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4 February 2021

Interview with Thomas Westphal, Director-General for European Policy

Thomas Westphal looks back on Germany’s Council Presidency in the second half of 2020.

Thomas Westphal, Director-General for European Policy enlarge image
Thomas Westphal, Director-General for European Policy Source:  Federal Ministry of Finance / Photothek

Mr Westphal, how do you feel after the exciting but no doubt stressful six months of Germany’s Council Presidency?

All those who were closely involved in the Presidency are certainly breathing a sigh of relief and enjoying the change of pace. But it also takes some getting used to. We no longer have any direct influence in setting the agendas of ECOFIN and Council working party meetings within the Federal Finance Ministry’s area of responsibility.

And we no longer get to chair negotiations, thus taking an active role in achieving key outcomes in significant European policy dossiers. We call this feeling the “Presidency blues”. I’ve experienced previous Presidencies, but the Covid-19 pandemic changed the organisational and policy-related circumstances in an unprecedented way, so it was a new and educational experience for me to guide the Council’s work during this time.

You just mentioned the pandemic. What impact did it have on Germany’s Council Presidency?

We closely observed the first Council meetings that took place in a video format – for the first time, delegates and ministers were not negotiating face to face in Brussels. The first of these meetings took place under Croatia’s Presidency in the first half of 2020, during the first lockdown. At the time, no one could imagine that this would become a normal state of affairs. So at the start, we expected Germany’s Presidency to go ahead as normal after the summer, with in-person events.

I still remember our interview in July. Our Presidency’s first ECOFIN – the monthly meeting of EU finance ministers – was held as a video conference that month, chaired by our Minister. But we all hoped things would go back to normal after the summer break. With the exception of the informal meeting of EU finance ministers in Berlin in September, this hope was not fulfilled. All the other regular ECOFIN meetings in the second half of the year were virtual meetings. So for us at the Federal Finance Ministry, the informal ECOFIN in Berlin was a special highlight of our Presidency. It was initially planned as a larger meeting, but we sadly had to scale it down to a smaller group because of Covid-19 restrictions. However, this encouraged discussions in a collegial atmosphere. Looking back, it’s fair to say that the Minister chose the right topics for the first face-to-face meeting of European finance ministers following seven months of video conferences. The meeting went very smoothly, thanks to the organisation team’s outstanding work behind the scenes. A fantastic evening in Potsdam provided a fitting cultural backdrop, leaving our guests with lasting positive memories.

With the exception of the informal ECOFIN, all the other meetings that were chaired from Berlin took the form of video conferences. Finance Ministry officials working at the permanent representation in Brussels were the only ones who could meet in person, in a restricted way. Luckily, even before the pandemic, we had significantly increased staffing levels at our permanent representation in Brussels, deploying experienced colleagues in a very targeted way. This meant that the permanent representation was able to take over and successfully handle all the necessary negotiations under the Ambassador’s leadership, for instance the night-long trilogue negotiations with the European Parliament. Our success hinged on this close and collaborative relationship with our Finance Ministry colleagues in Brussels, the Ambassador as the key figure on-site, and other ministries in Berlin. The General Secretariat of the Council also provided very valuable assistance. No Presidency would be able to function effectively without its routine preparatory work and its support during meetings.

Did the pandemic affect the German Presidency in terms of policy?

Even at the start of our Presidency, the extent and duration of the restrictions and of the economic fall-out were so worrying that a European response seemed like the only option. That is why the European Council adopted a package in July encompassing the Multiannual Financial Framework and the Next Generation EU recovery instrument, which was designed to help overcome the economic and social consequences of the pandemic. We at the Federal Finance Ministry, in cooperation with the Chancellery, prepared this compromise last spring. During our Presidency, we then needed to conduct negotiations in the Council and with the European Parliament to flesh out the political agreement into actual legislation.

At first it seemed almost impossible, but we ultimately succeeded in reaching an agreement on all key elements of this recovery package. Just before Christmas, after some tough negotiations, we came to an agreement with the European Parliament about the Recovery and Resilience Facility, the most important building block of the recovery package. Now it is up to the national governments to ratify the Own Resources Decision as quickly as possible so that the funds can be disbursed and help those who urgently need them. It is my firm belief that our Presidency will ultimately be viewed as extraordinarily strong and successful – not despite the coronavirus pandemic, but because of it.

What about the policy projects that Germany’s Council Presidency had originally planned to tackle? Were you able to make progress with or complete them under these circumstances?

Thanks to the outstanding commitment of my colleagues in Berlin and Brussels, we took substantial steps forward in many areas, despite the difficult conditions. You need to remember that the new European Commission was only able to take up its work with a three-month delay, and that it subsequently conducted its legislative activities with most officials working from home. The Spotlight article published in this issue of the monthly report provides a review of the German Council Presidency, including more detailed information on the progress made in individual dossiers. So I will outline the projects only briefly here.

By adopting the Multiannual Financial Framework and reaching an agreement on a new Own Resources Decision and the EU’s annual budget, we have given the EU a reliable framework for the budgets in coming years.

We have strengthened European anti-money laundering provisions and the banking union, made headway with the capital markets union, reached an agreement with the European Parliament on the creation of a real single market for financial services, and achieved progress with the Digital Financial Package.

In the area of taxes, we have taken further steps towards building a European architecture for fair and effective taxation, which is very important to us. One notable example is the agreement on amending the Administrative Assistance Directive (DAC7), which enables the more effective taxation of transactions made via online platforms.

We were able to complete work to amend the OLAF Regulation, thus ensuring that the European Anti-Fraud Office is able to work together smoothly with the European Public Prosecutor’s Office from 2021 onwards. In addition, we reached an agreement with the European Parliament on the future programme to combat fraud. Finally, the Council conclusions on the Customs Action Plan chart the future course in this important area.

What is your advice to member states that are at the beginning of their Presidency?

Each incoming Presidency needs to define its own objectives and think about what approach and negotiation strategy it wants to use to achieve them. But there are some general conclusions I can draw after the six months of Germany’s Presidency. 

The first requires very little explanation given the current situation: “Not everything will go as planned.”

The second is this: “A Presidency will only be successful if it acts as an honest broker.” Member states – but also the Commission and the European Parliament – react very sensitively to any attempt by a Presidency to take advantage of its more prominent role in order to push through a national agenda. A Presidency can only work in a spirit of European responsibility. 

The third conclusion: “The Presidency bears the ultimate responsibility for everything, but it cannot control everything.” Ultimately, success also depends on factors outside your control. 

Fourth: “You can’t do much without the permanent representation.” This, too, is plain to see at the moment. No amount of careful preparation can replace local contacts and expertise. At a time when travel is practically impossible, officials working in Brussels are the key to success.

And finally: “You need clear ideas, but you also need to be willing to adapt them.” European dossiers are complex, and given the large number of different interests, it is difficult to reach agreements. You will only be successful if you are willing to constantly reflect on your position and change it if necessary.

I would like to take this opportunity to thank all my colleagues in the Finance Ministry and in Brussels who, with their extraordinary commitment, made this unusual Presidency a very successful one.