First breakdown, then in Finland
Christian Lindner gives the “friendly falcon”
By Jan Ganger, Helsinki
2/15/2023, 4:59 p.m
In order to combat the economic consequences of the corona pandemic, the EU Commission has suspended the debt rules. They should apply again next year. But it is unclear by when and how the irregular debt will be reduced.
Things are not going so well for Christian Lindner at the moment. In the repeat election to the Berlin House of Representatives, his FDP failed at the five percent hurdle and is therefore thrown out of the state parliament. So it is only logical that his departure from BER to Helsinki on a cold, foggy Wednesday morning is delayed. When the party leader and federal finance minister enters the military-grey machine ready to fly, the lights go out and it’s quiet – one unit goes on strike.
But the technical problems are soon resolved and the journey to the Finnish capital is delayed. He landed there two hours later to talk about EU debt rules. At the end of last year, the EU Commission proposed, among other things, to give highly indebted countries more flexibility in repaying irregular debts. Instead of uniform guidelines for all countries, the authority’s reform proposal is based on individual paths for each country in order to reduce debt and deficits in the medium term. Lindner sees a need for discussion. Because how this is to be designed in concrete terms is open.
In Helsinki, Lindner seeks – and finds – support in Annika Saarikko. The liberal politician is the Nordic country’s finance minister. Economically, Finland is not the most important country in the EU, says Lindner. But when it comes to financing and debt, the country is one of the most important voices in the Union. Lindner is likely to see it that way because Saariko is much tougher on debt rules than the German finance minister. He can really use allies.
Consensus instead of confrontation
The day before he had met Dutch Prime Minister Mark Rutte. Tomorrow, Thursday, we’re going to Vienna. In the past he would have found tough partners there – but the coalitions in the Netherlands and Austria have changed, says Lindner. Here one could object: in Germany too. Lindner is Finance Minister in a coalition with the Social Democrats and the Greens.
For a long time, the “Frugal Four”, an informal alliance of the governments of Austria, the Netherlands, Sweden and Denmark, vehemently opposed any attempt to soften the budget rules. But times have changed. There is no longer any confrontation in the EU over fiscal policy, says Lindner.
In this context, the German Finance Minister speaks of a “serving leadership role for Germany” as the largest economy in the EU. The federal government does not want to forge any alliances. He is a “friendly hawk” who is concerned with finding a consensus that all members of the eurozone can agree to. Translated, this means: Basically, the old debt limits and rules should apply again. You can then be flexible about the way to reduce the debt.
The reform proposal is on the table
The EU Commission made corresponding reform proposals in November: Highly indebted countries should be given more leeway in repaying irregular debts. Instead of uniform guidelines for all countries, the authority’s reform proposal is based on individual paths for each country in order to reduce debt and deficits in the medium term. Countries with high debt should be given four years to credibly reduce their debt and reach the deficit target – countries with lower debt would be more flexible. Normally, states have to repay 5 percent of the debt that is over the 60 percent mark per year – for highly indebted countries like Italy or Greece that would be devastating for economic development.
Lindner had recently indicated that he saw a need for discussion of these reform proposals, but at the same time indicated a willingness to compromise. The rules are currently suspended until 2024 anyway due to the stress caused by the corona pandemic. Finland is one of Germany’s closest allies in the EU against a relaxation of European debt rules. After the obligatory press conference, Saarikko and Lindner shake hands with a smile.
In Germany, the well-known problems are likely to catch up with the finance minister again. The weather in Helsinki is just as cloudy and cold as in Berlin. But there is one significant difference: When Lindner lands in the most digital country in Europe, construction work on the railway near Frankfurt am Main causes a massive disruption of the IT system at Lufthansa. Numerous flights are cancelled, many more are delayed.