Brussels, 14/09/2011 (Agence Europe) - The three main EU institutions - the Council of Ministers, the European Commission and the European Parliament - expressed concern during a debate at the European Parliament in Strasbourg on Wednesday 14 September about the deleterious impact of the eurozone sovereign debt crisis on Europe's credulity, casting doubt on its ability to take speedy, unified action to deal with it. The Commission and a number of MEPs said that the situation demanded a qualititative shift towards genuine economic and budget integration, based on the Community method.
The Polish finance minister, Jacek Rostowski, speaking on behalf of the Polish Presidency, said that Europe was in danger and there was the risk of war breaking out in Europe if the eurozone were to cave in. Based on research carried out by a Swiss bank, he said it would cost a highly indebted country 40% of its GDP to leave the eurozone in the first year, and then 10% to 15% a year in the following years. It would cost a rich country between 10% and 25% of GDP in the first year if it were to leave the eurozone, forcing unemployment up to over 15%. He said he favoured any measure that would save the euro and hence save Europe by increasing economic integration in the eurozone, as long as it was not used as an excuse for introducing a two-speed Europe.
The president of the Commission, José Manuel Durão Barroso, said that the money markets and ordinary people alike believed that Europeans had not yet taken the right decisions to deal with the crisis. He called for ratification of the 21 July eurozone decisions before the end of the month (decisions about the details of the second Greek bailout and giving the EFSF bailout fund greater powers). Like Rostowski, he urged the EP and Council of Ministers to conclude their negotiations by the end of the month on reform of the Stability and Growth Pact (see separate article). By the end of the year, other proposals are to be unveiled on insider trading, financial rating agencies and a financial transaction tax. Commenting on the debate on boosting economic governance, Barroso said the intergovernmental system had failed to work in the past and would fail to work in the future, and even the EU's international partners expect it to become more integrated. He said that it was time for a new federalist movement, and people should not be scared off by the term, because it meant greater European integration through the Community method, which was exactly what was required. He said the European Commission would be unveiling proposals in connection with eurobonds and their feasibility, some of which would require changes to the European treaty.
The EU economic and monetary affairs commissioner, Olli Rehn, hoped the Wroc³aw ECOFIN Council would conclude the talks on the second Greek bailout and the collateral Finland is demanding for its share of the loans. He said people accusing the Commission of acting too slowly had got the target wrong because it was back in May 2010 that the Commission's proposal for a European Financial Stability Mechanism (which incorporated collateral) was rejected because it looked too much like a system of eurobonds. Echoing Barroso, he said that too much intergovernmentalism and lack of the Community method were acting as obstacles to action and warned that pooling some of the eurozone countries' debts would inevitably lead to increased budget surveillance and increased economic coordination. He wondered whether public opinion was prepared to agree to a further transfer of sovereignty from the national to European level.
French MEP Joseph Daul, chair of the EPP Group, said the time had come for the eurozone and any other countries wishing to take part to take a stand and introduce measures together to put an end to doubts about Europe's ability to deal with the crisis. He said the eurozone countries should introduce simultaneous measures to turn economic government into a reality, measures like a drastic restoration of budget discipline, ensuring the pension system was economically viable, harmonising company taxation, investing in education and research, and encouraging people to save more. He said this would amount to a Big Bang, and would introduce a United States of Europe, but could also simply be qualified as greater economic coordination. Everything must be done to protect European lifestyles as much as possible, he added. Martin Schulz (S&D, Germany) said the crisis jeopardised the very process of European integration and on behalf of the Social Democrats, Schulz (who is a candidate to become the next EP president) called for huge EU institutional involvement in ensuring coherent economic and budget policies and for the introduction of a golden rule (budget stability). He said that the burden of this should be imposed on ordinary people in a fair and proper manner because people were suffering right now from wage restraint and lower pensions, at a time when financial bonuses were back to the shocking levels of 2008. People who can afford to pay more should do so, rather than squirreling away their cash in tax havens, he said. Unlike Rostowski, however, he did not think that a war would break out because if people were united, they would emerge from the crisis stronger, rather than weaker.
The chair of the ALDE Group, former Belgian prime minister Guy Verhofstadt, pointed out errors of strategy and method committed by the people who introduced the single currency because it is not possible to have one currency and 17 different budget and economic policies and yet have the budget discipline required to ensure the euro operated properly. He pointed out the Liberals' solutions to the crisis, namely introducing genuine economic governance, steered by the European Commission; introducing a eurobond market because the ECB cannot continue to buy up eurozone sovereign debt indefinitely and Europe cannot continually live off savings from emerging economies; introducing an action plan for growth and jobs like the one unveiled by Barack Obama; and respecting tight budget discipline. The co-chair of the Greens/EFA Group, Rebecca Harms (Germany), expressed doubt about Europe's ability to act, saying that Barroso's various speeches had shown that he was not the man who could get Europe out of an intergovernmental union. On behalf of the GUE/NGL Group, Lothar Bisky criticised the way the crisis had been allowed to hit the poorest and had led to cuts in expenditure to encourage the European spirit in areas like culture and youth exchanges.
On behalf of the Conservatives, Derk Jan Eppink of the Netherlands said that it was inevitable that Greece would go bankrupt and it would have to leave the euro and devalue its own currency in a bid to end the crisis. Nigel Farage (EFD, UK) criticised European economic governance which, under order from the part-time dictators of the creditors, had killed off democracy in Greece. He said it was no accident that the Greeks were burning the European flag and urged Barroso to stand up and be a man, and admit that he had been wrong. Barroso ignored the comment, being busy reading his speech notes.
EU action to tackle tax fraud
The feeling of urgency and, inevitably, déjà vu, that emerged from the speeches by the political group spokespersons dominated the remainder of the debate. Despite a few outbursts from Eurosceptics who believe that the euro is the problem rather than the solution, MEPs called for EU solidarity and rapid and effective implementation of the new economic governance legislation. In respect of Greece, although a handful of MEPs are calling for it to leave the eurozone, others call for further aid for Greece, particularly Marielle De Sarnez (ALDE, France), who explained that the bankruptcy of a member of the eurozone would mean the bankruptcy of Europe as a whole. Echoing her, Belgium's Marianne Thyssen (EPP) said that everything must be done to save Greece. French MEP Pascal Canfin (Greens/EFA) urged the Commission to follow the United States' example and fight every day to get Switzerland to publish details of the holders of Swiss bank accounts as some €200 billion has been hived away in Switzerland by Greek taxpayers. Similarly, the chair of the EP's employment committee, French Socialist Pervenche Berès, asked Barroso what he was doing to ensure the EU did all it could to negotiate with Switzerland because if the political will were there, it would be possible for the EU to negotiate as strongly as the US. Berès hoped for a democratic and social progress dimension to be included in the eurobonds proposals. In this domain, like for the tax on financial transactions, British Labour MEP Stephen Hughes feared that too little was being done and too late. Another S&D member, Italy's Leonardo Domenici, called for self-criticism, asking whether the EU institutions, including the ECB, had always acted well, acknowledging that policy would always lag behind the markets. He said the solution was greater vision and focusing on growth and jobs.
Germany's Werner Langen (EPP) said that Europe was not about to go under, but he criticised delays at the Commission in checking that the anti-crisis measures had been properly implemented. He said Barroso should use his State of the Union speech in a fortnight's time to tell countries straight that they must act together rather than separately. This view was shared by Italy's Mario Mauro (EPP), who wanted the State of the Union speech to give details of how to solve the crisis. There are special rules for companies in liquidation, said French EPP MEP Jean-Paul Gauzès, suggesting that something similar could be introduced for EU member states.
Finnish Liberal Carl Haglund said that his government and his party had demanded collateral for Finnish aid to Greece, seeing the demands as an expression of doubt that the bailout would actually work. He said that all countries were responsible for the situation, however, including both Finland and Germany. French MEP Sylvie Goulard (ALDE) said she was battling with her conscience, wondering whether she should criticise governments that want to ensure the rules decided at EU level were properly implemented, because once adopted, such rules should actually be monitored by the European Commission. Fellow ALDE MEP, Anni Podimata (Greece) said that Greece would be judged on the outcome, but had to be given a chance. (M.B./L.G./transl.fl)