Greens chief warns new debt rules will strengthen EU far right, Putin

Ahead of a vote in the European Parliament on new debt rules for EU countries, the Greens co-president Philippe Lamberts warned against the “end of the European Union as we know it” in a worst-case scenario where renewed austerity gives rise to populists and too little military spending lets Putin win the war in Ukraine.

On Wednesday, the European Parliament will vote on the reform of the EU’s rules for national debts and deficits (“Stability and Growth Pact”).

While a deal was struck between finance ministers of EU countries in late December last year, parts of the package still have to be negotiated with the European Parliament in the inter-institutional dialogue between the European Commission, the European Parliament and the Council of the EU known as trilogues.

While the reform was considered necessary due to the old rules being considered unrealistic and insufficiently enforced, “Actually, the new rules are equally detrimental and equally unworkable,” Lamberts said in an interview with Euractiv and EUObserver.

“But at least they will be tried, which means that their freezing effect on public finances will happen regardless of us meeting the targets or not,” he added.

“That means that austerity will be back. And you know what austerity breeds? It breeds the far-right. It breeds national populism,” Lamberts said.

In a “worst-case scenario” that could see French far-right leader Marine Le Pen become president and former US president Donald Trump re-elected, Russian President Vladimir Putin could win the war in Ukraine, he added.

“Why does he win? Because Trump stops supporting Ukraine, and we have decided that we don’t want to put the money behind our words, so basically we let Ukraine down,” Lamberts said.

“That’s the end of the European Union as we know it. Maybe it will still exist, but it will be a paper tiger at best,” he added.

“This is sleepwalking Europe into a disaster,” Lamberts, an MEP since 2009, said about the new fiscal rules, calling it “the biggest case of sleepwalking” he had ever witnessed.

Military spending must go up

In the European Parliament’s Economic Committee (ECON), a majority of centre-right EPP, centrist Renew group and socialist S&D have backed an annual debt reduction by 1% of GDP for countries with high debt and 0.5% for countries with medium debt levels.

On Friday, S&D chief negotiator Margarida Marques said she was “confident that next week the European Parliament will adopt its position on the long-awaited and much-needed reform of EU fiscal rules”.

In Lamberts’ view, however, public debt levels would need to go up because, over the coming years, military spending would need to be increased.

“It might be strange that it’s a Green saying that, but with a war at our border, obviously, defence is an area where we need to invest substantially more,” he said.

Adding the additional public investments needed for the green transition, “we are facing a wall of 2% of GDP extra investments each year until 2050”, Lamberts said.

Even though he would also like wealth to be taxed higher, “a wealth tax will never bring the 2% we need,” he added.

While one alternative would be to cut social spending, “but then the question is the social acceptability of these measures in Europe and the impacts they would have politically”.

“That leaves open the last branch of alternative, which is increased debt”, Lamberts added.

‘Grand bargain’ after the EU election

While EU institutions hope to conclude negotiations before the European Elections and, therefore, will start negotiations immediately after the vote in parliament, Lamberts said that he “will do whatever I can to derail the process and to ensure that there is no deal because we cannot afford to have a bad deal.”

Instead, he hopes for a “grand bargain” on public finances after the EU elections in June.

Despite the Greens now polling much lower than their result in the last EU election in 2019 and the current record-high number for the far-right forces, Lamberts still hopes that negotiating budget rules after the election could tilt a compromise in his favoured direction.

On how the right views austerity, Lamberts gave the example of Italy, where Meloni “said yes in the Council, but Lega said no”, while ID, the Lega’s parliamentary group, voted against it. “So it’s not a given that the more right-wing you are, the more austerity you want,” he added.

While he expects the so-called “von-der-Leyen-majority” of EPP, Renew and S&D to continue working together, he said there could still be a reason for them to agree to more public debt after the election than now.

“I can think of a few things: Ukraine losing, Trump being elected, some major climate catastrophes,” he added.

“There come times when you have to do whatever it takes,” he said.

“The feeling is not like that now, the feeling is more: ‘Let’s go back to normal’. But there are many people who know that normal won’t be normal any more,” he added.

Cover photo: While the reform was considered necessary due to the old rules being considered unrealistic and insufficiently enforced, “Actually, the new rules are equally detrimental and equally unworkable,” Lamberts said. [EPA-EFE/JULIEN WARNAND]