MNI INTERVIEW: German ECB Criticism Risks Pandora's Box:EU Rep

By Luke Heighton

     VIENNA(MNI) - German criticism of European Central Bank monetary policy

risks opening a Pandora's Box, the EU's former top civil servant told MNI in an

interview, saying that Brexit showed that using European institutions as a

scapegoat for policy failure could lead to uncontrollable consequences.

     "Germany is regrettably the country that criticises most the accommodative

monetary policy of the ECB, even though it is, as the largest exporter of the

euro area, one of the biggest beneficiaries of the euro," said Martin Selmayr,

now head of the European Commission's representation in Vienna, adding that the

lesson he drew from Brexit was that blaming the EU for problems while

governments claim credit for any progress was dangerous.

     "One can criticise decisions," he added, "one should criticise decisions,

but one should always keep in mind what one can destroy - when this criticism

becomes destructive or is only meant as a distraction from what is wrong at

national level."

     If Brexit had taught him one thing, Selmayr continued, it was that "if you

are creating myths that the EU is responsible for everything negative in your

life, while national governments in return claim exclusive credit for the

positive developments, then don't be surprised if at some point the people say

they don't like the EU anymore and you don't know how to close Pandora's Box

three weeks before a referendum."

     Selmayr stepped down in August from his role as secretary general of the

Commission under Jean-Claude Juncker, after serving during a period of difficult

Brexit negotiations with the UK.

     --BREXIT

     The likelihood of a disorderly exit from the EU by the UK has diminished

despite a tight timetable, he said, now that a withdrawal agreement has been

negotiated and the new UK prime minister has shown himself to be ultimately a

pragmatist.

     "No prime minister of the United Kingdom will risk the economic and

political fortune of his country, and I think Boris Johnson has also shown so

far that when push comes to shove he acts responsibly," Selmayr said.

     The deadline for a trade deal to be negotiated is December 2020, and last

week Britain's Conservative government said it does not intend to seek any

further extensions from the European Commission as part of their manifesto ahead

of the Dec. 12 general election.

     The situation on Brexit has improved considerably compared with a year ago,

Selmayr said, although he cautioned that a meaningful agreement would only be

possible "if on the UK side people are as well-prepared for these negotiations

as on the EU side. We are extremely well-prepared and have a lot of experience

with negotiating trade deals."

     He spoke to MNI at the conference of the Oesterreichische Nationalbank in

Vienna on Nov. 26, days before the formal confirmation of a new Commission under

incoming president Ursula von der Leyen.

     "A new Commission, a new ECB president, will certainly be a good

opportunity to further strengthen Europe on the fiscal side," Selmayr said,

describing disagreements among members states over the level of contributions to

the EU's next seven-year budget as "normal in any decision-making process.

     "At the end member states are now arguing about one or two dots behind the

comma, but everybody agrees that we need to have a new budget and that it will

be somewhere between 1 and 1.3% of EU GNI. At the latest after three long nights

in autumn next year there will be an agreement on that."

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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