Brussels, 28/06/2012 (Agence Europe) - Guy Verhofstadt, leader of the Liberal group in the European Parliament (EP), said on Thursday 28 June that the only solution to the crisis was the pooling of debts, a move to which Germany is still resolutely opposed. Verhofstadt argued that Chancellor Angela Merkel is wrong when she says that, in opposing such a move, she is protecting citizens. “Today, it is the taxpayer who is footing the bill”, he stated and he quoted the sums that had been paid out to the countries in difficulty. Pooling debt, by creating liquidity, would reduce interest rates. High interest rates are choking any recovery in Italy. Former Italian Prime Minister Romano Prodi agreed with him: “Mr Monti has done all that was asked of him; I don't think he could have done more. What more is wanted?” he asked.
Sylvie Goulard, who is a member of the EP economic and monetary affairs committee and rapporteur on budgetary oversight in the eurozone, said that structural reforms were necessary, and that, once they had been achieved, solidarity must take over. The previous day, Goulard said that it was not solidarity “when something is asked in exchange for what is being given”.
States could begin by giving a positive response to Monti's request at the summit, Verhofstadt suggested. Monti is set upon asking his European counterparts that an anti-spread shield (see related article) be put in place in order to prevent interest rate rises. Verhofstadt argued that it was “impossible to help the euro or Italy without a reduction” in interest rates.
He referred to the United States which has a much larger debt but which is enjoying interest rates “half the size of ours”. He can see only one reason for this: “We have no real federal authority”, which could play a stabilising role on the budget. For this reason, Verhofstadt, with the assistance of the other members of the Spinelli Group, has produced a draft “Federal Act”, 30 years after the Single European Act. The group has already sent the paper to the leaders of the member states, due to meet on the evening of the Spinelli Group press conference, thus putting the ball in their court. Verhofstadt argued that the Council should not take any half measures, as has been the case over recent months, and, if it does not manage to do what is expected of it, that is, 'a major step forward”, then “the Commission must assume its responsibilities”.
Isabelle Durant, who also attended the presentation of the Federal Act, expressed concern at the ability of the ordinary person in the street to understand what was being discussed at the Council. She takes a dim view of the intergovernmental approach where every leader seeks “to argue his/her point of view”, much preferring the Community method.
The Federal Act presented by the Spinelli Group contains 12 key components to provide an exit to the crisis. These seek to put in place banking, economic and budgetary unions and also a political union. The Federal Act is modelled to a large extent on the document produced by the four presidents (Barroso, Van Rompuy, Juncker and Draghi) to which the Spinelli Group “brought its contribution”, Verhofstadt said.
The group's paper proposes setting up an EU-wide deposit guarantee scheme and resolution fund and provides for the direct recapitalisation through the establishment of a European fund, which could, in the meantime, be provided by the EFSF and/or ESM. Thereafter, a single supervisor should be established in the eurozone. The ECB would seem the obvious choice for this role, Verhofstadt said.
A new strategy for economic convergence should then be set up, but this would also require economic policies to be developed. The “Growth Compact” would have its role to play, inter alia, in increasing EIB capital and the launch of “project bonds”, in order to pool the debts of the member states of the eurozone. A European collective redemption fund for debt over the 60% of GDP mark for a period of 20-25 years could be launched at the same time as “eurobills”, an instrument for pooling debts due to mature in less than one year. Then, by means of the 2014-2020 multiannual financial framework, the EU budget should be financed by own resources, without increasing the existing tax burden on citizens. The final stage is to bring in a common taxation policy.
The group also calls for the democratic legitimacy of the institutions to be improved, for example through a pan-European list to elect a certain number of MEPs. Similarly, it calls for at least half of the College of Commissioners to be drawn from people elected to stand in the European Parliament.
Last but not least, the group calls for a review of the terms of the Greek memorandum. (EL/transl.rt)