Basel II and revision of the Capital Requirements Directive (CRD 4) (debate)
The next item is the report by Mr Karas, on behalf of the Committee on Economic and Monetary Affairs, on Basel II and revision of the Capital Requirements Directive (CRD 4).
Madam President, Commissioner, ladies and gentlemen, with this report on Basel III, the European Parliament has a clear position on the deliberations of the Basel Committee. We would like to draw attention to the unresolved questions and problems that Europe faces, and we are putting before the Commission a collection of demands for the drawing up of the draft directive. Although - and I would like to thank all the shadow rapporteurs in this regard - this report was adopted by 38 votes to 0 in the committee, I nevertheless feel a need, as rapporteur, to table six additional amendments, three of which relate to developments occurring in the meetings of the Basel Committee, in order to bring the report up-to-date, and three of which relate to the leverage ratio and to the liquidity standards.
We believe that it is not propitious to automatically incorporate the leverage ratio into Pillar 1 from 2018 but that there should instead be an evaluation process first. Secondly, there are a few unresolved issues in Basel in relation to the liquidity standards that need to be addressed to keep us up-to-date.
I am a little bit amazed by the nine EU Member States in the Basel Committee, as they have allowed the process to be deemed completed despite the fact that we fail to see how there is a level playing field between the economic structure of the United States and the European economic and banking structure, and between classical retail and investment banking. Furthermore, we still do not have a definition of liquidity.
The economic crisis, of course, demonstrated that we need a change of framework. It is therefore right to get to grips with this issue and to bring forward proposals. However, the crisis also clearly demonstrated that what we had was primarily a crisis of liquidity and not one primarily of capital resources, although we do need increased capital resources - one only needs to think of Lehman Brothers, where only 11% capital was held, to see that.
From our point of view, there are five unresolved issues. The first is that there is no study into the impact of the figures that have now been agreed for growth and employment in the European Union. I would ask that the Commission produce and submit such a study as a matter of some urgency. Secondly, we have not examined in detail the cumulative effects of all the regulations that we are currently considering. Key examples here would be Basel III, deposit protection, the bank levy and the transaction tax, amongst others. Thirdly, there is no level playing field between the EU and the United States, for example, when it comes to accounting regulations, and there is still no agreement with regard to the time frame for implementation. Fourthly, there is no level playing field between retail banks and investment banks in the definition of capital. Fifthly, there are unresolved issues such as those of the leverage ratio, the definition of liquidity and the role of rating agencies in the light of the decisions the United States has made.
These issues need to be resolved before the Commission brings forward a draft directive and they should not be concluded by the G20, but clarified, before being finalised by the Basel Committee. We will stay on the ball.
Madam President, Mr Karas, ladies and gentlemen, just a few days after the agreement reached in the Basel Committee, I think that it is very important that Parliament is demonstrating its commitment to banking reform and clearly showing that Europe behaves and must behave in a way appropriate to its global standing. I would like to thank Mr Karas and the members of the Committee on Economic and Monetary Affairs for their commitment and for this excellent report.
Mr Karas, you raise a number of critical points which will be studied very carefully before the adoption of our proposal for revision of the Capital Requirements Directive next spring.
I first want to say that I share your view, Mr Karas, on the importance of problems which are specifically European - our banking economy in Europe does not resemble those of the other regions of the world in all areas - the necessity, Mr Karas, of an in-depth impact assessment and the need to maintain a level playing field at international level.
We must, of course, stress that increased capitalisation of the banks is a necessary precondition for making the financial sector more stable and strong, but it will not be enough. As you know, ladies and gentlemen, since you are working on it, we must also have stricter supervision, stronger corporate governance, supervision of speculative financial activities and a framework for crisis management and for resolving banking crises. That is our road map. Thanks to you in particular, much progress has already been made in this direction. I am thinking of the supervision agreement and the Green Paper on the governance of financial institutions.
The Commission, for its part, is doing its job, and it will do it in such a way that by the end of next spring, we will have submitted to you and to the Council all the texts that are expected of us for implementing the recommendations of the G20. It is in this spirit that, a few days ago, I presented the draft regulations on derivatives and on short selling. In a few days, we will put forward a new document on the bank resolution and crisis management tools.
Returning to today's debate, however, I would like to discuss three issues, with regard to which I share Mr Karas's concerns. The first is the recognition of capital instruments issued by cooperative banks, or mutuals, under the definition 'tier one capital'. The agreement reached in Basel will allow us to take account of the specific circumstances of these unlisted banks, which play an essential role in financing European businesses. My services are now working with experts from the Member States on defining the technical arrangements for properly implementing these new principles in European legislation.
Second, as regards the rules on liquidity and the definition of 'liquidity buffer', the Commission is fully aware of the problem raised in particular for Denmark and Austria. Indeed, the very serious concerns expressed by the Commission in this context are the very reason why an agreement has not yet been reached on this issue. We had some reservations, and my services will continue to work with our partners in Basel to find a solution, particularly as regards the recognition of covered bonds.
The third point concerns the leverage ratio. We cannot go back on our commitments made at the G20 on this point. We are, however, satisfied with the agreement reached in Basel, which makes the leverage ratio part of Pillar 2 during a reporting period, as Mr Karas said a moment ago, the aim being to transfer it under Pillar 1. This transfer will not be automatic, and we will integrate a revision clause on this subject into our draft proposal for CRD 4.
I would now like to say a few words on the implementation of the Basel Agreement in the European Union. This financial crisis has shaken the world. It has taught us some lessons, which we must take on board. The global prudential rules were not suited to real-life conditions. In addition to the reforms which have already been implemented in order to strengthen the existing rules, we now have the agreement recently drawn up in Basel by the group of governors of the central banks and those responsible for banking supervision.
In my view, this agreement is good news. It is an important step in strengthening the rules and global financial stability, and this new Basel Agreement will help to establish common rules for the banking sector internationally, which is extremely important. This agreement also paves the way for a balanced solution: businesses benefit from an adaptation period providing sufficient time to meet these new requirements, which will allow for the health of the banking system to be gradually improved without, we think, compromising economic growth.
Ladies and gentlemen, my services, my colleagues - whom I want to thank - have done a great deal of work in Basel to find common ground with our non-European partners. I hope that the Heads of State or Government of the G20 will approve this new Basel Agreement during the forthcoming Seoul Summit in November. However, we will not stop there.
The next step will be to reform the basis of the banking system at Union level. We always take the specific circumstances of our Union into account when implementing international rules, and, ladies and gentlemen, the CRD 4 Directive will be no exception; here, too, we will take the specific circumstances of the European Union into account. Furthermore, in this context, we will specifically carry out the macro-economic and micro-economic analysis which forms part of this Basel Agreement, and you and your colleagues will naturally be informed about it, Mr Karas.
Our aim is to adopt the proposal for a directive during the first quarter of 2011. This means that the Member States need to transpose it before 1 January 2013. That will give them enough time to conform to these new provisions.
We must nevertheless remain realistic. This agreement reached in Basel constitutes very significant progress, but I repeat: there is still much to be done. We will work together with you and with the Member States in the coming months to implement one of the essential reforms of the post-crisis period. I would like to be very clear on this point too: we will be very attentive and very vigilant when it comes to ensuring that our main global partners - above all, the Americans, but not only them - also implement this essential reform correctly and in due time. This is an issue which I shall raise during my second and very imminent visit to the United States, at the end of this month.
Finally, I agree with you, Mr Karas, that it is essential for the European Parliament to play an even greater role in this process. That is why, in conclusion, I pledge to keep you - your committee and the plenary session - regularly informed of all future developments within this Basel Committee.
Madam President, Commissioner, I would like to start by briefly praising Mr Karas' excellent work. I was one of the people who were in favour of an own-initiative report being produced before the Commission makes its proposals on the framework for transposing the Basel Agreement, and I am delighted that the work done by Mr Karas with the help of the various shadow rapporteurs has highlighted the main points for consideration.
I will not repeat them here, Commissioner, and of course I welcome the points you make and your determination to ensure that this regulatory framework is effective and workable and above all that it creates no distortion of competition at international level.
To move on to a different subject, I cannot help noticing that there is often a big difference between the statements that are made publicly and the commitment to these in practice. I also note that countries outside the European Union, and I am thinking of the United States in particular, have an irritating tendency to make value judgments about how we operate, whilst they themselves are not putting the systems into practice as they ought.
As regards Basel, it is vital that European companies are dealt with on an equal footing and are not penalised more than US companies. In the United States, few banks are taking notice of these directives or of the Basel Committee and, at present, nothing is actually being put into practice. I would hate to see the provisions adopted in June to regulate US finance - the statements made about these exaggerate their real impact - being used as a legal basis for not applying the provisions which might be introduced by bodies outside the United States.
Commissioner, I trust in what I know to be your total determination and vigilance to ensure that this does not lead to a distortion of competition for the French banks, the European banks, and for those who finance the economy in general. It is right that we should be steering the banks back towards their primary role of financing economic development, but we must make sure that they are not penalised disproportionately.
Madam President, ladies and gentlemen, let me just point one thing out before I start. The Basel Committee is a group of more or less intelligent central bankers and overseers, but it is certainly no infallible council of wise men and it is definitely not the law. This House is the legislative body - Commissioner, you know that, and we know that you do - and this legislative body will pay close attention to what is put on the table and, where it makes sense, to what is put on the table here, too.
Clearly, we do want the rules on capital requirements to be tightened up. How could we not want that, in the wake of the economic crisis in which we still find ourselves? 20 to 30% of the gross national product of our national economies are in pawn as the rescue package for the banks. The people expect us, of course, to make respectable banking rules so that we do not find ourselves in a crisis like this one again. Clearly, we want there to be counter-cyclical elements in this banking safeguard like those, for example, that have already been proving their worth in Spain for years. Although there, too, they had to be implemented in the face of opposition, they are paying off today because they were implemented at an appropriately early point and they did not make the banking system worse; they made it more robust.
There are key issues, though, and I am truly grateful to the rapporteur, Mr Karas, for having put these key issues at the heart of his own-initiative report, which we find ourselves absolutely and totally able to support. The first of these is that, yes, indeed, we do need an impact study, specifically a complex impact study that makes it clear what the impact is, for one thing, on the financial sector in all its parts but also, of course, in particular, what the impact is on the real economy. What is the impact on the issue of what the future actually holds for loan financing conditions for small and medium-sized enterprises?
The second issue is that we need the certainty that this time, unlike in the past, the agreements will also be implemented in other territories. We need to know that before we legislate, as otherwise there will be a new asymmetry for which we cannot be responsible.
The third issue is that there can be no discrimination in terms of legal forms. Those forms among the diversity of the European banking system that particularly proved themselves during the financial crisis - and that means those banks that looked after the small and medium-sized business sector and those banks that were focusing on private customers and thus did not elicit cross-border risks - must not be penalised for the solidarity of their establishment. The proposal on the table at the moment does not do enough to ensure this. We therefore believe that the proposals need to now be improved and that we need to consider how we can tackle this issue in practical terms. Public banking overall is of major value, provided it can be run on a sensible basis. We do also need to ask - and I am thinking here about silent partnership reserves - how this will actually be effected in future, if we buy the regulations as they are envisaged in Basel. This cannot be the last word, nor is it the final version that we will accept.
The capital instruments need to be measured in order to see the extent to which they ensure consistent quality without false provisos, are available to absorb losses, are durable and flexible in terms of payment, as the rapporteur also argues in his report. It is a reasonable starting position for us to take. We want the leverage effects to be limited and reasonable allowance to be made for the different risk profiles. We will examine your proposal, therefore, Commissioner, and we hope for the best of cooperation with Parliament.
on behalf of the ALDE Group. - Madam President, can I say to the Commissioner that when we voted on supervision, I said our legislation was like Swiss cheese, full of holes, places where the common rule book would not reach.
Then, last week, bankers from around the EU assembled for Eurofi, discussing Basel III. The word on everyone's lips was 'national': national flexibility, national rules, national rules, national exemptions; the beast of perverse incentive was rampant. As soon as a framework is agreed for harmonisation and stability, the wriggling and the wheedling to make holes starts, and frankly, it is no better here. I am fed up of it. Why does Europe have to be the cry-baby of Basel? This is not what we intended with the supervisory architecture. It is not what is intended by Basel III. The facts are clear. G20 was clear. Banks must be able to withstand the type of crisis that we have just had and capital is crucial to that.
I am not blind to the problems of the real economy and the need for banks to lend and, like others, I look forward to the macro-economic and cumulative impact assessments, not just of Basel, but of the whole post-crisis financial regulation that you, Commissioner, and Commissioner Rehn both promised me in your competency hearings.
To the banks, I say: we cannot give weight to your protestations while your aggregates are cloaked in secrecy and you stamp 'Confidential' on everything. So as far as I am concerned, the extended timetable of Basel is enough slippage: no more.
Now, Commissioner, liquidity measures - as others have said - are not fully resolved, and I do fear more perverse incentives around the growing concentration on sovereign debt and short-term instruments. We must be very careful here; we must think and not replicate the same measures in every piece of the prudential regulation where they may not be appropriate and would destroy investments in equities and the real economy.
Madam President, Basel III is supposed to be a starting point and under no circumstances must it be the furthest that the European Union is willing to go. To those who say that if we go further than Basel, we might jeopardise the competitiveness of our banks on the international scene, I say that our primary concern is, and should be, the viability of our economy. And if that means more stringent rules, then so be it. I would also add that we hear so much about a level playing field, and yet the United States does not hesitate to go it alone whenever it can and when it suits it to do so. Therefore, I do not want to see Europe simply waiting for some kind of consensus that will never materialise.
Secondly, any transition period must necessarily be time-limited, and I can tell you that the eight years we are envisaging for ourselves is too long. What is more, and this is not something that has been factored in, during this transition period, strict conditions must be introduced regarding the payment of dividends and bonuses. We would find it indecent and unacceptable if, whilst the banks are claiming that it is difficult to build up the capital reserves imposed under the new rules, their shareholders and managers continue to help themselves from the kitty.
My final message is directly for the banks. To those banks that complain that they will no longer be able to make the same profits they made during the golden years, I say that all businesses working in industry or retail in the real economy are having to make do with net yearly profits of between two and five per cent - and that is nothing to be ashamed of. It is time to realise, therefore, that the party is over.
on behalf of the ECR Group. - Madam President, I am very aware that the economic crisis is far from over and that we do need lending in the wider economy. However, last week, we saw in Ireland that banks are still coming to the taxpayer for their bailouts.
We cannot continue to have the taxpayer bailing out banks. We need banks that are prepared to take risks, but they need the capital and liquidity to live within their means when those risks go wrong. This is a complicated piece of work, and one for which I would like to thank Mr Karas, but it is only part of the work, and we need the right resolution mechanisms too.
It is very clear from the number of amendments across the floor that MEPs want to look at the detail and at the impact. We must make sure a similar approach is taken to the collateral in the derivatives language. First of all, there is an impact assessment - it was done for Basel - but it is so cloaked in confidentiality that we cannot see it. Let us release it and use it.
When we make an international agreement, we need to make sure that it is implemented globally - not just here and in Wall Street, but globally. There are a number of places in this text where there is wriggle-room - paragraph 24, on minority interests and deferred taxes, paragraph 40 with its description of Pfandbriefe, and the new paragraph 43A.
Yes, Basel should look at networks of small banks supporting each other. They are doing that. However, my interpretation of the English is that we could, in some way, be seen to be pre-empting their conclusion.
Furthermore, it has been agreed that there will be a migration towards a full and binding leverage ratio. Let us not move away from that. I agree that, where we have good local practices, we should allow them to continue, but let us examine those in public and not bring in exemptions through the back door. The market will just assume that back door to be a way of promoting bad practices, rather than promoting good practices.
(FR) Madam President, I would like to start by thanking our rapporteur, Mr Karas, for his excellent work, and I fully support him in his approach to this complex matter. However, I feel it is important to use my two minutes to emphasise an issue which was mentioned in the report but which deserves a closer look. I refer to the matter of mortgage bonds, or Pfandbriefe in German, in the context of liquidity standards.
The new European liquidity standards that we are working towards redefining should give greater recognition to their special economic, legal and operational nature. Mortgage bonds are used for long-term financing and investment in the wider economy. However, the Basel Committee's current proposal regarding these bonds would have a negative and disproportionate impact on Europe's economy compared with other major economic zones, such as the United States.
I certainly welcome the fact that the agreement reached by the Basel Committee on 26 July 2010 recognises mortgage bonds as highly liquid assets in the context of calculating the liquidity coverage ratio. However, I call upon the Basel Committee and on the Commission, Mr Barnier, to give greater recognition to this financial instrument, with a view to promoting sufficient diversification of the eligible liquidity buffer assets and avoiding any distortion in the markets. This low-risk financial instrument must be given an environment in which it can thrive.
(EL) Madam President, we all know that today's debate on the agreement reached by the Basel Committee is yet another step dictated by the recent crisis, a crisis which dramatically highlighted the shortcomings and weaknesses in the regulation and supervision of the financial system, reversed what had, until then, been the prevailing doctrine of deregulation of the markets, and highlighted the need for stricter rules, both on capital adequacy and on the supervision of financial institutions.
Against this background, the Basel Committee has reached an agreement which includes certain basic principles and changes which need to be made to capital adequacy rules in order to improve the safeguards to the banking system. As far as the implementation of this agreement in Europe is concerned, Mr Karas's report highlights numerous important aspects which need to be taken into serious account, such as the peculiarity of the European market, on which 80% of lending is based on bank credits, the need to democratise the Basel process with more active participation by the European Parliament, among other things, and, of course, the proposal to include all euro area sovereign debt as high quality liquid assets, regardless of their credit rating, so as to reduce the impact of rating agencies.
However, I wish to repeat that the new capital adequacy measures are a minimum review and still need more general reform over a longer time frame. Europe, as the Commissioner said, has already taken an important step in adopting the new European system of supervision. We are changing tack and promoting enhanced coordination as a basic preventive tool. However, we must not stop there. We need to take further steps by introducing a supervisory and regulatory framework for agencies which have hitherto been operating without controls, such as credit rating agencies and alternative funds.
We need, at the heart of the proposals which you recently presented, Commissioner, to adopt rules to regulate transactions which are highly obscure and, as such, subject to increased systemic risk, such as the market in over-the-counter derivatives and naked options. Finally, Commissioner, as you referred to the G20 summit in Seoul, we need to lead efforts to introduce a tax on financial transactions, not, of course, to take revenge on or punish the banks, but to limit speculation and send a strong message to the citizens of the EU who are currently paying the price of the crisis, that we expect a fairer distribution of the burden.
(DE) Madam President, ladies and gentlemen, if banks have to hold more capital for loans and financial instruments, that increases their ability to bear losses. The most recent proposals from the Basel Committee take this stability-based approach as their basis. Unfortunately, the Basel Committee has not, as yet, satisfactorily addressed the problem of system-relevant banks. I therefore welcome Mr Karas's call for the requirements for the liquidity standards to be made independent of system-relevance. In other words, appropriately tougher requirements need to apply to banks that, due to their size or interconnectedness with the global financial system, need to be bailed out using taxpayers' money in crisis situations.
We should take a more differentiated approach to the factor of debt leverage. Only when it is empirically proven that this instrument does not lead to arbitrage and distortions of competition and actually counters the overheated granting of loans should we consider permanently incorporating it into the first pillar.
There is a need, in any case, for these proposals to be implemented at the global level. We cannot allow the US authorities to have a decisive influence on the Basel proposals only to not then implement them. The G20 summit in Seoul next month will show whether, and to what extent, we can achieve this objective.
(PL) Madam President, firstly, I would like to say I am very pleased that the European Parliament has taken up this matter, especially because this report arose at Parliament's initiative. I would like to congratulate Mr Karas very warmly.
In the last decade, we have seen unprecedented development in the different types of financial innovation and new instrument available. It is often these instruments, in fact, which determine the nature of the market today. I think that an essential condition for effective supervision is, in this situation, to be in possession of truly reliable knowledge about what is happening in these markets. Meanwhile, the financial instruments which have become so popular have reached a degree of complication which significantly hinders supervisors in making an appropriate evaluation of the risk associated with them.
Besides these new instruments, we have to be aware that the market is changing and is globalising very rapidly, and that in the confrontation between the globalised, evolving market and national supervisors, these instruments are completely inappropriate and the supervision unsuccessful. The growth of financial institutions is also causing, in a certain sense, a lack of monitoring where the supervision takes place, and the supervision, therefore, is also hampered.
By all this, I would like to say that there is a lack, in fact, of an overall view of the sector, both concerning the geographical aspect and concerning the sector's activity itself. Understanding the relations between the parties which are active in the sector, as well as the evolving nature of the activity itself, are, I think, crucial for the security of the financial system on a global scale. It seems to me that this has been lacking hitherto.
The current Basel regulations concern, in fact, capital, and I am glad that the new measures are implementing the requirements associated with aspects of liquidity, as well as mechanisms of counter-cyclical policy. The measures proposed in this area should be welcomed. In the context of the low effectiveness of capital indicators as an advance diagnostic measure, stability of the system and the attempt at standardisation of liquidity coverage ratios should be assessed positively in both the short-term and long-term perspective, because it was, after all, liquidity problems which necessitated the measures to save the banks, to which we were witnesses.
(SV) Madam President, it is, in many respects, a positive sign that work on the new capital adequacy rules is progressing. The fact that the Basel III process is being brought to a successful conclusion is a prerequisite for being able to restore stability to the financial sector. The report that we are to vote on now is both balanced and well-worded, but I would nevertheless like to highlight three points on which it could have been clearer.
Firstly, it is important in itself not to place too much pressure on the banks by giving them far too short an implementation period, but at the same time, it is at least as important that the implementation does not go too slowly. The aim should be for the banks to have sufficient stability to be able to cope with the next recession. With the target as far away as 2017/2018, there is a risk that many banks will not manage this.
Secondly, we must ensure that the implementation is carried out with close and positive cooperation with the United States and other players. The clear aim must be for the whole of the international banking sector to be stabilised, not just parts of it. Areas with weaker regulations or a slower rate of implementation could expose the whole of the global system to risks.
Thirdly, regular stress tests are an excellent way to continually ensure that the banking system is stable. This is therefore something that we should use as an effective tool to complement the capital rules. Both the frequency and the requirement level of these tests could well be increased. The crisis has demonstrated that some things can happen extremely quickly. In the financial sector, it is therefore important for developments to be monitored very closely at all times.
(SV) Madam President, Commissioner, the new Basel rules will establish the prerequisites for stability and sustainable growth. The crisis has taught us that the banks need to have more and better capital, and the regulations must promote sound banking and sound risk-taking. The rules concerning the leverage ratio must be formulated in such a way that banks that lend low-risk capital are not penalised. There is a risk that the rules will affect banks in the Nordic countries particularly badly, as these banks have large low-risk home loan portfolios. This gives cause for concern.
All directives and new rules must be well thought-out, but, overall, we risk having too many rules, which, in turn, could damage growth. I agree with Mrs Bowles that the Commission must produce an analysis of the effects of all these new banking rules on growth in Europe. Rules and new laws are not always the answer. Let us not settle for good if we can achieve the best.
(IT) Madam President, Commissioner, I would like to thank Mr Karas for his excellent work. I believe that we have stood by and watched this severe global economic and financial meltdown impotently over the past two years, even though some claim that things could have been even worse.
Today, the European Union is at the sharp end, and you, Commissioner, are conducting a revolution, aimed at stability, to provide us with the guarantees we need. During the last plenary session, we gave economic power a positive shake-up to safeguard Europe itself. As you stated not long ago, proposals have already been prepared on derivative products and short selling, and we are also discussing taxation on banks and the levy on financial transactions while awaiting the Commission's final proposed revision.
Commissioner, we need to take great care that, as often happens, we do not go from one extreme to the other, with rules and laws that could hinder or slow down economic development and recovery. I believe that rigidity and bureaucracy are always lying in wait. It is true that at the moment, we need stability, but it is even more true that we very much need growth, growth and more growth - as President Barroso stated in this Chamber.
Basel III marks the start of a process that requires all of us to be responsible, but we must also safeguard competitiveness and equal conditions and pay attention to SMEs, on the one hand, and savings and cooperative banks, on the other, which are close to the grass roots.
Madam President, I think everybody agrees that we need to strengthen the resilience of the banking system. Thanks to Mr Karas, we are aware that under the Basel proposals, we do not have a level playing field, and if you do not have a level playing field, you cannot compete. In fact, there is a great danger that you will score many own goals.
The point has been made, but needs to be made precise, that the US and Europe are totally different. The US economy is mainly financed through the capital markets. Europe relies mainly on the lending capacity of the banking sector and we know that more than anywhere in Ireland. Our banks simply cannot give credit to SMEs, and otherwise viable SMEs are going to the wall every day simply because they are starved of credit. And, as Vicky pointed out, the taxpayer is bailing out these bankers and also funding the redundancy packages and the pension funds and the golden handshakes of dormant regulators, etc.
So there is a lot of work to be done to get the balance right and I think that is the key here. I am encouraged by the Commissioner's response, and he did say he would work with us and would try and get the balance right and establish a level playing field. Then we would be scoring goals and not conceding own goals.
Thank you, Madam President, and thank you to everyone for your proposals, your encouragement, your suggestions and your requests, which I and my team have noted carefully.
Mr Gauzès was the first to mention the issue of striking the right balance, and this was reiterated by Mr Schmidt, Mr Klinz, Mr Ludvigsson, and just now Mr Kelly. Yes, we will be aiming to ensure that we strike the right balance; in fact, the balance needs to be struck in three particular areas to which I will be paying very close attention:
Striking an intelligent balance in the Basel measures themselves and the way in which we transpose them into our legislation. I will be making the best possible use of the transition periods and of the room for manoeuvre that the Basel Agreement gives us, plus you will be making your own contribution.
The second area in which a balance must be struck is between the Basel measures and all the other measures that we are introducing in the context of the G20 crisis prevention and management agenda, and I will come back to these in a moment.
The third area, which Mr Kelly has just mentioned, concerns the United States. Mr Kelly, I realise that Europe's banking sector is much more involved in financing the economy than is the case in the United States, and we will be taking this difference into account. This is the transatlantic balance. We need to see to this - I am addressing Mr Lamberts in particular - without waiting for the United States. I will be going back to the United States to see Tim Geithner and the other supervisors and I am not going there to drag my heels, but to make sure that we are all moving in the same direction on Basel II, Basel II and a half, Basel III, Basel IV - I beg your pardon, Basel III and CRD 4 - and on another extremely sensitive subject, which could become a point of divergence between the Americans and Europeans, and that is the matter of accounting standards. We are not naive, therefore, in our relationship with the United States, but nor do we want to pre-judge its intentions.
I can therefore reassure Mr Gauzès and all the other honourable Members that we will be paying close attention to this three-way balance. Mr Cancian has also quite rightly mentioned financial instability, which is indeed the worst enemy of growth. This is why we need to establish conditions that will promote greater financial stability and, in view of the debate we are having with China at the moment, I would add monetary stability also.
I have taken careful note of Mr Bullmann's comments urging us to conduct thorough micro-economic and macro-economic studies. We will also make productive use of the transition periods, which are not indefinite, and you are quite right, Mr Bullmann, in saying that it is here and in the Council that Europe's laws are made, not elsewhere, not in Basel. This is where the European legislator is and this is precisely why we are going to produce a proposal for CRD 4, which will be a legislative proposal on which we will be seeking your approval, even before the debate and motion stages.
Mrs Bowles, you are absolutely right in questioning us and in saying that it cannot be business as usual. I also hear certain bankers here and there, who have short memories, telling us that the economic crisis is over and that we can return to business as usual. We cannot allow ourselves to have short memories, and it will not be business as usual. We are perfectly serious about making reforms.
I would also add, Madam President, that the improved capitalisation we are talking about in Basel and CRD 4 is not the only tool, or the only solution. There are many other solutions to crisis management, which I mentioned earlier on in my first speech: there is everything that we are doing to regulate hedge funds of course, which I hope we will be completing in the next few days; then there is our action on private equities, derivatives and short selling. There are other tools which are also important. A few moments ago, Mr Ludvigsson spoke about stress tests. These need to be carried out regularly. So this is our approach at the moment.
Mr Lamberts, I will just mention another important point that you brought up: the payment of dividends by banks that do not put the minimum capitalisation requirements into practice. This problem has been clearly accounted for through one of the so-called buffers, in this case, the capital conservation buffer, which stipulates that a bank cannot pay out dividends if it has not fulfilled the minimum capitalisation requirements. This is one of the provisions which we will, of course, be incorporating in our legislative proposal.
Mrs Ford, we do indeed need to protect taxpayers. I am sure you will be watching closely for the proposals we will be making in a few days' time on crisis management and prevention, and on the creation of a resolution fund in every Member State, we hope, which will ensure that the banks pay for the banks, not the taxpayers.
Mrs Lulling asked a very specific question. Yes, in the Basel talks, my colleagues and I were very attentive to this point and we obtained an agreement that 40% of the liquidity buffer may be made up by the Pfandbriefe, or mortgage bonds, that you asked about. I feel this is a positive result, and we are totally in favour of diversification of liquid assets.
Mr Klinz raised the issue of 'too big to fail'. Here again, when this concern was raised in the United States, I replied that it was impossible to make comparisons, because the US and European banking systems are not the same, either in terms of their contribution to the economy or in their structure. However, Mr Klinz, it is an issue that is not yet settled at international level, both in the context of the G20 and that of the Financial Stability Board. We are watching the situation closely, to make sure that taxpayers are not and cannot be called upon.
Mr Nitras, as regards complex financial instruments, we need stronger supervision. That is why the new European authority, the ESMA, will be playing a key role, thanks largely to this Parliament, in looking into the possibility of banning certain toxic products, and you will see that we will be further reinforcing ESMA's role in the near future.
Lastly, I would like to let Mrs Podimata know that regarding the rating agencies, here again, there will be a third round of actions. What we have done so far with yourselves is not enough, and I am currently working on this third round of actions to regulate rating agencies and diversify the rating agency market, which, to put it mildly, is concentrated in too few hands. We questioned the ministers at ECOFIN last Friday, and your committee Chair, Mrs Bowles, was present. I am going to prepare a consultation aimed at strengthening this regulation.
Mr Schmidt also raised the issue of a cumulative effect; however, I have answered this question in my point about the three-way balance, which is something we are going to be watching very closely.
Madam President, ladies and gentlemen, The debate was lucid, clear, competent and responsible. We put out a very good image of ourselves as both cohesive and determined. Commissioner, I would also like to thank everyone who participated, you included. We are not putting the process in doubt, but it is not concluded. We have also brought up a painful subject. The sore point in question consists, above all, of the differences in banking and economic structures between Europe and the United States. We need to say one thing clearly at this point, and that is that, while the legislative process has not started yet, the Basel process does prejudice and limit our freedom to manoeuvre in political decision making. What would have happened if we had not produced an own-initiative report off our own bats? There would not have been a debate today. We therefore need to bring democracy and parliamentarianism into the Basel process, the G20 process, the new global institutions that are being created, and, at the same time, we need to be involved in the process so as not to always be presented with faits accomplis.
Basel III and deposit protection need to be connected, as there is a connection between the two. We need a link between our decision making and global implementation, particularly in the United States. We need the definition of liquidity before we get the draft directive. Meanwhile, the Dodd-Frank Act in the United States presents us with another problem. Because the Americans are going to have problems implementing the liquidity standard, they are now attempting, once again, to introduce additional criteria alongside the external ratings. Our maxim must be that either external ratings or alternative criteria such as price stability should act as the basis of evaluation. Yet we absolutely should not have both for Europe and only one for the United States.
We need to be vigilant and let us also together ensure, Commissioner, that the national finance and economic ministers pass on to their national parliaments what the Commission is now reporting in its impact study. There is less awareness in the national parliaments about what we are doing here and what the impact and causes are in the Member States than there is in this House. We also need to begin an offensive here. Let us involve the national parliaments in this communication process.
The debate is closed.
The vote will take place tomorrow.
Written statements (Rule 149)
I believe that the recent economic and financial crisis, or the biggest recession since the days of the great depression, has highlighted the need for a radical review of the current Basel II regulatory framework. I would like to remind you here in Parliament that the Basel II agreement defines the criteria for accessibility to credit by forcing banks to objectively assess the credit status of a company, taking account of risks connected with its possible state of insolvency, of guarantees, and of exposure in the event of bankruptcy. Although the aim of these criteria is to improve the competitiveness of companies and strengthen the financial system, they are excessively punitive to the small and medium-sized enterprises that drive the Union's economy. In concrete terms, because European enterprises are not on such a firm financial footing, application of the agreement often means less access to credit and higher interest rates. Although I find the efforts of the Basel Committee to update the general regulatory framework to be encouraging, I am extremely concerned about the shortcomings that emerged during the course of the negotiating process. For this reason, I agree that it is advisable for Parliament to be more involved in the negotiations with the aim of making the changes needed to ensure that European industry and the European economy are not at a disadvantage.
A new stability pact for Europe is bound to involve the banking system, which represents the other end of the process in which the own resources that are the beating heart of the European economy are used. In other words, the debt that the Member States of the European Union accumulate over time to produce national wealth and distribute it to their citizens is funded and managed by the banks, which should be able to make it produce profit.
While it is true that the Member States will still need a great deal of time to adjust to the standardisation of their financial laws and also to achieve an appropriate level of uniformity within their tax systems, establish decent margins of liquidity, and request reliable leverage effects to guarantee savings and their long-term trends, we must ensure that we can manage to find the right response to the crisis even in the short term.
The own funds that the European Union will have increasing access to will ensure that the aim of EU resources management will be increasingly less to shore up systemic risks and increasingly more to create a set of stimuli to benefit national economies, not only jealously guarded within national borders, but integrated to optimise the use of the respective comparative advantages.
Financial institutions that are strong and stable are crucial to the sustainability of the capital market, to access to credit, to competitiveness, and to economic and financial stability. I therefore welcome the adoption of this report, particularly because it includes crucial measures that I tabled dealing with the situation of national financial institutions. I am referring, in particular, to: the need for the Basel Committee and the Commission to clarify the treatment of reciprocal financial cross-holding agreements; the importance of defining the criteria for high quality liquid assets taking into account the definition of European Central Bank eligible assets for monetary policy operations (repo facility); and the inclusion of all euro area sovereign debt as high quality liquid assets, regardless of its specific rating, thus reducing the disproportional impact of rating agency actions.
The submitted report is drafted in relatively precise terms. It analyses clearly the issue of the new proposed banking regulation that is under review (Basel II), and gives a detailed analysis of its main points, which, at present, are being discussed at the practical and academic levels. In concrete terms, it involves introducing measures which should contribute to the greater financial stability of the banking sector, and to reducing the probability of another crisis, focusing on the following five areas: the quality of capital (increasing the quality of bank capital is undoubtedly desirable), stricter liquidity standards (the liquidity risk was shown to be significant during the crisis), countercyclical measures (the creation of additional banking capital in good times should limit excessive credit growth and consequent creation of price bubbles, such as, for example, in Spain), the introduction of a leverage ratio (this new indicator should contribute to the greater stability of banks, but it should include not only financial items contained in the bank's balance sheet, but also off-balance sheet items, such as derivatives and the contingent liabilities of the bank) and, last but not least, the creation of a central counterparty for the settlement of OTC transactions, particularly in relation to greater transparency in derivatives. Based on the above, I believe that the submitted report contains a detailed analysis as well as relevant recommendations in the area of the proposed bank regulation, and I therefore recommend that the proposed text be approved.
I believe that having dynamic, clearly defined financial markets, capable of financing huge investments, is an absolute prerequisite for the European economy's recovery. I strongly support the commitment made during the G20 meeting to generate a greater volume of capital and draw up liquidity management standards. These good quality liquidity standards are a key element in the response to the crisis.
I also think that a greater degree of flexibility from the eligible assets available in the European Union, which can be achieved by identifying secure financing sources and their specific features, will create financial stability when faced with crisis situations, both in the short and long term.
The financial and economic crisis of recent years has dispelled illusions that the banks know their own risk best and are able to determine security requirements on their own. The profound ignorance of some of the people in charge of banks, the paramount importance given to sales plans and the ignoring of risk factors, accompanied by the passivity of the system of financial supervision, are the fundamental sins of the banking sector which were the direct catalyst of the world recession.
Basel II has not proved very effective as a crisis prevention mechanism. In these circumstances, it is essential, as quickly as possible, to create a new code of standards - Basel III - which will no longer include the optimistic assumption of the ability of banks to regulate themselves.
Raising capital requirements will certainly contribute to an increase in the security of the banking sector by a growth in liquidity. However, such measures also carry the risk of transferring costs to the clients of banks - a growth in credit prices and other financial services - to the detriment of the economy. It is necessary, therefore, to guarantee suitable protective frameworks which would prevent us from being affected by this unwelcome effect, or at least keep it to a minimum. On the other hand, however, we must be aware that financial security also costs. The question is, how much are we willing to pay for it?
The crisis has clearly shown that even bank capital has been insufficient regarding solvability and solvency. The existing regulatory framework therefore requires an in-depth revision and thus, the efforts of the Basel Committee to upgrade the framework in general are to be welcomed, in particular, with uniform, clear and transparent regulations. However, there are some shortcomings here and, in its current form, the framework would put the European economy at a competitive disadvantage. European companies rely on credit from the banks. Eighty per cent of investment and lending in Europe is based on bank credits. In this regard, it is particularly important to secure financing for SMEs. Differences must be taken into account without penalising certain business models. Otherwise, there is a risk of harming the European economy.


Addressing the challenge of water scarcity and droughts in the European Union (debate)
The next item is the report by Richard Seeber, on behalf of the Committee on the Environment, Public Health and Food Safety, on addressing the challenge of water scarcity and droughts in the European Union.
Mr President, I would like first to thank the shadow rapporteurs and the Commission for their excellent cooperation on the preparation of this report.
We all know that water is the basis of all life. However, this basis is not infinitely available. In the future, up to three billion people will be affected by lack of water. Already in 2007, a third of Europeans lived in regions in which water resources were limited, according to the European Environment Agency. This problem particularly affects countries such as Cyprus, Bulgaria, Belgium, Hungary, Malta, Italy, the United Kingdom, Germany, Spain and, unfortunately, many others. That means that water is being overused. Of course, climate change is also exacerbating the problem. Drought events have therefore become more frequent over the last 30 years, costing more than EUR 100 billion so far. The EU economy suffered losses of approximately EUR 8.7 billion in the drought of 2003. These extreme weather situations have not only economic, but also social and human effects. Apart from the general impairment of human health, approximately 35 000 people in Europe died as a result of the heatwave in 2003.
We also note that patterns of water use vary greatly within Europe. The average consumption in the EU fluctuates between 100 and 400 litres, although in fact 80 litres per person per day should be enough for a European standard of living. This is caused by inefficiency owing to out-of-date technologies and also to the wasting of water. For example, 30% of the water in France's distribution networks simply disappears. For us, this means that there is tremendous potential for saving water here in Europe.
It is high time for the Community to take action as well. The Commission has already addressed the topic of water in several directives, such as those on bathing water, drinking water, floods, environmental quality standards for water, etc. Without a doubt, the milestone so far was the Water Framework Directive in 2000, with its implementation steps. It is now particularly important for the Commission to make sure that the Member States perform their obligations arising from that legislation.
Changed environmental and climate framework conditions, greater use of water by business, agriculture and households, and of course changed consumption habits have exacerbated the water shortage. Unfortunately, we are seeing extreme weather situations more and more often. On the one hand, there is heavy rainfall accompanied by flooding, while on the other, periods of drought that devastate entire swathes of Europe are becoming more frequent.
The communication that the Commission has now laid before us represents an important step in the right direction, but essential improvement measures are imperative. Firstly, water shortage and drought must be seen as a global phenomenon. Here in Europe, we must not concentrate only on our own problems - let us not forget the huge numbers of migrants descending upon Europe, very often because of droughts.
Secondly, the Member States need to work together across borders to combat water scarcity and drought. The management plans of the Water Framework Directive need to be supplemented with regard to drought and water scarcity. Mutual solidarity between the Member States as regards their water resources does not, however, mean that their sovereignty for making decisions about their water resources has to be abolished. In my view, transporting water over long distances is no solution to the problem, either.
Thirdly, the Commission document does not contain a specific timeframe or verifiable goals. Without these, this strategy cannot be implemented.
Fourthly, Europe really ought to try to become a global leader in water-saving technology. That requires dealing with both the human side of the problem and of course also the economic needs of the moment.
In summary, I believe that we have been presented with a paper that makes important improvements to the Commission document.
Member of the Commission. - (CS) Mr President, ladies and gentlemen, water scarcity and drought represent a major global problem and it is clear that climate change will aggravate the situation and result in serious water scarcity. This trend was confirmed by another report on the impact of climate change in Europe, prepared by the European Environment Agency last week.
The frequency and intensity of droughts in the European Union have dramatically increased over the past 30 years, and over 100 million people and almost one third of the EU were affected in 2003. Since the Commission presented its communication on water scarcity and droughts, we have seen further evidence of this trend. Cyprus is experiencing its worst drought since 1900. Water supplies for irrigation purposes were suspended during the summer and farmers suffered 80% crop losses as a result. In some areas cereal crops were completely destroyed. The estimated losses exceed 1.5% of Cyprus's GDP. Nor was this an isolated occurrence: 2008 is the third consecutive drought year in Cyprus.
This is therefore the right time for Parliament to debate its report on water scarcity and droughts. I am glad that the European Parliament has taken this opportunity to send out a clear message that it is important to tackle this problem.
Global warming, population growth and increasing per capita consumption all mean that the pressure on our water resources is rising. As a consequence, water scarcity or droughts are becoming increasingly likely, and they have a direct effect on the population and on those economic sectors that depend on water supply, for example agriculture, tourism, industry, power supply and transport. They also have negative side effects for biodiversity and water quality. The risks of forest fires and the consumption of land are increasing. Unless urgent measures are taken, entire regions will face the risk of desertification, both within and outside the European Union.
In order to prevent this, our top priority must be a shift towards practices that will lead to effective water use and water savings. At the same time, measures aimed at water saving will be adopted at all levels. In order to achieve this, the entire population will have to play a role; the adoption of government measures will not on its own be enough.
The latest Eurobarometer poll, asking the public about their attitude towards climate change, indicates that 62% of Europeans consider climate change/global warming to be among the two most serious problems facing the world today, while 68% of Europeans feel that 'poverty, the lack of food and drinking water' is the most serious problem. In this context the good news is that the fears expressed by the members of the public are also reflected in their behaviour: 61% of Europeans declare that they have personally taken actions aimed at tackling climate change and more than half have reduced their consumption of water at home.
Mr President, ladies and gentlemen, I am pleased to note that your report welcomes the Commission communication and supports the proposed first set of policy options for action. I would like to thank the rapporteur, Mr Seeber, for his excellent work on this report, as well as Mrs Herranz García and Mrs García Pérez from the Committee on Agriculture and the Committee on Regional Development for their positive and constructive contributions. There is broad agreement between the report and the conclusions adopted by the Council last year regarding the measures to be taken. The task now is to turn this political support into real actions.
Mr President, I would like to begin by congratulating Mr Seeber on his report and by saying that, in the Committee on Regional Development, we are aware that water scarcity has become one of the fundamental challenges for the cohesion policy, as it has so far affected 11% of the population and 17% of the territory of the European Union.
For this reason, this aspect needs to be taken into account in the future cohesion policy, using the necessary budgetary measures and instruments in order to do so. We need to stress to the regional and local authorities the opportunity offered by the Structural Funds to address the challenge of water efficiency in terms of saving and reusing water.
We also need to call on the Commission to promote the entry into operation of the European Drought Observatory, to work on complementing national, regional and local data.
Finally, we need to acknowledge that water scarcity and droughts have direct effects on social, economic and territorial cohesion, as the impact is more pronounced in certain regions, leading to land abandonment, forest fires and soil degradation, and hindering significantly the development of those regions.
Mr President, firstly I would like to congratulate Mr Seeber on the work he has done, because his report picks up many of the concerns expressed in this House regarding problems that are crucial for the whole of the European Union: water scarcity and drought, which have now ceased to be a problem for only the southern European countries.
I am pleased that this draft incorporates some of the ideas included in the opinion for which I was the draftsman in the Committee on Agriculture and Rural Development, in favour of agricultural activity, for example in highlighting the role that farmers play in the sustainable management of available resources. It also includes a reference to droughts and water scarcity as factors that push up the prices of raw materials, an aspect which, in the current climate, I think it is very important to highlight, so that we keep in mind not only the environmental dimension of this problem, but also some of its most important economic consequences.
The Committee on the Environment, Public Health and Food Safety also included the idea of establishing a European Drought Observatory, something that is also mentioned in the opinion of the Committee on Agriculture, and which I hope will one day become a reality.
The text to be put to the vote tomorrow does not, however, include a proposal made by the Committee on Agriculture for the Commission to look into setting up an economic adaptation fund against drought, which would benefit all economic sectors, including agriculture.
I would personally like to make it clear that I will continue to advocate the establishment of this fund, an idea that I will propose to Parliament again when the Commission produces its planned communication on adaptation to climate change in the next few months.
I think that, following the establishment of the Solidarity Fund, which was created to mitigate the losses caused by climate disasters, it is time for us to think about an instrument that acts in advance to fund preventive measures to reduce the environmental and financial cost of these climate disasters.
on behalf of the PPE-DE group. - (HU) Thank you, Mr President. I would first like to add to my colleagues' praise of Mr Seeber. He has brought expertise and hard work to this task and well deserves success and praise. This, I must say, is an extremely important matter. Ninety per cent of Hungary, my country, is a land threatened by drought. The regular occurrences of drought in past few years have caused exceptional damage to Hungarian agriculture, with the damage last year alone amounting to one billion euros. Drought is a problem that is not restricted to the countries in the south. It has caused huge problems in Hungary even though Europe's largest river, the Danube, and the seventh largest, the Tisza, both flow across it. Even so, the hundred-kilometre-wide area lying between these two abundant rivers has begun to suffer from desertification and this process is happening and being made to happen ever faster. This demonstrates that the European Union needs an overarching water management programme and I would therefore like to welcome this report, showing that the European Union has resolved to take action in the fight to control desertification and in the interests of that fight.
Yesterday, the Committee on Budgets, on my proposal, supported a pilot project calling for assistance in the control of desertification. But we must all contribute more in support of efficient agriculture practices and overarching water management. The measures we have to take to rationalise the use of water by the general population are important too. As a result of climate change the effects of regular periods of water scarcity will probably become more pronounced and every single drop of evaporated water will have a consequence.
Finally, permit me to draw your attention to the question of global responsibility. As the population of the world continues to grow dynamically, with even more pressure on industry, agriculture and water in the developing countries, Europe must re-evaluate its water reserves. It is our duty and responsibility to conserve and augment these reserves. Thank you.
On behalf of my group, the Socialist Group in the European Parliament, I would like to thank the rapporteur for his work. This is an important report containing appropriate proposals on how the European Union can address the challenge of water scarcity and droughts. This is not a new problem, but the situation has become more acute and extensive. The 2003 drought affected more than 100 million people and a third of the EU's territory, and cost the European economy EUR 8.7 million. Water scarcity no longer affects just the southern European countries; its impact is already being felt in central and northern Europe, as has been mentioned here, and the situation is getting worse because of climate change.
The European Union must take urgent measures to resolve the two issues of excessive water consumption and water wastage. According to European Environment Agency data, there is huge potential for water saving in Europe. Approximately 40% of the water used could be saved. Moreover, Europe is continuing to waste at least 20% of its water due to inefficiency. That being so, the amendments I tabled, and the Committee on the Environment, Public Health and Food Safety adopted, on the re-use of waste water and desalination, are fully justified. Furthermore, as leakages from pipes result in much wastage, I suggested that Member States could use the Structural Funds to improve and renew existing infrastructure and technology. It is impossible to develop a water saving culture without the involvement of citizens. Therefore, it is necessary to promote public awareness and information campaigns. Water is a public asset, yet it is scarce. We all need to contribute towards reducing consumption and combating waste so that it is accessible to everyone at a fair price.
Before I conclude, I should like to ask the Council and the Commission when the Solidarity Fund support mechanisms will be made more flexible. As drought is an anomalous natural phenomenon with serious, lasting repercussions on the living conditions and socioeconomic stability of the affected regions, it would be helpful for the Fund to support situations of a regional nature and for public and private damage to be made eligible.
on behalf of the ALDE Group. - (FR) Mr President, Commissioner, ladies and gentlemen, the lively debates that we have had recently about energy show that energy is a valuable asset, a basic need. Well, what about water? This is even more precious. We are conscious of the scarcity of water in developing countries. Well, what about in Europe? Water is also a valuable resource for Europe. Let us stop wasting it; let us conserve this resource.
The report that will be put to the vote tomorrow is a comprehensive report that deals with technical aspects, such as leakage from distribution networks, as well as political and societal aspects, such as usage and raising awareness about the efficient use of water. Our responsibility for water is both individual and collective. This report also addresses the issue of problems arising from the scarcity of water and drought, problems that are both immediate and long term in the context of climate change.
I would like to point out that it is important to share good practices, since Europe is affected to varying degrees by the scarcity of water, or drought, and therefore the practical experience of all regions is crucial if we are to avoid these phenomena or resolve them. I will even go further by saying that lessons can be learnt from both good and bad practices.
I am also satisfied that a link has been made between the availability of water and the quality of water. In fact, Parliament attaches a great deal of importance to this issue of water quality, through texts such as environmental quality standards or the current debate on pesticides.
The solution to the scarcity of this resource has many different angles: we need to encourage research and innovation, we need to improve technical and agricultural use, we need to change individual behaviours. Let us act now and disprove the old English adage that 'you never miss the water till the well runs dry'.
on behalf of the Verts/ALE. - (FR) Mr President, Commissioner, I would also like to thank the rapporteur for his work. We can only stress the fact that water has become a precious and rare resource.
The rapporteur told us that 3.2 billion inhabitants on this planet could face a water shortage. We also know that Europe is not immune from this. Therefore, we should do everything possible to conserve this rare resource. Water is a shared asset and it is unfortunate that some of my amendments were not adopted by the Committee on the Environment, Public Health and Food Safety.
This is why I am addressing the Commission directly. I hope that, as part of the CAP reform, we will also review certain methods of cultivation - I am mainly thinking of irrigation techniques that are unsuitable for some European regions and which must be abandoned if we are to stop wasting water.
It is also a shame that the amendment on the cooling of nuclear power stations was not taken into account because, in my own country France, at the time of year when river levels are very low, nuclear power stations have to be shut down or cooled using sprinklers. This is ridiculous, and is terribly dangerous for our citizens.
on behalf of the GUE/NGL Group. - (NL) Mr President, I should like to start by expressing my warm thanks to Mr Seeber. Many of us here think that clean drinking water looks like this. I should like to point out that, in a great many countries, that glass is empty. Many people have either no water or water looking like this.
Debates on oil shortages are tremendously heated, and I sometimes wonder why this is not the case for water. After all, water is a matter of life or death. The world's population is constantly increasing, and the quantities of clean drinking water available are only decreasing. Water scarcity exists even in Europe. This includes 'hidden' water scarcity: when, for example, households have their drinking water supplies cut off. The causes are various, for example poor sanitation systems, the creeping liberalisation of public services, the use of pesticides and artificial fertilisers, and intensive livestock farming. Did you know that producing 100 grams of beef requires 2 400 litres of water?
The Commission Communication largely focuses on water saving. As far as I am concerned, this is like carrying coals to Newcastle, as the source of the problems I have just mentioned should be tackled to begin with. For example, we first need investment, throughout Europe and beyond, in proper sanitation and water purification systems. In addition, more careful use must be made of pesticides, thought must be given to the impact of intensive livestock farming on water management, and measures must be taken to combat climate change.
Access to clean drinking water is a civil right, something to which everyone is entitled. The problem lies not in the availability or otherwise of sufficient drinking water, but in the distribution of clean drinking water, unnecessary pollution, and the drive towards privatisation. To give just one example, in the United Kingdom privatisation led to a sudden sharp increase in prices and in the number of households having their water supplies cut off. That is a disgrace. I would advocate leaving drinking water supplies in the public sector.
Mr President, water scarcity and droughts particularly affect southern parts of the European Union and have both climatic and human causes. Tourism also makes heavy demands on water resources, in the very countries where the problems are already severe. Study results from the IPCC have shown that the risks will only increase in coming years. Therefore, we must take care that the situation with regard to water does not grow any worse.
In my opinion, therefore, this report sends out a good signal. Efficient water use is vitally important in the fight against water scarcity and droughts. I would emphasise in particular the water-pricing principle also included in the report. Several Member States have had positive experiences with this. I, too, welcome the link made in the report to the Water Framework Directive. I think that that is the right place for the problems of water scarcity and droughts. Finally, my compliments to the rapporteur, Mr Seeber, on a job well done.
(DE) Mr President, as long as it is guaranteed that water resources remain under the exclusive sovereignty of the Member States and neither the EU nor the ECJ can intervene in any way, it certainly makes sense to have a joint strategy to combat water shortages.
However, it makes sense only if we tackle the problem comprehensively and apply ourselves to causally related problems such as population explosion and climate change. In the agricultural sector, which is responsible for 70% of the world's water consumption, there is certainly enormous potential for economising on water use. However, the EU has also contributed its two cents' worth to wasting water by requiring connection to and the use of canal systems.
On top of this, existing water shortages are often exacerbated by poor decisions - as in Cyprus, where citizens are paying the price in the form of water rationing for the building of new golf courses despite chronic water shortages.
Therefore, when it comes to water, a resource essential to life, we must become more aware and responsive, but this must on no account take the form of forcing benefits of dubious value on all Member States in typical EU style.
(HU) Thank you, Mr President. Ladies and gentlemen, the issue of water shortages and drought is one of the most urgent now facing the European Union, and, as a complex issue, closely linked with other environmental issues, it must be regulated with that in mind. Water use is not restricted to a specific geographical area. Its capacity to span borders demands regulation at European Union level. We must emphasise this important aspect of cross-border water management. The conditions attaching to floods which cause such serious damage are closely linked to the widespread practice of cutting down forests; in other words, deforestation results on the one hand in aridity and wasteland and on the other in devastating floods.
It is important to stress that we must maintain the principle of subsidiarity in the area of water management. The role of local and regional authorities and the elected councils must be strengthened as these bodies have a significant contribution to make in ameliorating the difficulties deriving from water shortage and drought through land use and building regulations.
As well as regional and local authorities we have to keep civilian organisations in mind, too. They are an important factor in education and publicity campaigns and this role should be supported in the future. It is essential to organise incentive and media campaigns, since it is not just the existence of the issues that can be highlighted through these forums, but in addition people can see how ideas and proposals are put into practice.
I would also like to draw attention to how important it is for the Member States to have a certain flexibility so that they can regulate other issues concerning irrigation and water management in line with their own special conditions. The regulatory authorities at different levels must work together to create a sustainable water management framework. I would like to thank Mr Seeber for all the work he has put into his report, and to thank you for your attention.
(ES) Mr President, I welcome the fact that there is a document on water, although I think that, unfortunately, this document, because of climate change issues, has been reduced to a partial and very specific view of the subject, which is water saving .
Despite this, I commend several things that Mr Seeber has highlighted and expanded on based on the Commission document, by making it clear that water is everyone's right - water for all - and that we need to take into account that we need to have closer cooperation between the regions, which is a phenomenon that I do not think is up to date right now, and which is a good lesson for all those who believe that water belongs to whoever has it in a river in their backyard.
I have to say, however, that I think that we have to start thinking in terms of water and climate change from an overall perspective. There are three problems in the world at present: one is hunger and food shortages, another is climate change, and another is drought, which is a problem that we have had for many centuries.
An increase in resources is essential and it is not dealt with here. We need to multiply the existing resources, and this is only mentioned in amendments made by Parliament. Not only desalination; we will also have to regulate the rivers again, and think about new engineering and new water paradigm, consisting of making every effort to ensure that water remains in the land: through reforestation, drought tanks to recover water during floods, recharging aquifers during floods and another set of measures.
We also need to think about an agricultural strategy for producing products that can generate the same plant mass as is produced now, but with a strategy focused on new crops that can grow with little water. For the same reason, we need to talk about a water economy, as it is not only a question of rising prices as has been said here, or of real prices, but rather there is a much more complex water economy.
Therefore agriculture strategy, consumption strategy, land treatment, river regulation and, if water needs to be diverted, it should be. What is important is for the world to continue to be sustainable, thinking about people and the economy.
(ES) Mr President, I would first of all like to thank the Commission for finally presenting a document on the problem of drought and water scarcity, which we have been calling for in Parliament for some time now. Especially having seen how cases of major floods have been dealt with in a way that we felt was right and sufficient, but it has always been forgotten that in other places drought is becoming a structural problem and that the problem of water scarcity has not only social effects but also economic effects, and has an even greater impact on all aspects of sustainability.
I must congratulate the rapporteur, Mr Seeber, on his excellent work, and also thank him for his active participation in and presence at the debates for European Environment Day at the International Expo 2008 in my city, Zaragoza.
I must thank him for this because at the Expo, the European Union was able, through Mr Seeber, to express its concern about water sustainability and to set out the needs and problems that affect the European Union, from the perspective of the Union and the European Parliament.
I also have to say that we now know that water scarcity problems are very much linked with the cycle of the fight against climate change, as we know that in that cycle, unrestrained deforestation and urban development are contributing to growing water scarcity, and therefore the authorities concerned need to pay heed to water-related considerations in their land-use planning, especially in connection with the development of economic activities in increasingly sensitive river basins.
On this aspect, as the Commission proposes in principle, we advocate establishing a hierarchy of water uses and, as Mr Seeber acknowledges in his report, we do not, of course, think that diverting water over long distances should, under any circumstances, be the solution to the problem of water scarcity.
On the contrary, our point of reference should always be correctly applying the Water Framework Directive, as a framework for achieving a good status for all European waters, respecting river basin units as well as objectives for improving quality.
As Mr Seeber's report rightly acknowledges, there are losses of up to 50% in cities and 20% water losses in Europe in general. Through various mechanisms and technologies and new forms of water saving and water efficiency, it would be possible to save 40%.
In order to do this, we need to promote sustainable water use, protection of available water resources and their efficient and sustainable use.
We therefore welcome the proposals to keep the European Drought Observatory within the framework of the European Environment Agency and for a network of cities to encourage sustainable water use.
(DE) Mr President, Commissioner, ladies and gentlemen, including the topic of water in all policy areas and developing a comprehensive plan for dealing with the subject is a real challenge that must be tackled successfully, as this debate has already very clearly shown. All political levels - national, regional and local - should be included in this process.
As a rapporteur for the Solidarity Fund and in view of the fact that this Parliament made its stand as long ago as May 2006, I again urge the Council to make a quick decision on the suggestion for a regulation on the EU Solidarity Fund, in order to complete the setting of criteria and measures eligible for funding by including the incidence of drought, so that damage caused by natural disasters can be dealt with effectively, flexibly and more appropriately.
However, my call is also to regional and local authorities to make the most of the opportunities that the structural fund offers to invest in infrastructure with regard to both efficient use of water and prevention of adverse effects when protecting water resources. The fact that this always involves a second call - to citizens both urban and rural - to take water conservation measures more seriously hardly needs to be emphasised here; it goes without saying.
I would like to thank the rapporteur.
(SK) Water is life. Life on earth could not exist without water. Rain is a gift from God that must be managed in a responsible manner. We must not flush a gift from God down the drain. We must use it to nourish the ground, to bring forth new life.
Every year, more than 20 billion m3 of rainwater are drained away from European cities through sewers and drainage pipes into the seas and oceans. This is the real reason why the European continent is drying out because rainwater, in all its forms, is the source of all water resources on the continents.
I welcome the involvement of the rapporteur, Mr Richard Seeber, in seeking solutions to the problems of water scarcity and droughts in the EU. However, I expected the report to be slightly more ambitious. Only in paragraph 48, which found its way into the report thanks to my suggestion in the Committee on Regional Development, does the report mention the need for rainwater collection, and even then it does so only marginally.
I believe that the new water paradigm, developed by the team of Slovak and Czech scientists led by Mr Michal Kravčík, will also influence our rapporteur and in the future will change the EU Water Framework Directive. As far as I am aware, Commissioner Špidla has also expressed his support for this suggestion and this programme.
Mr President, I should like to thank Richard Seeber for his commitment in this most important area. I fully support the movement towards a water-efficient and water-saving economy and of course the full implementation of the Water Framework Directive, which I was very involved in a few years ago when my former Austrian colleague Marilies Flemming was the rapporteur.
In fact the contents of Article 9 of the Water Framework Directive, to which I would like to draw attention tonight, were a result of an amendment I made to the original draft proposal. I would like an assurance from the Commission that any proposals regarding water pricing or compulsory water metering, if it should arise, would be expressed in accordance with Article 9 of the Water Framework Directive, which allows for the continuation of the established Irish practice of not charging domestic householders for domestic usage.
Please do not ask me to justify the sustainability of this to you here and now, but please believe me that it is a matter of acute political sensitivity and one, if I may suggest, best handled by Irish governments rather than under an EU directive. We are a wet island off the west of Europe but we too are facing shortage as we consider the impact of climate change on water.
(HU) Food and water have acquired the same strategic value as oil and gas. One moment we have water shortages and the next we have inland inundations and floods. This is a European problem, and Mr Seeber's report is extremely important here. I would like to amend Esther Herranz García's proposal in that we do not need a common European position on floods but on water management, as inland inundations and floods cause as big a problem as drought, and those on the committee know only too well that there is no single European risk management basis here. It is in this context that the problem of drought has to be tackled, and not just in Mediterranean countries. My colleague Péter Olajos has mentioned that ground level has shrunk back by four metres in Homokhátság, between the Danube and the Tisza, in the last four decades. Desertification has now reached Hungary and Central Europe. This is a pan-European problem. We can learn a lot from our Israeli colleagues, I am not ashamed to learn, they have excellent irrigation methods. Thank you for your attention.
(PL) Mr President, the protection of water resources, water ecosystems and drinking water is one of the essentials of environmental protection. Coordinated action is therefore required at EU level to ensure effective protection of this valuable resource. The three main challenges facing Europe in the sphere of water consumption are thrifty, sustainable and effective consumption.
Climate change is not the only challenge facing Europe. Despite increasing demand for water, we are still grappling with excessive, unsustainable and inefficient water consumption that is rising almost twice as fast as the world's population. In Europe itself, at least 20% of resources are wasted because of inefficient management. Means of regulating demand are therefore to be preferred to the usual increase in supply. Means of regulating supplies should be considered only when the potential linked to more thrifty water management, better control of demand and educational actions has been exhausted. Regional cooperation and the use of structural funds may also play a not insignificant role.
Member of the Commission. - (CS) Mr President, ladies and gentlemen, thank you for the debate on water management and water-related problems, which has highlighted many varied points of view. Although I will not respond to each individual speaker, I would like to address several issues contained in the report that I consider to be of particular importance. Firstly, the report acknowledges the importance of the Water Framework Directive. Full implementation of this Directive is a priority that will help to solve the problem of poor water management. The report also points out that measures on the demand side should be preferred and welcomes the fact that water savings are the Commission's first priority in tackling this problem. The water-saving potential in Europe is huge: 33% in households and 43% in agriculture.
The report also emphasises the link between climate change, water scarcity and drought and the need to take water-related issues into account in other policies, such as land-use planning, where poor decisions in some cases have aggravated the problem in the past. The report also calls on regional and local authorities to take advantage of the opportunities offered by the Structural Funds, and underlines the role played by environmental programmes within the framework of the second pillar of the common agricultural policy. This integration will be a priority in the shift towards practices aimed at achieving water savings.
The report also acknowledges the importance of high-quality information and calls on the Commission to promote the entry into operation of the European Drought Observatory. In response to the communication, the Commission's Joint Research Centre is now developing its prototype.
Finally, the report stresses the need for precise measures and a concrete timetable for their implementation. I can assure you that the Commission intends to elaborate further on the goals set out in the communication and that it is working on a report that will evaluate the progress made in solving the problems concerned. In addition, the Commission is fully committed to continuously solving these issues at international level, in particular through the United Nations Convention to Combat Desertification and the United Nations Framework Convention on Climate Change.
Mr President, ladies and gentlemen, in conclusion I would like to say that water-related issues will continue to be at the heart of our political programme and that your report is a very useful and topical contribution to the Commission's continuous efforts to adapt to climate change.
Ladies and gentlemen, I think that the debate has demonstrated clearly that water management is a complex issue and I cannot but agree with your opinion that this issue must be streamlined in all policies and that its facets are also extremely significant at international level.
Mr President, thank you, Commissioner, and thank you, ladies and gentlemen, for your very good input. I would like to say in advance that sovereignty over water resources must remain a national matter. Nevertheless, we need to demonstrate solidarity, although this solidarity must be voluntary.
Many good and very detailed suggestions were put forward by Members. I took only some of them into account, for the simple reason that this was an own-initiative report that had to remain relatively general and illustrate general principles. I am very much looking forward to seeing the paper that the Commission will present, hopefully in the next few weeks - that is, the Green Paper on adaptation to climate change, which we are all impatiently waiting for, because we all know that the 'Adaptation and Climate Change' section relates primarily to water. We are eagerly waiting to see what concrete suggestions the Commission has to make.
I would like to remind you that from our point of view, 'mainstreaming' is extremely important. It is vital for water policy to be included in all other areas of policy and politics, as my colleague Mr Berend has also pointed out. European funds must not be used in ways that contribute to short- or long-term water scarcity. Everyone must realise - and we must raise awareness of this in the political and economic world, but also amongst citizens - that water is not an infinite resource. My colleague Mrs Doyle mentioned water pricing. It is very clear: Article 9 must be implemented, but here the Member States have a wide scope and the necessary flexibility, and their traditions must be taken into account.
I support the measures on the demand side, too, although the supply side must also be taken into account, as our Spanish fellow Member said. There are special situations where these, too, simply have to be solved via the supply side.
In summary, I would like to thank everyone most sincerely for the stimulating debate.
The debate is closed.
The vote will take place tomorrow.
Written declarations (Rule 142)
in writing. - Water scarcity is a growing concern for all nations, but the impacts are generally more strongly felt by the poorest regions, leading to great environmental and economic misfortunes. Some countries are affected more than others depending on their geographical location and the core industries of their economies. Such is the case of the Mediterranean region, where water scarcity will be an acute problem as a result of its potential to disrupt tourism. Protecting water as a scarce resource is fundamental for environmental protection and economic development.
The creation of a more cohesive policy with regard to water consumption, education and policy integration is necessary at European level to ensure effective and responsible protection of water supply and the environment in Member States. Also, more research is necessary into desalination plants and water recycling technology in order to have a cheaper and more efficient system.
In addition, in the EU itself - at least in number of Member States - we need to have better and tougher legislation to curb abuse and pollution of water tables. Moreover, in certain regions the allocation of structural funds to support projects relating to water should be promoted. It is of critical value to ensure that all stakeholders in our society, politicians, industry and consumers themselves believe in this priority to be able to make informed decisions.
in writing. - (RO) Climate change can have an irreversible effect on all the planet's water resources and therefore it is essential to adapt all aspects of socio-economic life to counteracting the effects of water shortage.
The European and international legislative frameworks offer efficient levers but we need real progress in terms of the rapid enforcement of all measures adopted, especiallyly those contained in the Convention to Combat Desertification and the Water Framework Directive whose protracted implementation deadlines endanger the sustainability of resources.
I appeal to the Commission and to the Member States, utilising the active involvement of all authorised bodies and the local authorities, that they accelerate transparent and coherent water consumption tariffing processes by basing it on the principle of "the user pays” and by eliminating system losses.
I also recommend that the implementation of concrete measures for the rational use of the river basins is accelerated, especially in the case of those where there are hydropower plants built and most importantly of rivers that ensure the cooling of nuclear plants, because irrational use combined with the accentuated decrease of flows may lead to the closure of many clean electricity production facilities and, as a consequence, could throw the European electric power system out of balance, which would entail major risks to the Union's security in the electric power sector.
in writing. - (RO) I wished to intervene because I am a MEP from the south of Romania, an area which has faced serious drought problems over the past couple of years.
The last drought, in 2007, affected over 80% of the homesteads from my region, Ialomiţa. I believe that this phenomenon can be reduced and that we can get the results we all want if we also examine it from the perspective of regional development. Member States must be careful with sensitive river basins where there is a water shortage but they must be especially careful when they authorise economic activities in those sensitive areas.
When we allocate funds for water infrastructure, priority must be given to those which include clean technologies, use water efficiently and also involve risk prevention measures.
I also believe that both the Commission and the Member States must favour the emergence in Europe of a culture based on water saving and on management rules acquired through education.
Water shortage is one of the new challenges. So far, this has affected 11% of the European population and 17% of European territory. Cohesion policy must face this challenge.
I conclude by adding something that I also consider to be of immediate importance, in order to generate results: optimisation of the use of the Solidarity Fund and of the Civil Protection Cooperation Mechanism.
in writing. - (RO) Water scarcity and droughts have become issues of major importance both in the European Union and at a global level, especially in the context of climate change, which has aggravated this situation. Such phenomena have harmful secondary effects on biodiversity, water and soil quality and increase risks of forest fires, as proved by the recent devastating fires in Southern Europe.
In South-East Europe, the grants coming from the Common Agricultural Policy have caused an increase in water consumption, a reason why it is necessary to encourage the full suspension of grants and to provide support for the management of water resources within rural development programmes. Also, the continuous increase in the current demand for biofuels forces us to adjust production and the other economic activities to the amount of water available at local level.
In order to find solutions to these problems, the main priority is the transition to the efficient use and the saving of water. The introduction of water charges to stimulate the rational use of water, the achievement of the goals provided in the Water Framework Directive and the correlation with other industry water policies should materialize in actions to be carried out in the future.


Written statements (Rule 116): see Minutes