts that were simply not true.

And in my first Commission, I proposed to the governments of Europe to give more powers to the Eurostat. The Eurostat is the statistical office of the EU. To have the power to go and check, to make internal audits. And it was refused, not by Greece, but by others that said, no, this is too much intrusion in our national sovereignty.

In my second Commission, the first resolution I put forward was powers of internal audit in the national accounts, and it was approved. Because if you have a common currency, you need this. We cannot accept people are cheating, you see? And this is the point. So I think we need to go forward, for the euro area, in terms of more integration mechanisms. Some elements of a fiscal union. Some elements of mutualisation of responsibility. But countries assume their own responsibilities – for instance, the mechanisms of guarantee; Germany and others are saying they don’t want it and I understand why. Because they have created their own systems of guarantees for their banks. They don’t want those systems to work for others if the others don’t also create something comparable.

But when everybody has a system of guarantees, for instance some kind of financial accident, it means that the person who was manning the bank knows that he or she will receive a minimum in case there is a problem with that bank. Why not have a European system? Why not? If everybody has made their contribution. And I think that’s the future. The future is going in that direction. It’s a question now of whether governments will do it on their own or if they need another crisis to make it [happen].

Sometimes what happens in Europe and, in fact, one of the founders of the European community, Germany, has said it: European Union or the European community progresses through crisis and it is the result of responses to successive crises. It’s true. I hope now the lessons have been learned because it was, in fact, extremely difficult to react to all these situations. So I think we should now be a little bit more proactive.

JL: What about the role of lawyers? Do you see specific roles for lawyers in all of that?

It needs the intellectual contribution of lawyers… the imagination… to create rules that are acceptable cross border. Be it for migration and refugees. Be it for climate change

JB: I think one of the points that we have seen during the crisis in Europe, and not only in Europe, is the need to look creatively at these issues of regulation. What happens today in the age of globalisation is that there are many areas that, simply put, the governments at national level have not the means to cope with. The financial crisis is a good example. I mean, the Americans have done Dodd-Frank. We have done our things. But at the same time we met in the G20 to try to have some kind of common regulation. So I really believe that the rule of law and the role of law are going to become more and more important.

And it needs the intellectual contribution of lawyers. Sometimes I say the imagination of the legal profession to create rules that are acceptable across borders. Be it for migration and refugees. Be it for climate change to avoid what we have now, the scandals of big corporations not respecting the standards that have been agreed internationally, or at least at the European level. We need this kind of regulation. But we need to find the right level of regulation. And it is not evident sometimes what the right level is.

There was a great thinker in France, Montesquieu and, translating what he said, translating freely, ‘The useless laws contaminate the necessary ones.’ I mean, we need some laws, but there are some that we do not need. And excessive regulation in some sectors is not good. So what is an appropriate level of regulation? That’s a very important issue. And that’s why we need the legal profession, in my opinion, and based on my experience now, much more
trans-national or even super-national thinking, because it’s quite clear that for instance in Europe, you cannot solve the problem, only inside your borders. You have to do it at least at the European level. And sometimes also at a global level, because the financial
instability or the other issues don’t stop at the borders.

JL: I’m going to round off with a final question, to ask you about your own career, as President of the European Commission. You were there for ten years – that’s a very important role. What would you say was your most important, best, biggest achievement during that time?

JB: Well, I think the most important thing is probably not a very, let’s say, spectacular or sexy thing, but very important was resistance and resilience. In the time of all those crises, not only, by the way, the financial crisis and the sovereign debt crisis, but also the constitutional crisis, when there were two countries that did not accept the constitutional treaty, France and the Netherlands. Then we found a way out with the Lisbon Treaty, that was unanimously approved. Or the response to Russia, when Russia invaded the Crimea and we were able to take a common position at the European level. Those were extremely challenging years, with a permanent crisis.

And what we have been doing, I think, was to show that Europe, certainly in an incremental manner – because it’s difficult to manage and to steer 28 countries with very different ways of looking at things – it was possible to show its resilience. After all, the euro is there. The European Union remains there. The euro area is in fact enlarging, like the European Union. So I think we have shown our resilience. It was possible to resist all those challenges, and namely to keep the European Union as a project for peace. Because if you ask me what was my [best] moment in Europe, it was when I had the honour, with my colleagues from the European Union, to receive the Nobel Peace Prize in Oslo, in Norway in 2012. The Nobel Peace Prize that was given to the European Union, because the European Union has made a great contribution to peace on our continent, and this is why I think with all the shortcomings, because it’s not perfect, that we should treasure it and see what we can do to make it better for the future.