Brussels, 19/05/2010 (Agence Europe) - At a plenary debate on Wednesday 19 May 2010, MEPs called for genuinely united economic governance at EU level. Several MEPs urged the EU's twenty-seven Member States to speed up work to boost the coordination of economic policies, hoping that the European Commission would be fully involved.
The President of the Council, Spanish European affairs minister Diego López Garrido, explained that the EU had stopped at monetary union but that the stronger governance mechanisms decided upon by the Council now put the EU on the road to economic and monetary union, describing the outcome of recent weeks that have tended to focus on Greece but which arise from a global financial crisis that became apparent two years ago and has had an impact throughout the European Union. Recognising that the EU has reacted rather slowly, Lopez Garrido said that the EU had managed to take united and tangible action. Damage limitation had been required at first but it was important now to start preparing for the medium and long=term and get manufacturing rolling again - which was the aim of the new EU 2020 Strategy drawn up by the European Commission. The taskforce headed by Herman Van Rompuy will be meeting on Friday 21 May 2010 to examine measures to boost economic governance, a crucial element of which is budget discipline. The debate must examine whether to introduce a tax on financial deals (see EUROPE 10141 on the views of the European Parliament's political parties), argued López Garrido, pointing out that reform of the global financial system had been a huge subject of debate at the recent EU-Latin America and Caribbean summit in Madrid. He said that a precondition for successful introduction of economic governance was full involvement from the European Parliament and the Commission.
EU Economic and Monetary Affairs Commissioner Olli Rehn said that the European Union had been able to come forward with a credible package and had shown the markets that it was determined to protect the euro in order to ensure sustainable growth and create jobs. Following on from the Greek debt crisis, Spain and Portugal have decided upon budgetary consolidation and deficit reduction measures that would entail sacrifice but made sense. He said the Commission would be assessing the measures over the next fortnight. Fiscal stability is the immediate priority but this will inevitably take different forms depending on the economic vulnerability of the country in question and the degree of budget manoeuvrability. Rehn said that the euro's first decade had been a success but the crisis had revealed systemic weaknesses to which a solution would have to be found and this was the aim of the 'ambitious' measures unveiled by the European Commission on 12 May 2010 (see EUROPE 10139) to introduce a crisis management and anti-contagion system based on: prevention rather than cure, tighter budgetary surveillance and returning to macroeconomic balance and sustainable growth. Rehn admitted that stronger budgetary surveillance and giving the EU institutions the power to examine countries budgets before they are passed (or before they are unveiled) by national parliaments is seen by some as violating national parliamentary sovereignty, but said this was not true. Rehn pointed out that he had been a parliamentarian himself in the past. He commented on macroeconomic measures to cut the widening competitiveness gap between EU Member States, saying that the ECOFIN Council had taken an important decision to let Estonia join the euro (the decision is expected to be formally finalised in July 2010). He said the facts spoke for themselves - average EU national debt is 75% but in Estonia it is only a tenth of that, 7.5%.
The European Union has finally taken action, said French EPP MEP Joseph Daul, congratulating the Commission on its action and urging it to use the 'no claims bonus' system used for car insurance and using financial penalties where necessary. Understanding the anger of people who suddenly have to make sacrifices for a foreign country, he called on Europeans to change their mindset and behaviour and start thinking as Europeans. He said that if cuts had to be made, then MEPs and European civil servants should set the example. The legitimacy of the capitalist system as a whole is jeopardised by the crisis, commented Martin Schulz (S&D, Germany), slamming criminal speculation (like the way extreme speculation had emptied the coffers of a Californian teachers' trade union's pension funds) and calling for tight controls on credit rating agencies. Schulz said that nationalist rhetoric was not the way forward, calling instead for genuine European economic governance. This is certainly a crisis of governance, said Guy Verhofstadt (Belgium, chair of the ALDE group) with Member States thinking they can solve problems with a 'trade union formed of national interests' rather than using the 'Community Method'. Verhofstadt told the President of the Council to tell the Council members to stop talking about the euro and let the Commission and the EIB get on with their work. He urged the Commission to come up with a governance package in the next few months because the taskforce's ideas will not be available until October, which was far too late. He said the governance package should include a boosting of the Stability and Growth Pact - with penalties and peer review of budgets before national parliaments decide upon them. Verhofstadt said this was not a matter of sovereignty but instead of loyalty to the euro and the Stability and Growth Pact; a good EU 2020 Strategy was needed (it is not convincing in its current state, he said), led by the Commission; a European bond market; and a European Monetary Fund should be set up, managed by the Commission and the EIB rather than the eurozone countries.
The Greens/EFA hope to be constructive on this issue, explained Rebecca Harms of Germany, as long as certain conditions are met - true coordination of budget policies and budget discipline, more joint economic policy and a tax on financial deals. Not to mention the fact that any EU strategy must not ignore countries' social responsibilities for health, education and culture. Speaking on behalf of the GUE/NGL group, Lothar Bisky of Germany called for a Social Europe - people should come before bailing out the banks. Can the crisis be solved by greater European integration? Timothy Kirkhope (CRE, UK) does not think so. He says that rather than new systems, what was required was genuine desire to actually apply existing systems. He pointed out a crucial language difference in the documents adopted by the Council in March - the English version talks about 'economic governance' but the French version talks of 'economic government'! Kirkhope said the success of the euro was important for everyone and countries not in the euro had to take their responsibilities serious. Grateful for the aid for her country, Niki Tzavela (EFD, Greece) said that the IMF has extended the time period for Greece to pay off its debts from three to five years and she hoped the EU would follow suit. She recommended the release of financing to help Greece get its economy back on track.
After the debate, Commissioner Rehn expressed pleasure at the European Parliament's and Council Presidency's support for tighter economic government, saying that the three EU institutions (EP, Council and Commission) must work together to reach the objectives they have set in this domain. To this end, he suggested a three-pronged approach: (1) Continuing to help Greece, along with other countries in the EU, with greater vigilance and determination to ensure stability in Europe; (2) Speeding up, intensifying and completing reform of the financial markets, acting as fast as possible at EU level and setting up a system for correcting market failings (on this issue, Commissioner Rehn said he fully agreed with the calls by Hannes Swoboda (S&D, Austria) and working to achieve a social market economy and a credible legal system; and (3) Boosting the Stability and Growth Pact through better budget surveillance. Olli Rehn said he wanted the crisis to be solved as soon as possible, along with financial market reform, echoing comments from Marian-Jean Marinescu (EPP, Romania). Rehn said the Commission would soon be unveiling tangible draft legislation in this connection. He reassured former Belgian prime minister Guy Verhofstadt, telling him that he was not going to wait for the taskforce headed by Herman Van Rompuy. He said he would listen to the taskforce but would also be working independently to boost economic governance. Speed was of the essence, he said, because all the various initiatives had to be driven forward. Olli Rehn ended by warning that the EU institutions had to work together if they were to achieve their objectives and he counted on their support. He added that it was also crucial to rally national parliaments to the cause and the European Parliament could help the EP act more speedily and with greater determination. Rehn said he was counting on the MEPs to pass resolutions and do all they could to boost economic governance in Europe. (L.G./G.B. trans fl)