Given that 76% of Germans are in favour of the Euro according to Eurobarometer, being a German and a strong anti-Euro advocate is not a usual combination. Nonetheless, Professor Bernd Lucke – Member of the European Parliament, professor of macroeconomics at the University of Hamburg, former advisor to the World Bank – is precisely one of those remaining 16% of German people. In fact, in 2013 Lucke was one of the founders of Alternative for Germany (AfD), Germany’s first mainstream directly Euro-sceptic party.

Although he ended up leaving the party in 2015 after a lost leadership contest and the party’s turn towards nationalist-populist rhetoric, in 2017 AfD entered the German Bundestag gaining 12.6% of the vote – a nationalist-populist party reaching the 5% electoral threshold for the first time in post-war German history. In the following interview, I had the pleasure to ask Dr. Lucke how this historic electoral outcome became possible, what happened in AfD between 2013 and 2017, what his thoughts are on Brexit as an MEP, and other important issues.

BP: As we approach the first anniversary of Theresa May triggering the Article 50 negotiations on 29 March, issue number one on the British Isles is Brexit. What are your thoughts on this?

BL: Brexit is clearly detrimental to both the EU and the UK. Economists would say, Brexit is strictly Pareto-inferior to what we currently have. It is – on the EU side and on the UK side – the result of political decisions which have not been properly thought through. On the EU side, the EU has not spent sufficient thought on the consequences of two ambitious steps to deepen the Union: The introduction of the Euro and the introduction of qualified majority decisions in the Council. Eurozone countries may have different interests from non-Eurozone countries like the UK and they may impose their will on the latter by qualified majority.

This was most apparent in the Eurozone crisis when Eurozone countries pushed ahead a huge amount of financial service regulations without much thought about the fact that financial services are a key interest for the UK, while the Euro is not. So David Cameron was trying to carve out a niche for the UK in a more and more Euro-dominated EU by seeking Treaty changes which would guarantee the UK a veto right on EU legislation with negative spillovers on UK interests. He did not get it. His negotiating position had been weak, and while he tried to reinforce it with the threat of an exit referendum, this was backfiring when he returned from Brussels empty-handed (as far as Treaty changes are concerned).

On the UK side, the decision to call for a referendum was also not well thought through. It seems nobody had reflected much on whether the referendum called for a soft Brexit (staying in the Common Market) or a hard Brexit (leaving Common Market and Customs Union). Nor on the question which of these options would be better for the UK than the status quo – and why. Clearly, a soft Brexit would not change much: The UK is exempted from Schengen, the Euro and the Banking Union anyway. Being in the Common Market, the UK would have to accept and adopt most EU legislation. The basic difference to full membership is that the UK will have no say in the process of lawmaking. This makes a soft Brexit clearly inferior to full membership.

A hard Brexit, on the other hand, involves the difficult issue of the Irish border. I do not believe in the feasibility of high-tech smart border solutions which prevent border controls. With a hard Brexit we will have a hard border and this has negative repercussions for the whole of Ireland and, possibly, for the integrity of the UK. Also, a free-trade agreement can never make up for the loss of the Common Market. Today, most barriers to trade are non-tariff barriers which keep changing over time. A static FTA cannot account for that. UK business activities will suffer from being outside of the Common Market. While the UK will be sovereign to legislate as it pleases, my guess is that it will act like Switzerland: insist on its sovereignty publicly, but tacitly adopt all EU laws and accept the four freedoms to retain as much market access as possible. This is not as good as being in the Common Market, but it is workable. However, it is worse than full EU membership, because, again, the UK has lost its influence on lawmaking and will just have to accept what others have decided.

In your opinion, what is going to happen after 29 March 2019?

I simply do not know. I do not understand the rationale behind the decisions and statements of the UK government. I am not smart enough to see what Mrs May is aiming at. I do not want to say her policy does not make sense. Perhaps her wisdom is greater than mine. But I am still waiting for a revelation which makes me understand this hidden wisdom. Unless I receive this revelation, I am unable to forecast what the UK government will do and how the EU will react and what both parties may or may not agree on.

Speaking about the European Union, what do you think about the French President Emmanuel Macron’s plans for furthering integration, specifically the common defence policy and the fiscal union?

I am opposed to both proposals. Let’s first look at the European Defense Union (EDU): we have a well functioning defence alliance, NATO. Why set up a second one? Do we want to give the US a pretext to lower their defence commitments for Europe? Most EU member states are in NATO, but some are not. The latter want to preserve their neutrality. This is important for instance for Finland, which has a long common border with Russia. How can the neutral countries be neutral if EDU troops are deployed in their country, some of which are NATO troops? In the case of a military attack, would NATO troops in Europe have to follow NATO orders or EDU orders? Sometimes it is said that we can exploit economies of scale in military equipment if we have an EDU. This argument is completely unconvincing. Clearly, we can do the same thing in NATO. And we do. Countries have teamed up to develop the Tornado fighter plane and other high-tech equipment. Within EDU we would not buy and produce where this is efficient, but where leaders want to create jobs. We would divide the project in country shares so that each member country gets a piece of the pie. This would almost certainly make the equipment more expensive and probably less effective.

As for the fiscal union, there is a fundamental problem with democracy: We have the member states which are responsible for their fiscal policy and democratically accountable to their voters. The European Parliament (EP), on the other hand, cannot be democratically accountable, because it is not elected according to equal voting rights. The EP is probably the only major parliament in the world which grossly violates the one-man-one-vote principle. Look at Malta: Malta has six (out of 751) MEPs. If Malta has six MEPs, strict proportional representation implies that Germany should have roundabout 1000 MEPs. But Germany has only 96 MEPs. About 900 German MEPs are missing, along with hundreds of MEPs which should represent France, Italy, the UK etc. under proportional representation. “No taxation without representation” was the US battlecry 250 years ago. This principle should also guide European policymakers. We have proportional representation in the member states and this is where fiscal policy has democratic legitimacy.

Besides, you may ask: what do we need the fiscal union for? Its proponents will say: to save the Euro. So they admit that the Euro is in trouble, and I agree. But the root of the Euro problem is competitiveness of member states. There are many reasons for divergence of competitiveness in the EU, none of them intimately related to the lack of a fiscal union. The fiscal union is just an easy remedy for those countries which do not want to tackle the root causes of the competitiveness problem: insufficient labor productivity, low degree of innovation, red tape and barriers to market entry. The fiscal union addresses the symptoms of the crisis, not its causes.

You founded Alternative for Germany in 2013, being a centre-right conservative party, campaigning against the common currency.  How did the AfD get from the point when you founded it, to the current situation where some of its members openly praise the achievements of German soldiers in WWII, and declare the holocaust memorial in Berlin a ‘monument of shame’?

The 2013 AfD party was not “center-right conservative”. It was critical of the benefits of the Euro as the European currency. It had support from all lines of political thinking, from left to right. While what you call “center-right” was the single most important block of early AfD-members, we were very careful not to estrange those which came from the Social Democrats, the Greens or the Pirate party – of which we had quite a few.

One unifying theme was that all AfD members felt there was no free discussion in Germany about costs and benefits of the Euro. Criticising the common currency was stigmatized by the established parties and by the media. Labels like “Anti-European”, “Nationalist”, “right-wing” were abundantly used to discredit those who were not convinced the Euro was good for Europe. So freedom of opinion was always highly valued by AfD members – and it still is.

Later, it turned out there were two views on freedom of opinion. Some held that this implied any AfD member could publicly express any opinion – the sole red line being the fundamental rights in the German constitution. Others, myself included, contended that freedom of expression is a property of a free society. A party, however, unites on specific opinions. Precisely this makes it a party discernible from other parties. So according to this view, as long as you are a member of a party, you are not free to express just any opinion. You are free to leave the party and in this sense you have freedom of expression. But party members who express opinions greatly at odds with core party positions should be relegated.

This second view was considered autocratic by many at the party base. They rebelled against my “red lines” and they won. This is why some really bizarre opinions are not sanctioned in today’s AfD.

Did you foresee the populist-nationalist turn of the party?

Not in 2013. Very much so in 2015. The point is that party membership changed considerably in those two years. We had constantly been under attack by the media which rejoiced in picturing the AfD as right-wing, nationalist, Anti-European. Very minor incidents, like inappropriate language in Facebook comments by some unknown party members, were given nationwide TV coverage over and over again. This frustrated the moderate part of the party. They had employers, they had friends, they had careers to pursuit – and feared the stigma that was building up. So many of these people cut back on their activities in the AfD or left the party. Simultaneously, the image created by the media attracted new members which did not mind (or actually sought) a party which was right-wing, nationalist, anti-European. Mostly, they did not say so openly – they just came and said they were critical of the Euro and wanted to join the party. Nobody, and certainly not the inexperienced local party officials who admitted new members, could look into their heads. But gradually, the right wing of the AfD became stronger, and the stronger they were, the more openly they expressed their views and the more efficient they were in forging alliances to take over responsibilities.   

Did you try to prevent them overtaking the party?

Of course I did. This is why the right wing accused me over and over again of being an autocrat. But I was not – in fact, I could not. German party laws state that a party has to be democratic on all levels. So I needed majorities. And I had my majority in the federal board up to the end. For a long time, I also had a solid majority in the party base. But at the local and regional board levels, right-wing activists were increasingly ousting the first-generation moderates. They were often more active, had more time, did better networking. Since admitting new members was done at the local level, the political composition of the party base followed this development. Finally, I lost my majority at the party base. This was the end. There is nothing you can do if you don’t have a majority.

In the recent federal elections in Germany, AfD became the third largest party, while both Angela Merkel’s Christian Democrats and the SPD are at their post-war historical low. What do you think gave such a rise to AfD’s popularity? What led to this historic decline in the votes for the mainstream parties?

Very clearly: the refugee crisis. In late 2015, there were 10,000 people per day entering Germany without any border control. Refugees and economic migrants from many different countries, from the Middle East, from the Balkans, from Afghanistan and Pakistan. The government pretended they were all welcome, but many voters did not think so and were worried. The AfD was the only party which was openly hostile towards this policy (and towards the migrants). So AfD was the preferred choice for those voters which disapproved of Angela Merkel’s way of handling the issue. This was and is a protest vote – and more than just that.

We have had similar protest votes before, where even tiny radical parties were suddenly voted into parliaments when voters were concerned about high immigration. This time may be different, however, because the crisis has never been so dramatic. This has led to a great loss of trust among a significant part of the electorate. This is more serious than just a protest. While refugee numbers have receded, the government has so far failed to rebuild trust that things would be handled differently in the next crisis. This is why the AfD may live on to see good results in opinion polls for quite some time.

Returning to the EU for one last question, where do you see Europe in 2025?

This would be mere speculation. It is better to focus on today’s problems and how to solve them.