Local view for "http://purl.org/linkedpolitics/eu/plenary/2001-10-03-Speech-3-173"
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"en.20011003.6.3-173"2
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"Mr President, I, too, would like to offer a warm welcome to the Moroccan delegation with us today. I shall also endeavour to analyse two issues confronting us, namely the Growth and Stability Pact and the informal ECOFIN Council and shall attempt to report on both during my first speech.
Following the events on 11 September, political leaders showed their determination to act swiftly and appropriately to eliminate the risks of a lengthier slowdown. To this end, we must also maintain our medium-term objectives, and move through our agenda more swiftly. I have in mind in particular the Lisbon agenda. We need to modernise our economies quickly so we can reverse the slowdown as soon as possible and increase our capacity for growth.
As I stated earlier, the declaration following the informal ECOFIN confirmed the commitment of Member States to the framework, rules and implementation of the Growth and Stability Pact. As the presidency has pointed out, slower growth will affect the nominal value of budgetary positions. Departure from the objectives ought, however, to be limited.
The Growth and Stability Pact is a suitable framework for budgetary policy in times when the economy is developing well and in less good times. It makes it possible to implement the most appropriate budgetary policy for each set of circumstances. It is possible to resort to all the possibilities provided in the pact. The automatic stabilisers will be more effective if the slowdown is greater than anticipated. The manner and extent to which these stabilisers operate will depend on the situation of each Member State. Those states closer to balancing their budget will obviously have more room for manoeuvre.
Current budgetary situations result from compliance with existing budgetary rules, and have enabled the European Central Bank to adopt a flexible monetary policy. In particular, they have made it possible for the Bank to take the right decision quickly and reduce interest rates by fifty basic points on 17 September. An increase in deficits over and above what can be justified by the operation of the stabilisers would reduce the options open to the Central Bank as regards possible future cuts in rates of interest.
The European Council requested the Commission to submit a study of the likely evolution of the economic situation together with the recommendations it envisages to the forthcoming European Council at Ghent. The report will have to be viewed as an ongoing systematic exercise allowing for adjustment of the assessment of the evolution of risks and the possible consequences.
My second comment concerns action to combat the financing of terrorism. The ECOFIN statement gives prominence to a number of specific actions. Firstly, the matter of the review of the directive on money laundering. This is currently under negotiation, as you are aware. I should like to emphasise once again, on behalf of the Commission and in line with the ECOFIN statement at Liege, that we attach great political significance to the swift conclusion of this process. It will send out a clear signal of the Union’s commitment to stamping out criminal activity supported by money laundering.
I should also like to highlight the Commission’s approval of the draft regulation on specific measures to freeze the assets of individuals or entities involved in the financing of terrorist activities. We hope the Council and Parliament will deal with this as a matter of urgency so that it can be implemented immediately. It gives a clear indication of our political determination to grant no respite to those who attack political coexistence and the freedoms of all citizens.
The ECOFIN Council also agreed general guidelines on government intervention concerning the insurance problems facing airline companies. The ECOFIN statement invites the Commission to broaden the remit of the
group set up in the framework of the Transport Council to include insurance problems. The statement also specifies that the Commission must be notified of any measure taken by governments, including financial amounts. This will enable the Commission to discharge its responsibility of ensuring that such measures are compatible with Community legislation and to ensure consistency between the responses by the various Member States.
The Commission is drafting a report on the impact of the attacks on 11 September on the air transport industry.
There was also an opportunity at the informal ECOFIN to pursue the discussion on preparations for the introduction of the euro. Such discussions have been held at regular intervals. The Commission is drafting a report on the subject for the forthcoming European Council at Ghent on 19 October.
The Liege Council on 22 and 23 September 2001 focused on the economic impact of the terrorist attacks on the United States.
At Liege I appealed to the Member States to pay particular attention to three aspects which seem to me crucial at this juncture. Firstly, the problem of supplying small traders in advance. They need to be informed and convinced of the commercial advantages of advance supply. It is also important however to find ways of helping them to work with the banks. The latter should offer fair debit conditions for the amounts in euro received by small traders before 31 December 2001. In addition, it is essential to provide specific training for small traders and for all those working on the tills in any kind of business.
The third issue causing us concern is monitoring of the prices of goods and services over the period of the changeover to the euro. We cannot go through the process of calculating the harmonised consumer price index every week, nor would it make sense to do so. Nonetheless, we can however provide the citizens with information on the evolution of certain key prices in a transparent manner. As this exercise is to be undertaken by government agencies, transparency and objectivity will be guaranteed, and the sample chosen will be appropriate.
The informal ECOFIN also agreed with the Commission’s proposal to establish a common European network to organise exchange of information during the period when notes and coins are to be introduced. This network will start to operate at the beginning of December in close cooperation with the European Central Bank’s Cash Changeover Committee.
The last issue I would like to deal with is the debate on globalisation. The Commission has followed the public debate on globalisation closely, including the debate on the so-called Tobin levy or tax. We have taken note of ECOFINs interest in receiving a report on these issues. This debate focuses on two clearly relevant objectives on which we share the concerns expressed by many of the participants in the debate on globalisation.
Firstly, to avoid excessive fluctuation in the rates of interest which could prevent the hoped-for economic development of developing countries. Secondly, to find sources of additional finance to combat poverty.
There is no single instrument allowing us to attain both these objectives at once. The Union and other countries, international institutions and other groups have developed a range of instruments and policies in an attempt to work towards these objectives. More and better action could of course be taken, and the Commission is prepared to explore new possibilities.
As originally defined, Professor Tobin’s idea of imposing a tax on foreign currency transactions was intended to put a damper on international monetary markets. It was put forward as a second best solution to put the brakes on short-term speculative movements.
The Commission has already made its point of view clear on a number of occasions. A tax on monetary transactions is not an effective way of dealing with the problems arising from excessive volatility of financial flows or with inequalities between countries. A wide range of instruments should be drawn upon. The Tobin levy or tax is not the magic wand allowing us to deal with all the challenges which have arisen.
We need to consider a wide range of instruments in our efforts to attain financial and monetary stability. A global approach to the financial edifice is called for, both at internal European Union level and at international level. This should include regulatory frameworks, institutions and the problem of money laundering.
A wide-ranging approach to the financing of development is also required. Different instruments can be used to deal with poverty, debt reduction, the supply of international public goods and the protection of the environment. The Commission is prepared to make an active contribution to the debate on the instruments to ensure coherence between globalisation, sustainable development and world governance. I am sure we can also count on support from Parliament and the Council.
I should like to refer to three aspects of this impact discussed at ECOFIN. Firstly, the economic situation. The opportunity was also taken to discuss the Growth and Stability Pact.
These issues are of course beyond the Union’s strict sphere of competence. We should tackle them together with other countries and institutions. The Commission is ready to respond to the Council’s invitation to continue working on how best to respond to the key objectives I referred to. In any case, part of this work is already under way within the Commission. We are currently preparing a report on the external dimension of sustainable development. This is due next January and is aimed at the Río+10 conference to be held in Johannesburg next year.
Ladies and gentlemen, these are the key issues I wanted to share with you.
Secondly, the financing of terrorism.
Thirdly, the problems airlines are experiencing with regard to insurance.
I shall also comment on two other important matters raised at Liege, namely preparations for transition to the euro and issues related to globalisation.
Concerning the first point, I should emphasise that the attacks on the United States have strengthened our conviction that international cooperation on financial and political issues is essential. Further, coordination of economic policies within the European Union must be strengthened.
As from last year, the slowdown of economic activity in the United States and the rest of the world has been having a greater impact on the European Union than was originally anticipated. The tragic events in the United States have increased uncertainty and the negative risks for anticipated general growth. We cannot act as if nothing had happened, but at the same time it is very difficult to produce an accurate estimate of the potential impact of those acts.
Within the European Union, growth will be well below 2% this year. We are however still hoping for a gradual recovery of internal demand in the coming quarters. There are a number of reasons for this: lower inflation, recent tax reductions and more favourable monetary conditions. The risks should therefore be manageable. We must, of course, monitor economic changes very closely so as to adjust economic policies as necessary, both in the Union and in each of the Member States."@en1
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