A general frame of reference exists. The outcome of last week's informal EU summit lends itself to two contradictory readings: the results are remarkable when compared to the situation a few months ago; they are disappointing if seen in the light of the hopes of the most ambitious member states. The text, which was "adopted by common accord" (a definition which goes further than the usual "conclusions of the Presidency") has been reproduced in our special edition 9979a (annexed to bulletin 9979), with a summary of the debates and press conferences; each reader may decide for himself or herself how to interpret them. My own view is that the former of two interpretations is correct: the EU now has a general consensus in favour of reforming the financial world. What progress, in just a few weeks! The EU has even revived the "Tobin tax" on cross-border transactions; even though this is not explicitly referred to in the final text, due to the reservation of one member state (United Kingdom), its resurrection is now inevitable.
In favour of radical reform. It is true that Europe's position needs to be completed and refined; gaps and differences of opinion subsist. But the distance travelled since the start of the year is colossal. If the princes who govern us maintain their steadfastness, the abuses and misdeeds of the financial circles will no longer be tolerated, yesterday's shameful speculations no longer permitted and the resulting scandalous profits banned. Much remains to be done, because the essential measures will only be effective if they are accepted globally, and the United States still has reservations on other issues. However, progress is anticipated from the Pittsburgh G20; it is to be expected that the positions do not entirely coincide ahead of the meeting. As far as the EU is concerned, it appears that a number of aspects could possibly be taken for granted, including reinforcing global economic coordination. For others, the EU will be sending the G20 "a strong political message", calling in particular not for guidelines, but for binding rules on bonuses and other variable remuneration; the conclusions of the European Council give details of the principles it wishes to see brought in. They do not go so far as to call for a specific upper limit on admissible bonuses, but the criteria indicated are significant in themselves: deferred payment of bonus remuneration to allow time to assess the longevity of the gains made, reduction in remuneration in the event of negative developments in the banks' bottom line, liability in the event of risk-taking, etc (see the common text adopted). Other elements have been raised, but no European position has yet been defined in detail. On the reform of the IMF, this will not be easy because the interests of the member states contradict each other; eventually, given the need to boost the weight of the large emerging countries (China, Brazil, India), the EU will have to move towards a common representation; we are not yet there.
Inevitable resurrection? The resurrection of the "Tobin tax" was referred to by a number of heads of government in their press conferences, even though the common text does not mention it, as no unanimous position has been reached. It is by no means certain that the United States, in control of the agenda of the Pittsburgh meeting in its capacity as host country, will introduce the issue into the debate. The very fact that it is currently being discussed in detail, however, is significant in itself; just a few months ago, it was virtually forbidden to even mention it. James Tobin had proposed this tax on international monetary transactions in 1972, long before he won the Nobel Prize (1981). He specified a tax of between 0.05 and 1%, stressing that the value of financial transactions is 100 times more than that resulting from trade in goods and services. The minimum rate specified (0.05%) would, according to updated calculations, bring in at least €20 billion a year. Jean-Claude Juncker, President of the Eurogroup, explained that the tax on financial transactions should cover the whole planet, but that the EU could start by bringing in a European tax on stock exchange transactions. The future of the EU is at issue. The scale of the issues under discussion and of the reforms underway is enormous, and it will take years to implement them all. This Wednesday, the European Commission will present the draft legislative package on financial supervision, several aspects of which are controversial (see our bulletin 9980). A number of experts and political leaders are of the opinion that the dossier on bonuses and remuneration, which will of course attract the attention of the general public, is not the most important one.
All of these issues are under discussion. The European Commission appears to have its mind made up, the European Parliament is getting ready to play an essential role and, within the Council, most of the member states appear aware of the need to rebuild the world of finance, brick by brick. The road seems to have been mapped out for them and the EU appears to have decided to follow it. Its future is at issue.
(F.R./transl.fl)