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Nadia Calviño: ‘We are going to use all economic instruments against Russia so that the war ends’

The shock of the war in Ukraine keeps Europe and its economy on edge. The forecasts on growth and inflation they are under permanent review and the scenario is uncertain. But the Vice President and Minister of Economy of Spain, Nadia Calviño, remains optimistic.

Calviño, born in 1968 and who at the age of 23 was already a professor of Economic Policy at the Complutense University of Madrid, arrived in the European Commission in 2006, where for 12 years she held senior positions in Competition and Budgets.

The president of the Spanish government, the socialist Pedro Sánchez, appointed her vice president and economy minister in 2018. Since January she is also the chair of the IMF’s Monetary and Financial Committee (IMFC). She likes opera. When Clarion interviewed her in the office that the Spanish government has at the headquarters of the European Council, in Brussels, she confessed that she was finishing reading James Joyce’s “Ulysses”. The next one will be “La uruguaya”, by the Argentinean Pedro Mairal.

-The post-pandemic economic cycle pointed to a time of growth. The war and its economic consequences call this into question.

-The war is leading to downward revisions in growth and upward revisions in inflation. The impact of the war transcends the borders of the countries in conflict, neighboring countries or even Europe. There is a global impact. It was confirmed in the spring meetings (IMF) and, according to the European Commission and our own vision, the recovery is slowing down, but it is not put at risk. All organizations continue to see Spain as one of the countries with the most intense growth this year and next, at a European level. We are talking about an average rate in the 2021-2023 period of more than 4%. That’s a strong recovery.

Nadia Calviño, together with the President of the Government of Spain, Pedro Sánchez, in a session of the Parliament, in Madrid, in February. Photo: REUTERS

– Aren’t you afraid that the war will sink that growth?

-It’s not what we’re seeing. It is evident that the war brings enormous uncertainty and makes it more difficult than ever to make forecasts, but in the case of Spain we see a very strong recovery in employment, which continues to be very strong in the month of May; also of investment, unlike previous crises, and of international tourism. All of this is a foundation for strong growth this year and next, subject to all the uncertainties around us.

-How far are European governments willing to suffer economically so that Russia loses the war?

-From the first moment, we have planned to use all the economic instruments at our disposal in an intelligent way. And this consists of imposing sanctions that have the maximum impact on Vladimir Putin so that the war ends as soon as possible, which is our objective, and the minimum negative impact on the economies of the European Union.

Inflation and supply

-When inflation began to grow in Europe, it was said that it was temporary and due to problems in global supply chains. That in spring it would fall. Will it fall or are years of high inflation coming?

-Spain was the first country to sound the alarm when we began to see the rise in energy prices and other raw materials last summer. Due to the structure of the market in Spain and the enormous elasticity that exists with respect to the evolution of prices in international markets, we immediately saw that this was a matter of concern and we already asked that measures be taken, which are now being incorporated into the European Union response catalogue.

And are these measures enough?

-It is clear that the war has changed the scenario with respect to inflation forecasts, but even so, the forecasts of the European Central Bank and the Bank of Spain point to a sharp slowdown in the second part of the year and return to around 2%. in the year 2023.

-Why is there so much talk in Europe about strategic autonomy?

-We have to strengthen Europe’s strategic autonomy in goods that have proven essential, such as semiconductors. We also implemented measures to reduce Russia’s strategic dependence on oil, gas and coal, diversify supply sources and, above all, reinforce the strategic autonomy that renewable energies give us.

The Spanish Minister of Economy defends the economic sanctions against the government of Russian President Vladimir Putin.  Photo: EFE

The Spanish Minister of Economy defends the economic sanctions against the government of Russian President Vladimir Putin. Photo: EFE

-When the pandemic began, European Foreign Minister Josep Borrell said that Europe does not produce a single gram of paracetamol. The European Union imports a good part of the basic products of habitual consumption. Some come from very few suppliers. Should that change?

-In these last two years we have realized that we did not have a guarantee of supply of some goods that have been revealed as essential. At first, the masks and protective equipment for workers. Then vaccines and some other types of drugs and more recently semiconductors. I think it is good to be aware that we have to strengthen our strategic autonomy, but not everything happens because we produce everything.


-We can also have strategic reserves, for example of certain medicines to ensure that we can react efficiently. Spain has always supported that these types of reserves have a European character so that we can also be efficient in the management of our resources. Vaccines is a paradigmatic example of how we have had centralized management of production, research, development and distribution. This has allowed us to lead vaccination campaigns in the world.

“We have to reinforce our strategic autonomy (…) We can have strategic reserves, for example of certain medicines to make sure we can react efficiently.”

-From the financial crisis that started in 2008 the European Union came out with adjustment policies. Economic conditions were set that sometimes bordered on political conditions. In this crisis they come out with a more expansive policy. Is this because the political balance is different or because it was learned from the previous crisis?

-I think we learned the lessons of the financial crisis. Spain is a magnificent example of a country in which there was a fall in public and private investment that is only now recovering the levels of 2012. We have had one of each loss from the point of view of investment and it took us 10 years to recover GDP levels, 12 years to recover employment levels, investment has not yet recovered to 2007 levels. But we already have higher employment levels than before the financial crisis and investment levels that have also recovered. We are seeing a much faster and much more intense exit from the crisis. I think there is a new awareness that we are all in the same boat and that we need to make a very strong investment in the green and digital transition and we have to do it at a European level.

-The European funds (70,000 million euros in three years in full) are they having the impact that you thought they were going to have?

-Yes. The recovery of activity, employment and investment in Spain is not understood without the recovery plan. Already the decisions of the companies have changed with that perspective. Investment growth of over 9%, over 11% in capital goods and 17% in intellectual property products. Large car producers such as the Volkswagen Group and Stellantis announced investments of several billion to locate their electric vehicle manufacturing plants in Spain. And there is great interest from the big technology companies to invest in Spain.

“We need to make a very strong investment in the green and digital transition and we have to do it at a European level.”

-The Federal Reserve and soon the European Central Bank begin to raise interest rates and reduce or eliminate debt purchases. That traditionally appreciates the dollar and the euro and moves capital from emerging economies. Shall we go to that stage?

-From the point of view of monetary policy, Europe and the United States are not in the same situation. The origins of inflation in the European case are imported, it is due to exogenous causes and that explains why the European Central Bank announces that it will progressively and gradually raise interest rates to go to positive territory in the second part of the year. In other words, we are talking about a different approach from that of the United States. The potential global impact is a topic that has been discussed at IMF meetings and one that we need to take seriously from the standpoint of our shared goal of preserving global financial stability. We have to use the different instruments that we have, including those of the IMF, to protect that financial stability and avoid that there may be a situation of tension generated by the most vulnerable countries.

Message to Argentina

-What is said from a European Ministry of Economy to a country that has lived for many decades with high inflation?

-These are issues that we have addressed on occasions with the different governments. They all have very clear goals of reducing inflation and being on a fiscally responsible path. I hope that progress is made in this direction.

-It is impossible to control from Europe issues that push inflation up, such as the closure in China.

-It is clear that geopolitical changes and also the problems of global supply chains are not under the control of a national government. We are committed to the diversification of supply sources, an area in which we support the implementation of the agreement with Mercosur.

– Isn’t the discourse of strategic autonomy, of the relocation of certain sectors, protectionist?

I don’t see it that way at all. It is clear that we cannot manufacture everything in Europe and that does not have to be the goal. We must have greater diversification, but at the same time we cannot depend on a single supplier for sensitive products and where there may be disruptions in supply chains. The diversification of supplies is a way to solve it. Having strategic reserves is another way, and thirdly, to develop a production capacity, for example with semiconductors, because it does not seem reasonable that Europe does not have a production capacity in a good that is absolutely essential for technological development. But I do not see it at all as protectionism, but as a reinforcement to cover possible gaps in the globalization of recent decades. Spain’s approach will not reverse globalization but reinforce our strategic autonomy.

-There is a lot of talk in France about relocation. Not in Spain.

-Spain wants to attract investment. We believe that the strength of the European Union is precisely that we are the world’s commercial power. Spain is a very open economy, with internationalized companies and we see international trade as an asset. We do want to resolve possible vulnerabilities that may have been generated in recent decades.

-Spain supports Argentina in its negotiations with the IMF?

-Spain has a very close relationship with the Argentine people. It is a brother town and a very close country. Spain supports Argentina in the different international forums and we continue along these lines. As president of the IMFC of the IMF, what I believe is that it is positive that there is a constructive dialogue between the Argentine government and the IMF so that progress can be made in that line of tackling inflation and reducing fiscal imbalances and also achieving more sustainable economic growth from financial, environmental and social point of view.

Brussels, special


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