Christine Lagarde: “Europe-bashing is “vastly excessive” | The Economist

I think that Europe bashing is vastly and I think it's only as excessive as the expectations about Europe. Europe was a dream. Europe was a promise and the key original project of Europe back in those days 1957 was we've been at war with each other. We have killed thousands if not millions of people on our land. let's make sure that this does not happen and we build peace amongst ourselves. And that project has been a a brutal success. If you look at it, Europe is now significantly behind the United States. Whatever, you know, not that long ago the GDPs were the same size. Now it's huge. We have been left behind by the AI revolution. We have unsustainable welfare states and we don't actually have very happy citizens for all of this because we have huge populist nationalist backlashes in many of our — and there's none of that in the US. — There's a lot US but it's I would submit that what we have in Europe is neither sustainable — nor particularly vibrant and the and I'm sure I' you've get you get this too. I often get from people outside Europe. It's great place to visit on holiday, great place to have, you know, go to a museum, but it's not going to make the future. — Great place to um receive healthcare. That's another one. Great place to age because the longevity is much longer in Europe than it is in many other advanced economies. Uh great place to raise kids where there is not too much um you know killing at the uh at the school um entrance. I totally agree with you that by GDP measurements Europe is now lagging behind and if you look at you know GDP per capita which I don't think is actually the you know the most perfect way to measure a society we are you know sort of 40% behind the US if you look at the distribution of value distribution of wealth in say the United States versus Europe because this is the comparison that you wanted to uh to apply It's very different. But is it better or worse in one place or the other? It's for society and people in society to decide. It's operating under a different model. I — you are you're very clear about your preference for Europe's choices over those in the United States. And you now somewhat infamously walked out of a dinner in Davos. Um it was reported uh that uh where the US Secretary of Commerce Howard Lutnik was particularly aggressive in putting down Europe. Uh do you bridal at that or do you see it as a kind of much needed kick up the butt? — I think we've been receiving a few kicks in the butt and I hope that this is enough to get us to move. I think the first kick in the butt was the Draggy Report. You know, two years ago, uh, Mario came out with this 450 pages, but with a list of so many reforms that we had to, uh, undertake quickly in order to restore our competitiveness. I think on that front there is progress, but as you said, it's not like this sort of massive train that has just left the station. It's more like trick omnibus where we go from one omnibus to another omnibus. But hopefully there will be some smart marketing experts who say, "Okay, you know what? If you bring all these omnibuses together, it's a massive train that has left the station and which is transforming Europe. I hope I can see that. The second kick in the butt, we received it from Donald Trump. So the first one was Draggy, the second one was Trump and I guess the third one might have been Mark Connie. The contempt with which some members, many members of the Trump administration regard Europe is so striking to me that I wonder whether it is motivated not by a desire for Europe to succeed, but just by a sort of general disdain for Europe. I think US authorities, not necessarily just the current ones, but US authorities do not really understand Europe. And it's a bit of a it's a contradiction in terms because the US authorities at the time were very keen that Europeans be together, get together and form this incredible animal that Europe was. They pushed in that direction contrary to what has been said more recently. But I think the the animal that has been developed based on democratic principles, based on the respect of the member states, sovereignty and autonomy while being together as a in a way I mean we can debate at nauseium but as a federation of states. This is very hard to understand and this is not something that is new because I remember vividly US president presidents actually saying

oh the Europeans and looking at it as a complication — because member states are much easier to understand added to which there's always been a little bit of contempt towards some European leaders. I remember one European leader being called the pompous ass by one US president and I won't say who it was. — I think there's probably worse but it reminded me as you were saying that wasn't it Henry Kissinger who used to say there's no one I can call in Europe. — Yes that's great. There is a so it's interesting because you put then some of this down to just simply a lack of understanding of Europe an alternative or perhaps additional explanation which is the reason the support in some quarters in the United States particularly in the MAGA movement for the populist nationalist right in Europe is clearly designed to undermine Europe or it's based on extreme ignorance but I assume it's designed to undermine Europe. So there is a that's where that's what I'm getting at when I think some of this is not just we don't get it. It's actually we don't want Europe to succeed. — That can very well be the case as well. But if that is the case, it shows that Europe is strong or Europe has the potential to be very strong, which is not something that others might like, especially if they compete with us.