(Bloomberg) -- Former German Finance Minister Wolfgang Schaeuble backed the European Union’s proposed 500 billion-euro ($545 billion) economic-recovery plan, adding a key voice to a standoff with EU countries focusing on fiscal austerity.
The comments by Schaeuble, who remains influential within Chancellor Angela Merkel’s Christian Democratic Union party, suggest he’s gearing up to play a role when the package eventually makes it to the German parliament, where he presides over the lower house.
Arguing in a newspaper interview that Germany should think of the greater European good, Schaeuble’s defense echoed key talking points in favor of sovereign bailouts to save the euro during the debt crisis that spread from Greece a decade ago.
“We now have a new situation,” Schaeuble was quoted as saying by Welt am Sonntag. “If Europe wants to have any chance at all, it must now show solidarity and demonstrate that it’s capable of acting. Germans have a huge interest in seeing Europe get back on its feet.”
Schaeuble, 77, was known —- and often reviled —- as the architect of Germany’s balanced-budget policy in response to the debt crisis. He and Merkel also consistently rejected joint euro-area debt issuance, a demand that resurfaced in Italy and several other countries as the coronavirus pandemic paralyzed economies.
After Merkel and French President Emmanuel Macron backed the European aid package, four EU countries — Austria, Denmark, Sweden and the Netherlands — called for limits on its scope and duration.
Schaeuble said he “argued very much in favor” of the plan during internal discussions. Asked whether it presents a moral-hazard risk, Schaeuble said that shouldn’t be a concern.
“No, because the member countries aren’t just getting money with which they can do what they want,” he told Welt am Sonntag. “Rather, there will be programs by the European Commission and it has to strictly control whether the money is put to proper use.”
In a shift by German leaders, the rescue fund proposed by Merkel and Macron would be a step toward more EU integration. It also marks a significant step to shore up the European idea, with the region’s richer nations in the north helping those in the south that have suffered most in the pandemic.
While senior CDU lawmakers have publicly advocated for the plan, grass-roots opposition has been growing and Schaeuble’s stand may help address those concerns.
“We aren’t mutualizing old debt,” he said. “Rather, the idea is that the EU Commission pushes ahead with Europe’s economic recovery.”
©2020 Bloomberg L.P.
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