Sri Lanka’s economy stands to gain from a stronger Europe: German Envoy

German Chancellor Angela Merkel and French President Nicolas Sarkozy, the two leaders of the Eurozone’s most powerful economies, met on 9 January to discuss further steps to resolve the debt crisis. Their first meeting of 2012 comes after all EU countries except the UK agreed to work together on a new treaty to stabilise the Eurozone. The German Ambassador to Sri Lanka Jens Ploetner discusses the policy directions of the EU and its implications on EU-Sri Lanka trade relations

Q: For several months now Europe has been engaged in financial policy crisis management – what will a sustainable solution look like?

A: We are now developing the European Union into a ‘stability union’. That is what we agreed at the European Council on December 9, 2011. Almost all member states of the European Union committed themselves to observing the stability criteria by showing, for example, increased thrift and greater budgetary discipline. A European Commission with stronger powers will monitor this and be able to intervene if the common rules are infringed. I am confident that we can thereby regain the trust in our common currency and permanently stabilise the euro.

Q: Financial stability is one point, but how can the competitiveness of the EU countries also be strengthened at the same time?

A: Increases in competitiveness can be achieved within a currency union by raising efficiency and improving productivity. Germany has implemented such reforms in recent years, such as increasing the age of retirement to 67 from 65. These reforms were painful, but necessary. They are one of the main reasons why my country has weathered the recent crises without a massive economic slowdown.

Q: What political opportunities does the crisis present for the European Union? Are the countries moving closer together or moving further apart?

A: We must seize the opportunity that the crisis offers for Europe to grow even closer together. The intensified cooperation that has now been agreed in the key areas of fiscal and economic policy will have spillover effects on all other policy areas. I am convinced: At the end of the day, Europe will emerge from this crisis stronger than before.

Q: Some seem to have gained the impression that German interests are different from European interests. How do you answer such criticism?

A: Germany is not alone in its desire for a more robust fiscal and economic policy in the European Union. The fact that 26 EU member states agreed on 9 December 2011 to set out together on the path towards a stability union shows that our goals receive broad support.

Q: German regulatory policy principles have become more firmly anchored in the Eurozone in recent months. Doesn’t that involve the danger that Germany is perceived too much as a strict taskmaster? Is Germany’s image suffering in the debt crisis?

A: As the largest economy in the European Union, Germany bears a special responsibility towards Europe. We have actively assumed this responsibility in the euro crisis. That also fulfils the expectations that the EU partner countries have of Germany. We have always acted transparently and underlined that we attach importance to cooperation with all 26 EU partners.

Q: Is there a danger that the European ideal will recede into the background?

A: We must not forget during the current crisis that Europe is the compass of German policy. Our goal remains a political union of Europe – with open borders, with an attractive and unique European way of life, with cultural magnetism, economic growth and political appeal.

Q: How important is a stable EU for Sri Lanka?

A: The European Union has been an important trade partner for Sri Lanka for several decades. Sri Lankan exports to the EU have continued to grow in recent years, even after the removal of the GSP plus preferential trade scheme. Both the UK and Germany are among the top three largest markets for the local tourism sector, which has experienced rapid growth after the end of the civil conflict here in Sri Lanka. Europe also continues to be a preferred destination for Sri Lankan students to pursue their higher education. Therefore, in many ways, a stable and growing European economy is important to Sri Lanka.

Q: Some seem to consider that – given Europe’s present crisis – now is the time for Sri Lanka to turn East. What are your thoughts on that?

A: I strongly recommend not thinking in categories of a zero-sum game, meaning what you gain on the one side, you have to lose on the other. Neither economically, nor politically, is this a wise concept. Instead of merely redistributing the ‘cake,’ one should aim at making it bigger.

Translated to Sri Lanka’s situation this means that building and strengthening new ties is a good thing, but it should not be seen as an alternative to existing relationships. A country aiming at the kind of economic development Sri Lanka is cannot relinquish its ties to Europe – the place where 25% of all patents are registered each year!