Local view for "http://purl.org/linkedpolitics/eu/plenary/2010-05-19-Speech-3-008"
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"en.20100519.3.3-008"2
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"Mr President, everyone is aware that we are living in a period of exceptional financial turbulence. This has been the case for a few months, and the origin does not go back a few months, but a few years, when the subprime crisis occurred in the United States.
Not only are recommendations being given in relation to the liquidity of its public accounts, but also regarding structural reforms in the pensions system and the need to undertake reforms in the health system. Then came 23 April, when an action mechanism was adopted regarding Greece. Yesterday, this mechanism was manifested for the first time in funds being sent to Greece by EU countries through the system of this agreed mechanism.
This is therefore the first expression of this short-term action, which is essential when a Member State is in serious difficulties, as is the case with Greece.
Naturally, also in the short term – and this was expressed very clearly in the oral question put by Mr Daul, Mr Verhofstadt, Mr Schulz and others – we need to have a strategy to get us out of the crisis. It needs to be a measured, controlled strategy and, of course, it needs to be aimed at avoiding the very serious difficulties in public accounts, but it also needs to maintain the objective of growth.
However, obviously a short-term strategy is not enough. We need to take medium and long-term measures. There are structural problems in the European economy; structural problems that were ultimately responsible for weakening Europe in the face of a highly volatile situation of extreme financial turbulence.
The European Union is taking and suggesting measures in the medium and long term that it is important to point out. This is firstly the case because they are going to respond to the type of crisis that occurred as a result of this serious economic situation affecting the whole of the EU and, in particular, the euro area system. In order to be able to respond to the crisis in the financial sector, the European Union has planned a series of measures that are being debated in the next few days in Parliament: a supervision package, which I hope will be adopted as soon as possible. I also hope that the Council and Parliament will reach an agreement in this respect. As part of this package, or in relation to it, the Economic and Financial Affairs (Ecofin) Council adopted a measure yesterday: the regulation of hedge funds, alternative funds or high-risk funds. I refer here to the question by Mrs Harms and Mr Cohn-Bendit, who place a great deal of emphasis on this aspect.
The perspective of action in the G20 also needs to be taken into account, also implementing what has been agreed in the G20.
Likewise, we have said that the European Union has structural weaknesses and that structural reforms are needed. The Europe 2020 strategy aims to do this, and it is based on the commitment of the Member States to tackle certain objectives through a series of integrated guidelines. These guidelines are also going to be accompanied by national plans, which will be designed in what are known as the reform plans. It should also be said that, along with the Europe 2020 strategy, the action that the Commission is adopting in relation to the whole of the production system is also important. In its communication on 12 May, it proposed the coordination of economic policies.
The Europe 2020 strategy is therefore a way of responding to the underlying problem in the productive economic system, preventing these fundamental weaknesses in the system in the future and making the Union’s economic system competitive and productive. It is also a way of aiming towards the objectives of technological added value, taking into account the social impact and therefore the need for specialisation in the labour market, employability and also combating climate change.
There is not, however, only a problem with the private financial system, with the productive structure, and essentially with the private sector: there is a problem with public accounts, which is also the focus of another aspect of the EU’s medium and long-term measures. These are the measures in the Commission’s proposal of 12 May, which the Ecofin Council began to debate yesterday and will continue to debate. These measures are aimed at maintaining budgetary discipline, guaranteeing compliance with the Stability and Growth Pact and establishing measures to resolve and prevent crises.
With this in mind, a task force has been created, which is going to meet for the first time this Friday, 21 May, chaired by President Van Rompuy. Its objective is budgetary discipline and it will be using the Commission document on coordinating economic and budgetary policies presented by Commissioner Rehn.
The origin was, therefore, a financial crisis in the private sector of the financial system, which rapidly became something that was affecting the real economy in the form of a deep depression, which, technically speaking, was a deep recession. This involved a decline in production and a significant increase in unemployment, which was particularly serious in those countries in which the property or residential construction sectors had a significant influence.
This relates to all the more long-term measures, in which we also need to include the debate that is beginning in the EU about tax on benefits in the financial sector and a tax that even the G20 is beginning to talk about, which is a tax on financial transactions, which is, in turn, being debated in the EU. This is something that Mrs Harms and Mr Cohn-Bendit emphasise in their question.
On this subject, it should be said that all the European Union institutions are working towards this. It was discussed at the European Council in December of last year. The International Monetary Fund was given the task of conducting a study on a tax on international financial transactions. It was discussed in the European Council in March, the Commission proposed it on 1 April, and it was also discussed in the Ecofin Council.
This is, therefore, another measure that will undoubtedly be discussed at the G20, and which is of the utmost importance; these are what I have called the medium- and long-term measures proposed by the EU. Yesterday, for example, at the EU-Latin America Summit in Madrid, a reform of the financial system was also proposed. In other words, the European Union is raising these issues in all the forums that it attends.
In short, Mr President, the steps are being taken and the conditions are in place to move towards what has been described as economic governance of the Union. The European Council is playing an active role in this, along with the Commission and Parliament as the legislative and controlling body.
So I think we can say – to conclude, Mr President – that it is true that the crisis has clearly demonstrated the shortcomings of the European monetary union in the absence of economic union, something that is provided for in the treaties but does not exist in reality. We have remained in monetary union, but we are not moving on to economic union. These measures adopted in the short, medium and long term by the EU are clearly taking the Union along a path towards economic union.
This crisis has weakened our economies and put the Union to the test, but it has not destroyed it, it has not fragmented it. The European Union has responded and, at times, we have felt that it has done so slowly, but it has acted surely. At times, it seems that it has been hesitant, but it has been united, and its response has been correct and appropriate to the challenges that we face at the moment.
I hope that the European Council in June will consolidate this move towards European economic governance, towards a united reaction to this crisis from the EU. I therefore also hope that it will adequately prepare the EU’s common position for the extremely important G20 meeting in Toronto on the regulation of the financial system and for the important debate on taxing international financial transactions.
There was an immediate reaction from the Member States and the central banks in order to prevent the financial system from collapsing, and there was also a reaction in relation to the real economy.
This reaction, of course, had consequences for public economies and public finances. We are now no longer talking about private finances, but about public finances. Firstly, there was a crisis of financial stability in public accounts as a result of very marked deficits.
There was also a crisis in sovereign bonds. This is what has been coming to the surface in recent months, encouraged by the actions of very volatile markets which, at times, have even been clearly speculative. These actions have also caused a significant rise in the interest that the markets require from the Member States when they are going to issue bonds. Moreover, this clearly affected the whole of the euro area, and therefore became a problem affecting not one, two or three countries, but the stability of the whole of the euro area.
That is the situation. Those are all the events, or the diagnosis of the facts that the European Union has taken into account in order to react and act in response to this, and I feel that the EU has acted correctly throughout this period. It may have appeared slow to take decisions. It may, at times, have seemed to be exasperatingly slow to take some decisions, but it has achieved the right results, the results of prudent action by the EU and, more importantly, coordinated action by the EU.
Although it might appear that various measures prevent us from seeing the whole, I believe that the EU has established an appropriate strategy for the circumstances, which has to include some short-term measures and look more towards the medium and long term, as it is about preventing such a crisis from occurring again.
As we have already said, the short-term measures involve an injection of public money and coordination by the European Union: what is known as the European Economic Recovery Plan, backed by the Commission; a plan that coordinates this immediate action, this shock treatment that the Member States are adopting in order to limit the damage done by this huge crisis, but not make it disappear.
One manifestation of this short-term action is undoubtedly the aid to Greece, which had already been warned by the Commission months before about a difficult situation in its public accounts. The Council is making a series of recommendations to Greece in relation to Article 126(9) of the Treaty on the Functioning of the European Union, and the Council and the Commission are monitoring developments there."@en1
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