Brussels, 13/01/2011 (Agence Europe) - At a public hearing organised at the European Parliament on Thursday 13 January, the president of Bocconi University in Milan, Italy, and former European commissioner, Mario Monti, invited the European Parliament to closely link the question of changing economic governance in Europe with implementation of the single market. He said it twas important in this connection to make a bridge between the single market and the package of economic governance measures. Monti said it did not make sense for the legislative package to be silent on encouraging the integration of national economies by means of a deepening of the single market. In response to a question from Sylvie Goulard (ALDE, France) who wanted to know how this connection could be introduced in practice in the draft legislation, he suggested incorporating references to priority, long-term investment. He said it twas important to stop member states from listing most of their spending under the “Investment” heading in order to get round EU budget rules. Referring to his report on stimulating the internal market (see EUROPE 10237), Monti did not contradict Philippe Lamberts (Greens/EFA, Belgium) who said it was crucial for economic integration to be achieved through fiscal measures as well, saying that economic integration was not feasible without fiscal coordination measures. Mario Monti called for a special meeting of the European Council to be convened to discuss economic governance.
Eurobonds. There should be no worries about the joint emission of eurobonds by countries in the eurozone, explained Monti, particularly in countries with good budget or countries worried about their borrowing costs increasing. He said that the economic analysis showed that it was simply not true that Germany's borrowing costs would go up. The EFSF was set up in the spring of 2010 to aid eurozone countries and it could become the EU agency responsible for issuing eurobonds. On Wednesday, the European Commission called for the EFSF, an intergovernmental fund, to be increased (see EUROPE 10292), echoed by the European Central Bank on Thursday (see above). In order to set up eurobonds, a change would be needed to Article 125 of the Lisbon Treaty that bans any financial bailout of a member state, pointed out Werner Langen (EPP, Germany).
Professor at the Catholic University of Leuven in Belgium, Paul de Grauwe, said that eurobonds were an initial step towards political union in the EU. In response to a question from Jean-Paul Gauzès (EPP, France) who asked which country would end up paying back the sovereign debt issued jointly, he said that sustainable debt would not need to be paid back because it could be continually rolled over. Whether a debt is sustainable or not depends on the interest rates, he explained, because with interest rates of 9% and over, debt becomes unsustainable. Portugal rolled over ten-year treasury bonds on Wednesday at a rate of nearly 7%. (M.B./transl.fl)