Luis Solana: “The finance and energy sector must be closely monitored” (I)

Question: Why are US telecommunications companies doing better than their European competitors?

Answer: I think this is happening because European firms wanted to recreate the US model of limited competition that no longer exists there. AT&T was split into seven companies a long time ago and now there are only two or three left. We have around 150 operators in Europe. With so many small businesses, it’s impossible to make a profit.

Q: What do you think of the change in direction of the banking sector?

A: I missed the traditional counter banking business … it was a very reliable system that started to drift as things got more complex. The banking sector is a sector that needs to be closely monitored. I agree with British socialist Eli Miliband who recently said that markets are vital other than finance and energy. They must be under government surveillance. This means turning to another socialism, far from the idea that banks will become free. The point is, they can get you into serious problems that are almost impossible to solve, as events have shown. Spain spent 400 billion euros on the financial crisis and Europe spent trillion euros from taxpayers. The same thing happens with energy, it cannot be free in the markets.

Q: But the banking industry was also closely monitored, wasn’t it?

A: Sure, but for some reason they managed to get away with it in both the EU and US and mix these packages with healthy and toxic items without anyone knowing what was inside.

Q: In the end, Europeans seem very angry with corporate behavior?

A: It’s a logical answer because we all went to great lengths without devaluing. These things have happened before, but they weren’t as harmful.

Q: But is it worth keeping the euro, or is it, on the contrary, a reluctance?

A: The best EU artists are UK and Poland. The remaining countries, especially the southern ones, were forced to make major budgetary adjustments. But Germany did it in the days of Gerhard Schröder, who is an extraordinary political leader. He was the only one who saw that public spending could not continue to rise. However, the German dismissed Schröder.

Q: Between 2003 and 2004 Spain grew by 3-4%. Do you remember the saying “Spain is fine”? [N. from the E.: one of former Spanish PM José María Aznar most remembered sentences]?

A: I do. The question is that 2 of those percentage points came from the real estate market. However, Germany was in a very difficult situation and was absorbing the East. Sometimes countries come into complex circumstances that require urgent decisions.

Q: It is not easy to find the appropriate measure. For example, what should socialists do now?

A: European socialism should be concerned about the future of all social things and the future of socialism itself. All over Europe, very broad social movements have spread to express people’s anger and frustration. This is kind of a resounding no to what is happening. I don’t think socialism can gain anything if it goes along with this no. These groups can shout “no” because they will never reach the government. In addition, this attitude adds absolutely nothing to people. What socialism has to do is say “yes” to some ideas and find solutions. You should tweak your suggestions. For example, it is in vain to say no to a measure about the health system that smells like privatization. Some public-private partnerships are interesting and can even improve services, including in the education system. Many socialists adopt them.

Q: It would be pretty difficult, wouldn’t it? Spain is not the Germany of the grand coalitions …

A: Yes. In fact, this is the only European country that has a clear division between right and left due to the civil war. It is crucial. A German coalition government is impossible in Spain. The Spaniards have made it a matter of life and death to be right or left. This was not the case in Germany or France. I myself was in prison for a few years and became Telefonica’s chairman. In Germany one would not understand that the head of Deutsche Telekom was in prison. This is a unique Spanish problem that is still unsolved.

Q: The economic importance of Europe in a global context is declining, Europeans have become poorer, the middle class is shrinking. Do you think socialists have a solution for this?

A: The region has no choice but to reduce state influence. This does not mean reducing the welfare state, but rather that the state is managing too many affairs. The private sector can contribute perfectly. In addition, it can be challenged more closely and monitored more closely than civil servants. The state got out of control and these should be cut.

* This is the first publication of The Corner’s conversation with Mr. Solana. The next part focuses on the telecommunications sector and the challenges ahead. Stay tuned!

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