Merkel’s One-Sided Crisis Management Is a Mistake

Interview with Peer Steinbrück published on Spiegel Online International, by Konstantin von Hammerstein and Gordon Repinski, April 08, 2013 (Photo GalleryTranslated from the German by Christopher Sultan).

In an interview with SPIEGEL, Peer Steinbrück, the 66-year-old Social Democrat German chancellor candidate, says Chancellor Angela Merkel’s strict focus on austerity in the debt crisis has been wrong. He also vows to crack down on tax evaders and raise taxes on high earners.

SPIEGEL: Mr. Steinbrück, following the revelations about trillions of euros in assets deposited in offshore tax havens, you have called for a tougher approach against tax evaders. Why have you waited so long? You would have had an opportunity to do this when you were finance minister. 

  • Steinbrück: First, I have advocated a tougher approach for years. Second, if there was anyone who placed the topic on the agenda during his term in office, with the support of the OECD and my French partners at the time, it was I. Some have even quoted my use of the word “cavalry” to criticize my hard-hitting approach.

SPIEGEL: Why do Germany and the European Union have such a hard time taking action against tax havens?

  • Steinbrück: The current government has indeed neglected the issue. Worse yet, Mrs. Merkel’s government wanted to stop German tax authorities and public prosecutor’s offices from accepting tax CDs for their investigations of tax evaders. This makes the latest reactions about wanting to establish a sort of tax FBI all the more hypocritical. That’s what the German government should have done long ago, instead of sidelining the tax evasion probes.

SPIEGEL: What’s your objection to a nationwide tax investigation authority?

  • Steinbrück: It’s the usual strategy of the government. First it does nothing, and now it’s far too late in presenting an idea that the SPD already proposed in a five-point paper on combating tax fraud. In that document, we also proposed a criminal code for corporations, which could be used to force the banks to assist tax investigators. So far the government has rejected all of these ideas.

SPIEGEL: At least one tax oasis could have been dried out by now: Switzerland. The SPD prevented that from happening.

  • Steinbrück: No, the SPD prevented a tax amnesty that wouldn’t even have made tax fraud impossible. The German-Swiss treaty would have left bigger holes than you get in a piece of Swiss cheese. My successor Wolfgang Schäuble was prepared to exempt German tax evaders from punishment, allow them to remain anonymous and accept tax secrecy, while the Americans get all the data on their tax evaders with money in Swiss bank accounts. With the help of the OECD, which I have just visited, and the European Commission, the pressure on European tax havens should have been intensified by now.

SPIEGEL: Do you expect that the desire to avoid tax will become even stronger if the SPD and the Greens form the next government?

  • Steinbrück: Why?

SPIEGEL: Because you want to revoke some of the tax cuts enacted during the former SPD/Greens government.

  • Steinbrück: Times have changed since the crisis. We will not increase all taxes for everyone, but some taxes for some people. I stand by that because the gaps in income and wealth distribution are widening. To contribute to greater equality of opportunities, we have to invest more money in infrastructure and education, as well as help local authorities. At the same time, we have to adhere to the debt brake.

SPIEGEL: You could also cut spending.

  • Steinbrück: An SPD/Greens government under my leadership will make savings. We will cut subsidies where there are environmental disincentives. For instance, we will repeal the Mövenpick tax break for hotels. Other changes will follow. For more than 10 years, we have been in a situation in which top incomes and assets have been growing considerably, while ordinary citizens have had to accept real wage losses. That’s why stronger shoulders will also have to contribute more to the funding of public services.

SPIEGEL: The income gap between rich and poor hasn’t grown any larger in recent years.

  • Steinbrück: The basic situation hasn’t changed. In recent years, we have also been dealing with stagnating real wages and a significant increase in income and wealth at the upper levels of society. The gap has grown wider, as Hans-Ulrich Wehler recently explained convincingly in a SPIEGEL interview.

SPIEGEL: But it was already there when your party was still in power … //

… SPIEGEL: You were finance minister when you made your cavalry remark. You held a position of governmental responsibility at the time.

  • Steinbrück: Yes, and a broad segment of the public understood what I was saying perfectly well.

SPIEGEL: But it caused considerable upset in Switzerland.

  • Steinbrück: Perhaps, but much has changed in Switzerland since then.

SPIEGEL: So far you have only been restrained when it comes to Russia, even though the regime of (President Vladimir) Putin has just taken action against the Konrad Adenauer Foundation and the Friedrich Ebert Foundation, the latter of which is aligned with the SPD. Why were you so loud in the case of Switzerland and are so quiet on Russia?

  • Steinbrück: What the Russian authorities have done is completely unacceptable, and I strongly object to it. But I believe that since Willy Brandt’s time, we have done very well with the motto “change through rapprochement.” It’s the way we should deal with countries where there are human rights violations. This also applies to China.

SPIEGEL: So you don’t agree with your mentor, (former Chancellor) Helmut Schmidt, who says that the West should stay out of these issues?

  • Steinbrück: These issues must be clearly addressed in direct talks with the governments in question. All former chancellors have done so, it’s what the current chancellor does and when I am chancellor, I’ll do it, as well.

SPIEGEL: Do you enjoy running for office?

  • Steinbrück: Yes. Come to my events and you’ll see.

SPIEGEL: Have you sometimes regretted running for chancellor?

  • Steinbrück: Never.

SPIEGEL: We don’t quite believe you.

  • Steinbrück: When I was chosen as the candidate all of a sudden in late September, I assumed a responsibility that goes beyond me as a person. That is why I say “never.”

SPIEGEL: Does that mean that you did indeed think of ditching your candidacy?

  • Steinbrück: No, because when the wind is blowing in your face, you automatically think that a candidacy isn’t a private matter. It’s sort of like the motto: The air contains iron, so I’d better pull the covers over my head and not get up anymore. I’m aware that I also assumed responsibility for my party, our supporters and a cause. And if things sometimes get tough, you can’t ask yourself what impact it’s having on you. It isn’t an option.

SPIEGEL: Things certainly haven’t gone that well in recent months.

  • Steinbrück: Of course, not everything has gone smoothly. I don’t deny that at all. But there have also been times when I had the impression that others had an interest in stirring things up. But that’s behind me, and now it’s time to enter the campaign and talk about the issues.

(full long interview text).

Comments are closed.