Brussels, 11/02/2010 (Agence Europe) - Growing concerns about stability of the eurozone and the euro as a currency put other issues in the shade in the talks between EU heads of state on Thursday 11 February 2010, initially scheduled to discuss the EU's economic strategy for the year 2020, but where the leaders issued a formal statement that the EU would stand behind Greece and provide economic support where required.
Greece. The highly awaited official statement by EU heads of state on the situation in Greece was intended to provide political and psychological support for the Greek government's action under George Papandreou. Expressing confidence and determination, the EU27 hopes to allay market fears and avert possible further action. The heads of state did not explain exactly what form any such action might take, but did suggest more direct aid for Greece may be forthcoming, stating that they will take action to prevent any destabilisation of the eurozone. In the statement published after a series of meetings of individual leaders with Herman Van Rompuy, the heads of state say that all countries in the single currency (and only these countries) are responsible for ensuring the stability of the eurozone. 'All euro member areas must conduct sound national policies in line with the agreed rules. They have a shared responsibility for the economic and financial stability of the area. In this context, we fully support the efforts of the Greek government and their commitment to do whatever is necessary, including adopting additional measures to ensure that the ambitious targets set in the stability programme for 2010 and the following years are met. We call on the Greek government to implement all these measures in a rigorous and determined manner to effectively reduce the budget deficit by 4% in 2010. We invite the ECOFIN Council to adopt at its meeting of 16th February the recommendations to Greece based on the Commission's proposal and the additional measures Greece has announced. The Commission will closely monitor the implementation of the recommendations in liaison with the ECB and will propose additional needed measures, drawing on the expertise of the IMF. A first assessment will be done in March' 2010.
Details of any intervention have deliberately been left vague. Nothing has yet been officially decided and decisions will not be taken in advance. Work will continue over the next weeks and months at Eurogroup and the ECOFIN Council on coordinating action that individual Member States take in support of the Greek government, which is the preferred mechanism at this stage. At a press conference, Van Rompuy refused to specify whether the statement's reference to possible coordinated measures meant that the Commission and European Summit were prepared to activate Article 122.2 of the EU Treaty whereby the EU can provide financial aid to a struggling Member State in the event of a crisis over which it does not have any control. Van Rompuy said that the politicians had not found it difficult to reach agreement and the statement expressed very clear and very firm political will. Money market reactions suggest that operators are not wholly convinced by the statement but Van Rompuy said it was too soon to make judgements about the statement. He said that a two-pronged approach was being taken, combining the Greek government's responsibility with EU solidarity, if required. Would such EU solidarity extend to other countries? Van Rompuy answered that the politicians had only talked about Greece and had not discussed any other countries.
José Manuel Barroso praised the action taken by the EU heads of state in expressing confidence in Greece and in the eurozone. The President of the Commission said that by defending a eurozone member, it was the entire European economy that was being defended. Refusing to speculate about future intervention, Barroso said that the question of financial aid had not been raised because the Greek government said it didn't need any.
2020 Strategy. Quantifiable targets, fewer of them and targets adjusted to suit the specifics of each country is what should be included in the 2020 Strategy, announced Van Rompuy. On how the strategy should be managed, he said the European Summit had demonstrated its boldness and ambition but admitted that the politicians had not discussed penalties although monitoring will be required to ensure that everyone feels involved and progress can be measured. Asked whether the European Summit had discussed how European economic governance was to be achieved, Van Rompuy answered that the concept had to be more than a credo and can be interpreted in many different ways. In terms of foreign policy, it was important, he said, that the EU explored how it can have a greater presence on the world stage and how it can get involved in the decision-making process at the G20.
Climate change and Haiti. Herman Van Rompuy said that climate change had come up at the very end of the summit but had been discussed in detail. The politicians decided to put the issue on the agenda for their March 2010 meeting. Van Rompuy said that Copenhagen had been highly revealing of the need for coordination among European nations being required if the EU is to have any weight on the global stage. José Manuel Barroso said that the EU High Representative for Foreign Policy, Catherine Ashton, had asked for extra military assistance to deal with pressing needs in Haiti and respond to the second call for aid from the president of Haiti and the UN Secretary General Bank Ki-Moon (see related article). ( trans fl)
Euro area sends “strong political message” to markets, says Papandreou
Speaking long after most of his counterparts had left, Greek Prime Minister Georgios Papandreou acknowledged the “bitter truth” that Greece was facing “serious challenges brought about by serious errors in the past”. He did not hide the fact that, facing one of the most gravest crises in modern history, Athens had lost some “credibility” in the eyes of member states and internationally, and, thus, “part of its sovereignty”. He said that the EU and the eurozone countries had, on Thursday, sent “a powerful political message” to warn financial speculators: if necessary, these countries will act in a coordinated way to protect and stabilise the euro area. There had been no detailed discussion of the arrangement for the aid mechanism which might yet come, “because we felt that this political message would be enough for the markets,” he stated, though such a matter would be an issue for the future. Papandreou repeated time after time that the Greek government would meet its commitments fully implementing the draconian structural measures provided for in its stability programme in order to bring down the national deficit by 4% this year. For that, he was banking inter alia on tackling tax evasion and fraud. “If we do not succeed in tacking this phenomenon, the situation will only get worse,” he warned. As for possible “additional measures”, they will be adopted when necessary. When asked who would monitror Greece's application of its commitments, he recognised that his country was “under observation” by the European Commission, the Ecofin Council and the Eurogroup. Greece, he added, had sought “technical” assistance, but “not economic”, from the International Monetary Fund, before denying that a Commission or European Central Bank envoy would be dispatched to Athens.
Angela Merkel and Nicolas Sarkozy: “Member states have to send message of solidarity to Greece -
Consensus on giving European Council role of EU “economic government”
German Chancellor Angela Merkel and French President Nicolas Sarkozy held a joint press after the meeting to express, together, their satisfaction at the statement adopted on Greece and also on progress made on economic government.
Greek financial situation. The statement is “strong and unambiguous” containing all the points needed for the moment, Sarkozy said: “our support for Greece, the credibility we give to the commitments made by the Greek government, the agreement between the Commission and the ECB on the measures taken and the Greek government's commitment to do more to abide by the 4% reduction (of budgetary deficit in 2010) if it is necessary”. Furthermore, the creation of monthly supervision will mean that the budgetary consolidation programme can be carefully monitored, he said. “In these conditions, we have decided to support Greece and its plan … This is a pledge on rigour and solidarity from Europe and commitment to rigour and transparency from Greece,” the French President said, underlining that Germany and France had led this debate “hand in hand”.
The statement on Greece sends a “very clear political signal” to the markets as it confirms the Greek government's commitment to reduce its budgetary deficit by 4% in 2010 and, if necessary, to take additional measures to achieve this, Angela Merkel stressed. “All eurozone member states therefore confirm that they are committed by the Stability and Growth Pact”, she said. “We, the other countries, accompany and support the process (for improving Greek public finance). We are aware of our responsibility. We belong together”, she added. However, Merkel went on to say: “There are rules to be respected. That is why it is important to underline that Greece has not requested financial support”. She said she felt the statement would allow market confidence to be restored.
The question was raised as to what additional measures the EU would be willing to use if the Greek measures announced and the political support of the EU27 were not enough to discourage speculation? Neither Nicolas Sarkozy nor Angela Merkel wished to commit themselves in such a debate that they consider as premature. “There will be monitoring (of compliance with measures) each month, the next being in March. At that time, we shall analyse the situation” and the EU could then, if necessary, take other measures, the arrangements for which would be “calibrated depending on developments in the situation”, Sarkozy told journalists. “If other events were to occur, perhaps review would be necessary. But today's declaration is very clear. Greece is part of the eurozone, it is part of Europe and we support Greece (…). We endorse this statement. It is not in our interest to promote any movement with interests (…). It is not our role to create agitation and speculation, to promote speculation or to throw ourselves into increasingly difficult scenarios (…). We had a decision to take today and we took it”, the French president said.
Angela Merkel was also very cautious. “Problems must be dealt with as and when they arise”, she said, pointing out again that Greece has not asked for any financial aid but that, on the contrary, has reiterated its commitment to take the necessary measures under the Commission and ECB's strict and permanent supervision. “That was the best signal for the euro possible today”, the chancellor concluded.
Economic Strategy EU 2020. “I did not hear a single country contest the need for economic governance. Everyone agreed”, Sarkozy said. “In the context of the European Council, we shall assess the situation, coordinate policies, organise initiatives. This was the subject of consensus around the table”, he said. There was also “consensus” on the fact that Europe should take “strong decisions” on matters such as reform of the financial markets, the follow-up to be given to the Copenhagen conference (on climate change) and on the volatility of raw materials. “On all such issues, we shall work together and we shall put proposals forward”, the French president said, also welcoming the “excellent initiative” taken by Herman Van Rompuy to convene this informal summit.
“We say that the member states must cooperate better and draw lessons from the crisis. This means that we, the 27 heads of state and government, must see ourselves as an economic government - we must coordinate better and ensure better external representation”, Merkel said. The future EU economic strategy should be focused on “several essential points that must then by respected by all”. “The credibility of commitments to be taken is the most important element”, she said. Germany and France have very ambitious objectives for the future French presidency of the G20, the chancellor continued, above all calling for a “new architecture for financial markets”. “France and Germany, two large Union countries, undertake to make their contribution in favour of better European coordination as one thing is clear - no country can attain its objectives by acting on its own. We belong together. France and Germany want to be the driving force to take things forward”, Merkel said.
Jean-Claude Juncker: Eurogroup will show solidarity with Greece under certain conditions - exclusion
of all eurozone recourse to IMF
The major subject discussed at the informal summit on Thursday 11 February was the case of Greece. After the initiative by Eurogroup President Jean-Claude Juncker to consult Eurogroup finance ministers on Wednesday 10 February, as well as the president of the European Central Bank (ECB) and the commissioner responsible for this dossier, Juncker commented at the end of the informal summit: '”We reached an agreement on a common approach, namely that the Greek government - after saying it was taking the necessary measures for reducing its deficit by 4 percentage points of GDP - said it was ready to take additional measures to its adjustment plan in 2010, if necessary. The whole of the Eurogroup would show solidarity with Greece and provide it with coordinated aid”. Addressing the press, he stressed the fact that “the Eurogroup members are ready to do everything to preserve solidarity. I am very pleased as Greece is not alone, is not isolated”, he said in essence. Jean-Claude Juncker pointed out he had had a preparatory meeting before the summit on Thursday morning with Herman Van Rompuy, José Manuel Barroso and Jean-Claude Trichet, to reach agreement on the declaration relating to the situation in Greece.
Speaking to a journalist who asked him whether he endorsed the remarks by Greek Prime Minister Papandreou, who said his country was a victim of conspiracy, Jean-Claude Juncker answered: “Yes, I believe Mr Papandreou is right. Greece suffers from a significant corruption problem and tax ethics is not beyond reproof. Greece alone is responsible for the situation it is in”. Asked by a journalist whether any reference had been made to aid mechanisms for a eurozone country that goes bankrupt, Jean-Claude Juncker said regretfully: “In this case, the Eurogroup will have a determined response. A European instrument seems to be ruled out. I had envisaged, with Italy, the creation of eurobonds but my proposal was not taken on board”. He went on to note: “As for the Eurogrop contribution, if there are bilateral aid schemes, these should be coordinated. So we must agree amongst ourselves on the amount that each state has to reimburse”. Two conclusions were reached today, Juncker repeated: (1) If Greece's current adjustment plan does not allow it to reduce its deficit by 4 percentage points of GDP, then the Greek government will take further measures; and: (2) If this is the case and if the financial markets follow suit, then the Eurogroup will stand ready to help Greece. He continued by saying: “If Greece does everyone it has to do, the eurozone will have a determined and coordinated response. We shall not resort to Article 122 of the Treaty, which deals with natural disasters or events that escape government control. The Greek case does not come under natural disasters. It is due to flawed Greek behaviour that has gone on for several years!”. And the role of the International Monetary Fund in all that? To this question, Jean-Claude Juncker exclaimed: “I rule out all recourse from the IMF. We are in the eurozone and this zone has instruments of its own! The eurozone has an average deficit of 6% and the United States 10% - but the United States does not apply to the IMF! IMF involvement in the way we settle our problems would be unfortunate intrusion, and the Greek government, moreover, rules out all recourse to the IMF! We agree as to the choice of instruments that must be set in place”.
On the subject of the second item discussed at the summit, namely the Agenda 2020, the Luxembourg prime minister called for national reform programmes, saying: “We agree on the elements that the president of the European Council, Herman Van Rompuy, has suggested on governance, namely fewer objectives and quantification of agreements, taking on the fight against poverty, improving employment rates and eliminating obstacles to growth”.
While satisfied with the response to the Greek crisis, Jan Peter Balkenende is not too pleased
at prospect of monthly European summits
Dutch Prime Minister Jan Peter Balkenende believes that the combined skills of the European Central Bank, the International Monetary Fund and the European Commission should allow “good control” of implementation of the measures the Greek government had undertaken to take. Speaking to press, he said he was satisfied with the consensus reached on a two way solution. He welcomed the fact that the Greeks themselves have to assume their responsibilities in facing up to their budgetary problems, and felt that “the IMF has to be involved”, as he had previously told the Dutch parliament just before the European Council.
Answering a journalist who asked him how much the Dutch taxpayer would have to pay, Balkenende replied “nothing for the moment”, because the approach adopted by the European Council meant precisely that the begging bowl did not have to be put round other countries.
Asked about solidarity if no one has to dig into their pockets, he replied , “It is too soon to say”, since we should not speculate. The main thing, he said, was that the Greeks “are sorting things out themselves”.
He said he had taken “quite a strong stance” against the proposal from Herman Van Rompuy to convene a Council meeting every month from the end of this year. We wanted there to be no more than four summits per year and put the new idea down to the “President's enthusiasm”. If, nonetheless, heads of state and government had to meet monthly, ther ewould have to be a good balance between the Ecofin Council, the Eurogroup and the European Council, he warned.
This first informal European Council convened by Van Rompuy, had been “efficiently” chaired, Balkenenede said. Finishing with a touch of humour, he said he had been delighted to have been surrounded by books in the Solvay Library: the only problem was that the floor creaked.
José Luis Zapatero feels there is reason to be “quite happy” with the day and solutions found
President of the Spanish government José Luis Rodriguez Zapatero said he was optimistic after the day. He began by stressing the importance of the meetings which took place on Thursday since they, above all, allowed cooperation among member states to be strengthened. The response to Greece's difficult situation was proof that the EU could take joint decisions. He felt that “a European and Europe-affirming response” had been brought. He added that “it's a positive solution, a compromise that is fully in line with what Spain wants to achieve”. For Zapatero, the EU is sure that the Papandreou government would succeed in reaching its targets. The message the EU gave is one of serenity. The EU “will help any country which has difficulties”. The other issue that the Spanish Prime Minister lingered over was the situation in Haiti. He said it was of particular concern for Spain which would see what it could do to help those “who have nowhere to go” as quickly as possible. Today marked the achievement, for the first time, of one of the objectives of the EU2020 strategy - cooperation. For that reason, “we must all be relatively happy”. He concluded by speaking about Parliament's rejection of the Swift agreement. He said he thought that the project had to be returned to, through dialogue with the USA, since the fight against terrorism was of the highest importance and he felt that “this rejection must not in any way affect relations with the United States”.
He also announced that there was a need for caution over the three Spanish citizens being held in Mali, and that Spain would do all in its power to secure their early release.
Poland welcomes solidarity between European countries
“The statement adopted is a guarantee that no EU country will remain without assistance”, said Donald Tusk after the informal meeting of heads of state and government. The Polish prime minister reaffirmed that the arrangement found was an arrangement “within the eurozone” and did not involve Poland. He nonetheless gave his assurance that “any action in favour of stabilising public finance” in Europe will be supported by Poland. Europe needs “solidarity and internal freedom of action” as well as great firmness externally if it wants to face up to competition from China or India, the Polish prime minister said. Earlier in the day, Tusk had confirmed that his country was able to take part in the aid mechanisms envisaged in favour of the Greek government and that solutions discussed (voluntary contributions or IMF support) were “acceptable” as far as Poland could see. Speaking to the press, Tusk also underlined that the proposals made by the president of the EU Council and the president of the European Commission on the new economic strategy for 2020 “were in line with Polish expectations”. (transl.jl)
Jerzy Buzek: We cannot accept allow the 2020 strategy to fail
“We are faced with excessive deficits and we have only 1% growth in the EU. We cannot in 10 years' time agree that our 2020 strategy has failed and we need a 2030 strategy!” said European Parliament President Jerzy Buzek. The response to such a situation is, “The EU2020 strategy has to be concrete, as binding and as targeted as the 1992 project was for the single market. We need a plan and a clear direction. We may be coming out of the economic crisis, but we are faced with excessive deficits. The stability of the eurozone, every separate country in it, is important, but it is also important for those who wish to joint he eurozone in the future. We have to show solidarity,” he said.
There should also be discussion on creating a European energy Community (EEC), Buzek said. 60 years ago, Robert Schuman called for a pooling of sovereignty in the energy of the 20th century, he noted, stating, “we should do the same for the 21st century. We need to invest in education, in new technology, in our human capital and in innovation. We wish to create the jobs of the future!”
Another clear truth for Buzek is that “the method of open coordination has failed”. The answer, he said was, “we have to return to the method that once worked - to the Community method”.
Then, it has to be said that the EU missed out on the technological revolution at the end of the 20th century. “If we fail, we will still be talking about the electric car while Tata will mass produce the electric car,” he argued. “We have to be at the forefront of the green economic revolution. We have the know-how and the technology to do this. We still have a short window of opportunity before others out-perform us in green technology,” he went on. (A.B./H.B./A.N./G.B./V.L.B./M.B./transl.jl/rt)
European Parliament plenary session