In his words, Berlin wishes that countries without the euro have a right to vote if they join the bank oversight system. The diplomat also emphasized that Germany, which aims to launch more rigid monitoring of national budgets, does not want to reduce the role of national parliaments.
In the interview, Mulmenstadt said the “excellent” relations between Lithuania and Germany were reinforced by the fiscal policy agreement. On the other hand, he restated Berlin's determination to cut the future long-term EU budget, although drastic budget cuts are feared by the poorer countries, such as Lithuania.
Two speeds not in Germany's interest
"I understand the concern but I would say there is no reason for that," Mumenstadt told BNS when asked to specify what he would tell Lithuanian officials who fear the emergence of a "two-speed" Europe.
The ambassador recalled that German Chancellor Angela Merkel recently told the European Parliament that "a renewed economic and monetary union would be open for non-euro states", while "a deepened EMU will not lead to a two-speed Europe, but a union of double strength."
"So this is our policy, this is our position and I think that all countries in Europe - euro members and non-euro-members - have an overwhelming interest in a strong Europe and a healthy euro," said the diplomat.
In Mulmenstadt's words, non-euro countries will not be ignored in joint oversight of banks. The system is developed in an effort to allow troubled banks to receive money directly from European financial rescue funds.
The ambassador who has more than 30 years of experience of diplomatic work said that Berlin's opinion on the banking union was that it should have quality, not speed as its priority: "It should focus on systemic banks and so-called toxic banks."
"We think that non-members of the euro zone shall participate in the negotiations on the banking oversight, and participating non-euro countries should have real voting rights. We want to establish an effective supervisory mechanism involving the ECB for the banks in the euro zone and in those member states that wish to join," the ambassador said.
Lithuania has so far been cautious about accession to the banking union, if all matters in the union were to be addressed by the European Central Bank, which does not represent non-euro-members. Nevertheless, support has been given to proposals that monitoring issues be addressed by a special agency involving all countries regardless of the currency they have.
EU should control national budgets
The German ambassador said that his country appreciated Lithuania's efforts to carry out austerity policies and strictly control its finances: "I think we see eye-to-eye on fiscal policy."
Nevertheless, speaking about the EU in general, the diplomat underlined Germany's aspiration to monitor on the EU level whether national budgets of member-states are in line with deficit and debt restriction requirements, although the formation of the budgets would stay a national competence.
"We need to strengthen economic coordination within the euro area with binding commitments. We want binding rules to ensure that national budgets are in conformity with European rules," Mulmenstadt said.
"No one wants to prescribe how a national budget is composed, this decision rests with national parliaments. The budget is a fundamental right of national parliaments, and we do not want to change that," he added.
"I would say that national parliaments will not lose a single right but we get a more efficient control by EU institutions. Thus we all gain more security and stability," the German ambassador said.
In his words, Germany agrees that amid increasing numbers of decisions made on the European levels, it is crucial to seek a more transparent decision-making process, with an adequate role for the European Parliament and national parliaments.
"To find the right balance also means to strengthen the principle of subsidiarity: all Brussels decisions should be made only on those questions that need to be made at the European level," he said
EU budget cannot grow amid universal austerity
Although European discussions on whether the continent would benefit more from austerity or stimulation, both Lithuania and Germany agree that economic growth is not possible in disorderly public finances, yet use the concepts differently in the negotiations on the future 2014-2020 EU budget.
Lithuania, along with other poorer countries who receive money from EU Cohesion Funds, do not want drastic budget cuts, saying that only an ambitious budget can stimulate economic development and creation of jobs. Meanwhile, richer Western Europeans who pay much to the shared budget emphasize that the organization's budget cannot remain unchanged amid austerity in member-states.
"Our position is, and we are strict on this point: one percent of the GDP of the European countries must be sufficient. In all of Europe, national budgets are cut, consolidation and austerity dominate headlines. In such times, we simply cannot imagine that the European budget could grow," said the German ambassador.
The European Commission has proposed a budget of more than 1 trillion euros; however, officials familiar with the situation say that opposition from Germany, France, and Great Britain could lead to slashes – consequently, Lithuania may have to live with lower than expected structural aid and smaller payments to farmers, as well as do without more aid to decommissioning of its Ignalina nuclear power plant (NPP).
"We understand that there are very difficult problems at this moment. But given the experience of the past, we think we can overcome difficulties in a joint effort and find a compromise," the ambassador said.
EU member-states expect to agree on EU budget during a summit in Brussels next week. Lithuania will be represented by President Dalia Grybauskaitė.
Lithuania and Germany should foster economic ties
Touching upon bilateral relations between Lithuania and Germany, the ambassador says they are "excellent," recalling that Germany's Chancellor Angela Merkel has visited Lithuania, while Lithuania's Grybauskaitė has gone to Berlin twice. Consultations between Lithuanian and German foreign ministers are held on a regular basis.
"I see potential for more cooperation in the field of economy, especially in vocational training, where we can offer a lot. I think this is a German trademark and good vocational training is one reason why Germany at the moment is so stable in economics," Mulmenstadt said.
"I think this would be important for Lithuania as well, where youth unemployment is quite high," he added.
The ambassador noted numerous opportunities in environment policy, waste management, and renewable energies.
Strong EU defense policy does not mean less NATO
Mulmenstadt, who has been heading Germany's diplomatic mission in Vilnius since October 2011, also ruled out fears voiced by some Lithuanian officials that the idea of some larger European countries to step up EU forces could undermine NATO and European ties with the United States.
"NATO and commitment of the United States to Europe are essential, for Germany as well. We will work together with NATO. On the other hand, we have to do more for our own security," said the ambassador.
"We are still the biggest economic group and region, largest and the most prosperous region in the world. We have all the means to take care of our own security. That means pooling of defense capabilities, that means a reform of our own security policy," the diplomat told BNS.
"But to be clear: more European security and defense policy does not mean less NATO for us," he added.
