Strasbourg, 21/10/2008 (Agence Europe) - Just as he had done in July, on Tuesday 21 October, the President of the European Council, Nicolas Sarkozy, spent over two hours in a discussion with MEPs on the various crises the French Presidency has had to deal with. While stressing the need to “radically reform capitalism” and ensure European economic coordination, he proposed the creation of National Sovereign Wealth Funds to avoid predators buying European industries on the cheap, when their stock market values were low.
European Parliament President Hans-Gert Pöttering opened the session by congratulating Messrs Sarkozy and Barroso. “If European countries had not come to a joint response, if there hadn't been an agreement among European partners and if there hadn't been the euro, there is every likelihood that we would find ourselves in a disastrous situation today,” Pöttering said, adding: “The European Council under your leadership and working closely with the European Commission and the European Parliament ensured that the European Union was a decisive player in protecting the well-being of all our citizens to whom we are all responsible”.
Sarkozy stressed that, throughout all the crises that have followed one after the other over the last few months, the Presidency was determined that “the voice of Europe” should be heard, the voice of a united Europe which had “independence of thought … and was proactive”. “First of all we had the war in Georgia with Russia's totally disproportionate reaction,” he recalled, highlighting not only that the reaction was disproportionate, but also that it was in response “to totally inappropriate action”. He went on: “In four days, Europe brokered a ceasefire. In two months Europe achieved the end of the war and the withdrawal of occupying troops. Europe must not become involved in a new Cold War”. He had had to explain this to the Americans, who were unhappy that he had gone to Moscow, but a crisis with Russia was certainly not in Europe's interest. Today, what was important was that negotiations were beginning, he said, and he pointed out that President Medvedev had kept his word.
“The systemic financial crisis began on 15 September 2008, not on 7 August 2007”, Sarkozy said, stating that it was on this date that “the world, in disbelief, discovered that a bank could go bankrupt”. He had worked with the President of the European Commission on a joint position. First of all, the four G8 members had to come to agreement, then “banks had to be left once again to do their jobs”. “All of this is crisis management … now the real answers have to be brought” in order to “avoid any repetition of what has happened,” he said - hence the need for an international summit “to come to a new world system”. It was for Europe to “bring forward the idea of recasting world capitalism”. No bank, he said, that works with states' money must be able to work with tax havens, there had to be supervision of banks and hedge funds and there had to be reflection on other ways of remunerating trading room operators. For this, there were going to be several summits taking place from mid-November, he said. These summits would bring together the G8 and the G5 countries, along with Russia and China, and Sarkozy will propose a meeting of his counterparts to prepare for the international summit so that Europe can speak with one voice.
Turning to the energy-climate package, Sarkozy told a divided Parliament that “this package is based on the belief that the world is heading for disaster if it continues to produce as it is doing”. “It would be irresponsible and dramatic to abandon this reform because of the financial crisis,” he opined, adding that “if Europe doesn't do anything, our chances of persuading (third countries) are non-existent”. “We will have missed our date with history,” he warned, arguing for the treble 20% objectives and the timetable to be maintained. “We have a few weeks to convince a number of partners,” he said, acknowledging that “some economies are 95% dependent on coal and we cannot bring them to their knees”.
“The financial crisis has brought us an economic crisis. It's here. There's no point in forecasting it, because we're living through it!” he exclaimed, calling for a united response to this economic crisis as there had been for the financial. “United does not mean having the same response,” he added, calling for “a roadmap, harmonisation, coordination”.
Stressing that stock markets are at a historic low and that European companies can now be bought up by non-European capital while their stock exchange values are low, the French president suggested there should be “reflection on whether we, too, should create sovereign wealth funds in each of our countries and perhaps these national sovereign wealth funds could from time to time cooperate with each other”. As the US motor industry is to benefit from an injection of $25 billion, he asked whether the European industry should be left “in serious distortion with its US competitors”. This does not mean one should question the principles of the internal market, competition or state aid, Nicolas Sarkozy said, while calling for a powerful European industry.
“The crisis calls for reform of the European institutions”, he said, underlining the need to find a solution with Ireland to address the institutional crisis. “It is not possible for the eurozone to continue without a clearly identified economic government”, Nicolas Sarkozy said, adding that an “independent ECB” must be able to “dialogue with a real economic government: a government of the Eurogroup at the level of the heads of state and government”.
President of the European Commission José Manuel Barroso said Europe has shown it is able to influence the economy. He explained it was necessary to use the opportunities provided by the crisis to reform the international financial system and provide a “global response”. One must not “endure the crisis but mould it”, he said, taking the view that “Europe has shown it is up to the challenge”. He pointed out that he will be at the ASEM summit with Nicolas Sarkozy at the end of this week in the hope of convincing China and other Asian countries to take part in reform of the international financial system. Given the fact that it is “facing a serious slow down”, Europe must support growth by using every flexibility open to it but avoiding the “siren calls for protection”, the president of the European Commission said, stressing the role that can be played by the EIB (European Investment Bank) and the European Globalisation Adjustment Fund.
Joseph Daul of France, President of the EPP-ED Group, welcomed the exemplary action by the French EU Presidency during the two recent crises. Speaking of the Lisbon Treaty, he hoped the European Council in December would decide on a realistic but also demanding timetable and roadmap for overcoming the crisis. Martin Schulz of Germany, President of the Socialist Group, said the Bush deregulation policy has led to failure but that Europe has today an opportunity to jump into the void it leaves behind. “What is happening on the markets must never happen again - we need new rules and we expect them of you also, Mr Barroso!”, he said, evoking the supervision of banks, of hedge funds and private equity. “I have heard President Sarkozy, who is at the head of a conservative government, use Socialist language”, Martin Schulz said with irony, also jokingly mentioning the remarks made by José Manuel Barroso (“a former Maoist”) on regulation, and Joseph Daul, to whom he suggested PES membership. “But where, in your speeches, are the ordinary people?”, Martin Schulz asked, adding: “We need to boost purchasing power and not just aid to the banking sector”. ALDE President Graham Watson deplored the fact that the European Council's conclusions did not make any reference to the role of the Parliament in the adoption of the energy/climate package. He called for the timetable to be maintained and bemoaned the fact that the European Council was unable to reach agreement on an effective system for supervising financial services. “The French Presidency has demonstrated an energy and determination that has done Europe good”, the president of the Greens/EFA Group, Daniel Cohn-Bendit of Germany, said. He nonetheless called for a “minimum of self-criticism by a former finance minister and a president of the Commission who refused the slightest financial regulation just a few months ago”. Speaking of possible aid to the automobile sector, he said the German car industry already has money in tax havens and does not need more. He went on to call for a European ecological investment plan by the banks in which the states have stakes. Speaking for the UEN Group, Cristiana Muscardini of Italy called for a permanent presidency and for the institutional crisis to be addressed as well as for regulation of the financial sector. She thanked Nicolas Sarkozy for the immigration/asylum package.
“Many southern countries are on the brink of the abyss. They are the ones forgotten in international mobilisation (…). He who wishes to moralise capitalism has certainly a hard task ahead”, the French communist Francis Wurtz said, adding: “It may have sparked off in New York but the fuel that took fire is also in Europe … in a model that the Commission has adopted as its own”. British UKIP representative Nigel Farage told the French president he had not acted for the EU but at his own initiative, that he had no Council mandate when he went to Russia. And the financial crisis, he said, springs from failed financial regulation for which the model must be sought outside the Union, namely in Switzerland. Such comments are upheld by Bruno Gollnisch (National Front) who says the “Union is an outmoded framework” and that “we are now witnessing a return to bilateral and multilateral diplomacy”.
Nicolas Sarkozy calls for co-decision
In response to MEPs, Nicolas Sarkozy, immediately pointed out that the, “EPP has always believed in a Europe that protects”. He called for a partnership with Russia and stressed, “Russia has energy, Europe has technology…Russia has a demographic problem and is losing 700,000 inhabitants a year”. On the same lines as Joseph Daul, Sarkozy said, “if we have to support the banks, it will be to support savers”. He told Martin Schulz that, “When I talk like a European Socialist, believe me, you are not talking like a French Socialist at all: in the schism between Socialists, I choose Martin Schulz”. He told Graham Watson that he wanted last week's European Council conclusions to be no longer than eight pages and that the reference to the previous texts was enough to guarantee codecision from Parliament on the energy/climate package.
He affirmed that he was aware that they had a crying need for a commitment from the EP and exclaimed, “I am calling for co-decision” and told Daniel Cohn-Bendit that he was in extraordinary form, “you told me five times yes and twice no and your support is useful. He added that, “You are not, all the same, going to fight a presidency of the Council and a presidency of the Commission committed to the energy/climate package”. He advised Francis Wurtz to listen to Daniel Cohn-Bendit, when he talks about self-criticism and points out that the biggest economic and ecological damage was caused by collectivist systems. In response to Nigel Farage, he said, “I still support the values of capitalism” but the French president said that he did not accept, “the betrayal of capitalism” and added that he did not have the incontestable mandate but, “neither did the Russian troops when they went into Georgia”. He also told Farage that, “it is Europe that has helped re-establish the balance of the City, it has not been the United Kingdom on its own!”
The president of the European Council calls on Luxembourg to help reform financial sector
Addressing the German Social Democrat Hartmut Nassauer, who had posed questions about the future of the Lisbon Treaty, the French president repeated that “if it is not Lisbon, it will be Nice, and Nice means an end to further enlargement”. He told Robert Goebbels, the Luxembourg Socialists, “I am counting on Luxembourg's support for a profound rethink regarding the financial architecture outside and within Europe”. “I support your proposal for a European regulator,” he told Centrist MEP Marielle de Sarnez, before replying to French MEP Philipe de Villiers, “Forget about the ideal treaty which you know perfectly well will never exist!” He added, “What's wrong with European political debate is the lack of ideas. We have behaved like statues; we have followed the founders, but we haven't done like them. We haven't cleared new ways”. “We cannot continue with three, essentially American, rating agencies,” Sarkozy said, going on, “I believe in competition, but I have had enough of people wanting to make competition an end in itself, when it is a means to achieve growth”. Responding to Danish Socialist Poul Nyrup Rasmussen, he said that “the Americans have been living above their means for three decades and now it's up to the whole world to settle their debts”. “Russia stopped its tanks, withdrew its troops, is attending to talks in Geneva … as we asked it to,” he told Belgian Liberal Annemie Neyts praising the merits of a “strategy that was cool-headed, calm and lucid”.
“If the United States had had a Stability and Growth Pact, maybe we wouldn't have had this crisis,” said European Commission President José Manuel Barroso, noting that in Europe, too, failures in bank supervision were failures of national mechanisms. “We will have to see what we can do on the legislative level,” he added, going on to salute the “leadership of President Sarkozy on the energy/climate package”. He concluded by saying that “we have to come together in a situations like the one we are going through”.
Creation of sovereign wealth funds as offensive strategy
During the press conference, the presidents of the European Council and the Commission spoke of economic coordination and the creation of sovereign wealth funds. As Nicolas Sarkozy sees it, economic coordination “does not mean emptying the coffers, some of which are not very full” or “ensuring recovery by opening up the flood gates”, but simply ensuring coordination at the economic level as has been done at the financial level. José Manuel Barroso, for his part, hopes to strengthen economic coordination mechanisms albeit without questioning either the independence of the ECB or the acquis communautaire. Mr Barroso said he was willing to look at the matter of sovereign wealth funds, while wondering how to distinguish between those that are of a predatory kind and those that come about for economic reasons. The Commission president also notes that some member states (he cited Spain) have called on Arab countries to invest their sovereign wealth funds, including in their banks. “I do not consider sovereign wealth funds are a threat”, Nicolas Sarkozy replied, saying it is difficult to identify the reasons that lie behind sovereign wealth fund action. In his view, it is necessary to react to the current situation - of depressed markets - and, in this context, he feels the creation of national sovereign wealth funds in Europe is an “offensive strategy”. (O.J./transl.rt/rh/jl)