ECB annual report for 2008 - Report on the 2009 Annual Statement on the Euro Area and Public Finances (debate)
The next item is the joint debate on the following:
the report by Mr Scicluna, on behalf of the Committee on Economic and Monetary Affairs, on the ECB annual report for 2008, and
the report by Mr Giegold, on behalf of the Committee on Economic and Monetary Affairs, on the 2009 Annual Statement on the Euro Area and Public Finances -.
rapporteur. - Mr President, the last two years have certainly been the most challenging for the ECB, in its role as guardian of financial and price stability, since its inception. My report on the ECB's 2008 annual report was drafted in this context.
The report focuses on the ECB's continued response to the crisis, its exit strategy proposals, the increasing imbalances within the eurozone, the reform of the EU's financial architecture and, finally, issues related to the governance and accountability of this institution. I hope that a good balance has been found.
The financial and economic crisis has seen the worst global economic decline since the 1930s. After a relatively benign period of economic growth enjoyed across most of Europe, most Member States have had their economies stress-tested, not through a simulated model but in real time and with painfully real consequences. The result has been GDP growth of a meagre 0.7% in 2008, followed by a 4% contraction in 2009. Meanwhile, Member States across the EU have forecast a very sluggish and uneven return to growth in 2010 and 2011.
Most Member States are experiencing rising budgetary deficits and debts. The Commission's economic forecast in autumn 2009 predicted average budget deficits across the eurozone of 6.4% and average government debts of 78.2%, figures which, in turn, are both expected to increase in 2010. It will take years for these figures, brought about by the financial and economic crisis, to return to the pre-crisis levels.
I believe that the ECB has responded fairly well to the crisis. The primary function of the ECB is to maintain price stability. Although inflation was far above the ECB's self-imposed ceiling when it peaked at 4% in June and July 2008, inflation rates have since tumbled. The ECB has also steadily cut interest rates from a peak of 4.25% in June 2008 down to the current rate of 1% in May 2009, in a bid to reinvigorate lending and to kick-start the European economy.
The ECB's additional role during the crisis has been to expand liquidity provisions through the use of non-standard measures. Without such financial life-support, many financial institutions holding the savings and pensions of many European citizens would undoubtedly have collapsed.
Of course, it could be suggested that the ECB's interest rate cuts were not as radical as those taken by the likes of the US Federal Reserve or the Bank of England.
Similarly, while the ECB's massive cash injections have kept many institutions from collapse, the reality is that many banks have not passed on the liquidity to customers, particularly to the detriment of the small and medium-sized businesses on whom economic recovery rests. Instead, many banks have used the liquidity to buttress their own position. To justified public revulsion, it has allowed them to make bonus payments as well.
I also cannot avoid making a quick reference to the policy responses needed to the current fiscal imbalances, a subject which is surrounded by a lot of confusion and which requires timely and decisive action. However, I will leave it to my colleagues here perhaps to amplify on this.
Like previous rapporteurs, I believe that the dialogue between this Parliament and the ECB is constructive and is developing positively. This is something to build upon. I believe that Parliament should be more closely involved in the appointments of the ECB Executive Board members - including the next President of the ECB - by following the precedent that has recently been set by the procedure taken for the appointment of the new Vice-President of the institution.
The ECB is accountable to the citizens of Europe through the European Parliament. We must strengthen that accountability. Above all, the crisis has demonstrated that markets left unregulated do not always self-correct and are prone to systemic risk. For this reason, it is important to support and complete the comprehensive set of reforms to the financial architecture of the EU and, in particular, the establishment of a European Systemic Risk Board, a body designed to act as a watchdog, giving an early warning of any systemic risks of instability in the financial...
(The President cut off the speaker)
Mr President, the report on the 2009 annual statement on the euro area and public finance was drafted during a period when the euro area was facing huge challenges and this period has not yet come to an end.
The economic situation is a matter of major concern for the citizens of Europe and for all of us. At this time, the report was adopted by the Committee on Economic and Monetary Affairs in a highly cooperative spirit and by a large majority. I would like to present the report against this background. On the one hand, it is very clear, both from the relevant Commission proposal and from the recommendations which Parliament and the Committee on Economic and Monetary Affairs are presenting here in the plenary session, that the economic situation must be stabilised. On the other hand, the crisis, which has achieved a certain level of stability as the growth figures have recovered slightly, has entered a second phase represented by huge public budget deficits. This is the price which we have to pay in order to emerge from the crisis. The report's message in this respect is very clear. We must return to the path taken by the Stability and Growth Pact as quickly as possible. We cannot pass on this level of debt to our children and grandchildren.
However, the report also states very clearly that the rules in the Stability and Growth Pact are not enough. There are no corresponding measures for improved coordination in the euro area and it is important to resolve the imbalances within the euro area and increase the coordination of budgetary and fiscal policy.
Those with responsibility for these areas in the euro area are now faced with the significant challenge of finding a responsible solution for these problems. This means that it is out of the question for every country to continue to insist on its individual privileges against a background of parochial politics. The Commission, in particular, and also the euro area countries, have a huge responsibility for introducing the necessary measures in this situation. I would like to summarise briefly our proposals in this respect.
Firstly, we need effective instruments for economic coordination. Secondly, the structural dependency of the euro area on finite resources must be brought to an end. We cannot afford to slip back into recession the next time that there is a rise in oil and resource prices, which is already under way. Thirdly, it is essential that the financial markets are effectively regulated after this crisis. However, we are currently seeing individual Member States ensuring that sensible proposals are not even being made by central authorities, such as supervisory bodies. Fourthly, it is unacceptable that in a crisis of this kind the focus is not on the objective of social cohesion, contrary to the values of the European Union. Instead, individual Member States are expected to use ridiculous interest rates in order to finance their debts. This is why we are calling in the report for eurobonds or similar measures to be applied, in order to help the weaker Member States by means of solidarity. Most importantly, the necessary changes to fiscal policy must not be made at the expense of mass purchasing power. The simplest solution which would allow us to make good progress in this area is effective cooperation in the field of taxes.
At long last, the Commission must quickly come up with some proposals for a common consolidated corporate tax base. The report also calls for the implementation of a country-by-country reporting system for corporate income. We are asking you to submit a corresponding proposal. In general, the principle of tax cooperation must take priority over tax competition, in particular, in the context of the work done by Mr Monti and the reinvigoration of the internal market. We need you to come up with effective proposals so that we do not come out of this crisis with even higher debts. Strong economic cooperation between the Member States will help us to ensure that we do not leave behind debts for our children, but instead a euro area in which the countries cooperate with one another rather than being dragged down by competition.
Mr President, ladies and gentlemen, I am pleased to be here with you on the occasion of the debate on the resolution concerning the European Central Bank annual report for 2008.
As a result of the parliamentary elections last year, this year's debate has been postponed for a long period. However, this gives me the opportunity to discuss the current situation at the end of the debate.
(FR) Mr President, as you know, the European Central Bank welcomes the very close links with Parliament, which incidentally go far beyond the obligations provided for by the treaty. Over the years, we have established very fruitful dialogue, and I would say that the excellent reports that we have just heard from Mr Scicluna and Mr Giegold are further evidence of this.
Today, in my statement, I will briefly review the economic developments observed in the past and the monetary policy measures taken by the European Central Bank. Then I will address a few points that were raised in the proposal for a resolution and I will say a few words about the current situation.
First, on the economic developments and monetary policy over the past year. In 2009, as was said very eloquently by Mr Scicluna, the European Central Bank was operating in an environment that future economic historians are likely to describe as the most difficult one for advanced economies since the Second World War.
Following the profound intensification of the financial crisis in the autumn of 2008, 2009 started with a continued synchronised freefall in economic activity worldwide. Until around April last year, economic activity was declining, month after month. During this period, the trade-mark which was vital for maintaining confidence - and it was the trade-mark of the ECB - was the ability to take the immediate and exceptional decisions that were necessary whilst, at the same time, remaining inflexibly attached to our primary objective of maintaining price stability in the medium term.
Overall, our non-standard monetary policy measures, which are known collectively as enhanced credit support, have served, we trust, the euro area economy well. They have supported the functioning of the money market, contributed to improving financing conditions and allowed for a better flow of credit to the real economy than could have been achieved through interest rate reductions alone. By and large, banks have been passing on the sharply lower key ECB interest rates to households and businesses.
The guiding principle is that, to the extent that the situation returns to normal, keeping these measures in place for longer than required risks changing the behaviour of financial market participants in an undesirable manner, and we do not wish to breed dependency.
This is why, in December 2009, we began to gradually phase out some of our extraordinary liquidity measures, taking account of improvements in financial markets. In particular, we scaled back the number, frequency and maturity of longer-term refinancing operations. At the same time, we have committed to maintaining fully accommodating liquidity support to the euro area banking system until at least October this year.
The Governing Council is of the opinion that the current monetary policy stance is appropriate, and that the continued firm anchoring of inflation expectations bodes well for price stability in the medium term.
Let me now turn to some of the issues you raise in the resolution and which were mentioned in the report.
On the issues of accountability and transparency, we very much appreciate the regular dialogue with the European Parliament and the constructive spirit with which this exchange is conducted.
I therefore welcome the repeated support by the Committee on Economic and Monetary Affairs for our quarterly monetary dialogue. I think, as it was said again very eloquently by the rapporteur, we are accountable to the European people, which means to Parliament.
We consider the ECB to be one of the world's most transparent central banks. Our practice of holding a press conference immediately after the Governing Council meeting on monetary policy each month remains a pioneering initiative that has not yet been replicated by our major sister institutions. With the publication of our comprehensive introductory statement in real time, we explain policy decisions and their underlying rationale.
During the crisis, as you know, we have further intensified our communication efforts and thereby helped to smooth financial market reactions, to build confidence and lay the foundations for recovery.
You have also requested the views of the ECB on the establishment of a clearing house for instruments such as credit default swaps (CDSs) within the euro area. I would like to say that the robustness of euro-denominated CDS markets is of direct relevance for the Eurosystem as regards control over its currency and financial stability in the euro area.
Central counterparty clearing is very important, not only for delivering transparency, but also for diversifying and sharing risk exposures and reducing the incentives to take excessive risks. Certain financial instruments which were introduced for hedging should not be misused for speculation. Regulators should be able to undertake effective investigations into possible improper conduct, and there it seems to me that we are very much in line with Parliament's concerns.
Let me say just a word on the outlook for EMU during challenging times. An economic recovery is in progress, but this does not mean that the crisis is over. For one thing, we know that the pace of recovery will be uneven and we cannot rule out setbacks.
For another, we are still facing numerous challenges regarding the reform of our financial system. Finance must play a constructive role, and not a destructive one, in our economies. The litmus test for a constructive role is that finance serves the real economy. To ensure such a role, we still need to improve the functioning of financial systems considerably further.
Thus far, a great deal of attention has been focused on the banking sector. Effective reforms also have to look very closely at non-bank financial institutions and at the set-up and functioning of financial markets. We have to devise mechanisms and incentives to ensure that finance does not spiral out of control in the destructive way that it did just prior to the crisis.
We have to contain systemic disruptions that lead to economic hardship for the people of Europe. Setting up the European Systemic Risk Board, legislation for which is currently being considered by the Parliament, is part of the correct response to this challenge.
There are other challenges facing the European economy, and they are associated with public finances, as was again stressed by the rapporteur, and sovereign financial health.
Within Europe's economic and monetary union, there is a clear allocation of responsibilities. With respect to that allocation of responsibilities, everyone can count on the commitment of the ECB to maintain price stability in the euro area as a whole over the medium term.
Based on our last projections for this year, we will have at the end of this year, after 12 years of the euro, inflation at a yearly average of 1.95%. That is in line with our definition of price stability: less than 2%, but close to 2%.
The commitment of the ECB, the strategy of the ECB and its track record are consistent. The smooth functioning of Europe's economic and monetary union does not rest only on monetary union but also on economic union. Policy makers at the national level must keep public finances sound and their economies competitive.
In the current circumstances, where Europe faces pivotal decisions, it is more important than ever to recognise that a prosperous union requires determined action by all. Monetary union in Europe is far more, in my opinion, than a monetary arrangement. It is a union of shared destiny.
(The speaker added in French and German: 'We share a destiny in common.')
This destiny is for our common good, and it is the vision of our founding fathers. Monetary union is not a matter of convenience. It is part of an overarching process of advancing the integration of the people in Europe that began after the Second World War.
I believe we often play down the achievement that Europe has attained. We are often too quick to criticise our institutions and processes. But they have generally worked well, even in the most difficult times. I trust that European institutions and processes have remained effective during the financial crisis.
On this side of the Atlantic, we have avoided dramatic events that could have triggered a new intensification of the crisis, which started in the United States in September 2008. It is within this present context that I appreciate the commitment of euro area Member States, made on the occasion of the last European Council meeting, to take determined and coordinated action, if needed, to safeguard financial stability in the euro area.
I would also take advantage of my presence in front of the European Parliament to lay out what I have already mentioned at the hearing before the Committee on Economic and Monetary Affairs on Monday. It is the intention of the ECB's Governing Council to keep the minimum credit threshold in the collateral framework at investment grade level (BBB-) beyond the end of 2010. In parallel, we will introduce, as of January 2011, a graded haircut schedule, which will continue to adequately protect the Eurosystem. I will provide the technical details when reporting on the Governing Council decisions of our next meeting on 8 April.
Let me conclude. The introduction of the single currency just over a decade ago represents the greatest achievement, in my view, in the history of European integration to date - a process that has ensured peace and prosperity in Europe.
The global financial crisis has brought fresh challenges to which we in Europe have risen. Our monetary union and our very close ties, inside the single market, with all EU Member States' economies have prevented the crisis from being compounded by currency crises, as was the experience in the early 1990s.
Today, Europe faces further pivotal decisions. Our common task is to continue to ensure peace and prosperity, to make our union an even more attractive place to live and work in.
For this we need strengthened surveillance as again was said by the rapporteurs, and strengthened cooperation. We also need to revive the sense of common purpose, the shared ideals that motivated our founding fathers. Their endeavour was visionary and all that we see in today's world confirms their lucidity.
Member of the Commission. - Mr President, first of all, I would like to thank you for the chance to discuss the 2009 Annual Statement on the euro area. When we prepared our Annual Statement, we knew that the selected issues would be topical. They might, however, have become somewhat too topical recently.
Let me congratulate both rapporteurs, Edward Scicluna and Sven Giegold, for their excellent reports. In order to respect the independence of the European Central Bank, I will focus on the Giegold report, which makes a very substantive contribution to the current debate on economic coordination and economic governance within the euro area.
In my view, the broad support the Giegold report enjoyed within the Committee on Economic and Monetary Affairs is indeed a testimony to the relevance and balance of his approach and issues. I fully agree with Mr Trichet that the euro is not only a technical monetary arrangement but is rather the core political project of the European Union, which must be defended and developed in this European spirit, not least today and tomorrow, as the European Council is convening at a very critical moment.
Since 1999, the euro area has mostly been an area of economic stability. It has shielded our citizens from economic turbulences. However, since the end of 2008, the euro area has been hit hard by the global financial crisis. Despite the economic recovery policies and strong fiscal stimulus, financial markets still remain volatile and the degree of uncertainty remains exceptionally high. Recent waves in the market have seriously tested financial stability and economic governance in the euro area, especially in relation to Greece.
I would like to say that Greece is now on track to meet the 4% target of deficit reduction this year, following the bold and convincing measures that the Greek Parliament decided earlier this month and which are now in force. This moment may indeed be a turning point in Greek fiscal history and economic development.
However, neither Greece nor the eurozone are completely out of the woods yet as there are still concerns regarding financial stability in the euro area. Therefore, the Commission has strongly encouraged the euro area Member States to take a political decision on a mechanism to ensure financial stability in the euro area as a whole, a mechanism which could be swiftly activated if needed, in conformity with the treaty and its bailout clause, and without any automaticity built into this mechanism.
On our side, I can assure you that the Commission is ready to put such a European framework in place for coordinated and conditional assistance, which could be used if needed and if requested. We are working closely and intensively together with all euro area Member States and the ECB in order to reach such a solution this week in the context of the European Council.
However, in addition to the immediate crisis management, we need to look at how similar situations can be avoided in the future so that we never again have cases similar to the Greek case now. The Greek crisis has demonstrated the need for enhanced economic governance. This was already recognised and the legal base provided in the Lisbon Treaty. Therefore, we are currently preparing proposals for the implementation of Article 136 of the Lisbon Treaty and the Commission will make a proposal for enhanced economic policy coordination and reinforced country surveillance in the coming weeks.
Like you, Mr Giegold, in paragraph 28, we regret the lack of binding commitments among governments to enforce coordination in the euro area. Therefore, an integrated and forward-looking approach focused on policy action and clear operational arrangements is needed. First and foremost, we needed to prevent unsustainable public deficits and therefore we need to be better able to monitor the mid-term budgetary policies of the euro area Member States. We need to be able to issue broader and more stringent recommendations to the Member States to take corrective measures. I also count on your support in this matter.
We can also make better use of existing instruments. It is possible for the Council to address recommendations to a Member State whose economic policies risk jeopardising the proper functioning of economic and monetary union. This has been used in the past, probably too rarely. With the new Lisbon Treaty, under Article 21, the Commission can issue similar early warnings directly to a Member State. This is something we must do in order to help Member States to address emerging economic problems at a much earlier stage.
As I seem to be running on injury time, I will continue on macro-economic imbalances in my concluding remarks. That is the second core element of reinforced economic governance. By and large, I share the views of the rapporteur in this regard.
I just want to conclude by saying that the financial crisis has harshly demonstrated that the continuous economic growth of past decades cannot be taken for granted. Today, the worst may be over. The economic recovery is now in progress but it is still fragile and not self-sustaining. Unemployment has not yet changed for the better. The same applies to the consolidation of public finances, which is a prerequisite for sustainable growth. No matter how important fiscal stimulus was for the economic recovery, the two years of the crisis have wiped out over 20 years of consolidation of public finances.
These clouds will overshadow our economic landscape in the coming years. We must do our utmost to clear the sky and bring back growth. Therefore, this is indeed no time for business as usual. Instead, this is time for a change in step to promote sustainable growth and job creation.
Mr President, ladies and gentlemen, let me firstly congratulate and thank the rapporteur, Mr Giegold, who has proposed a work of high quality and has shown himself ready to listen to the rapporteurs from other groups.
This report, the European Parliament's response to the European Commission annual statement on the euro area and public finances, is rich in analyses and proposals. Of course, it is, to a great extent, marked by the big event of 2009, the economic and financial crisis, which is without any doubt the most serious crisis the European Union has faced since it was created.
I have learnt two main lessons from this crisis. On the one hand, the Economic and Monetary Union has shown how useful it is. The euro, a stable common currency, has played the part of a real monetary shield. Belonging to the euro area has enabled more than one country to avoid a devaluation of their national currencies, which would have further exacerbated the consequences of the crisis. The euro area has therefore become more attractive, as the case of Iceland shows.
Moreover, the active and flexible monetary policy conducted by the ECB, increasing its injections of liquid funds into lending establishments, has played a significant role in keeping European banks afloat.
The first lesson then is that while we often say that Europe was built on crises, this one has shown that economic Europe is both effective and necessary at the same time.
From this I draw the second lesson, which is that we should strengthen European economic governance. Today, the only genuine European economic policy is monetary policy. There is limited coordination of budget policies. However, the euro area, which - as mentioned again by this report - is intended to integrate all the Member States of the European Union, must establish effective governance in every aspect of economic policy.
It must begin with macro-economic as well as financial monitoring, something we are busy working on in the European Parliament. It must be carried forward within the framework of the Stability and Growth Pact as a real instrument of fiscal coordination. At this time of crisis, the considerable drop in revenue, the tax incentive measures taken within the framework of the recovery plan and the operation of economic stabilisers have led to a deterioration of the budget balances of the Member States.
Reducing public debt remains a fundamental commitment, as it concerns our children's future. Let us be austere, but let us also be inventive. Let us think about a new European fiscal policy, let us think about eurobonds, and let us be bold in European economic governance.
Mr President, ladies and gentlemen, Mr Giegold's report is particularly significant given the current macro-economic debate. This report is all the more relevant given the fact that its author is a German MEP who wanted to draw the attention of Europeans to the distorted effects, for the countries of the euro area, of the German strategy of reducing labour costs in the single currency system.
The German Government is, in fact, about to drag the euro area and the whole of the European Union into generalised wage deflation with damaging macro-economic consequences. Particularly in the absence of consistent structural funds and sufficient budgetary resources, and faced with the impossibility of devaluation, Member States with current accounts in deficit are condemned, in order to resist, to trim their wages and reduce the perimeter of their social security systems.
The result is firstly a slowdown in internal demand which, since the second quarter of 2008, has led to negative growth, and this was even before the start of the liquidity crisis. Secondly, we are seeing a rise in the personal debt of households with modest incomes and means, whose purchasing power is no longer increasing. Their debt to acquire homes was fed by the whole deregulated financial machinery, in Spain, in the United Kingdom and in Ireland, with the disastrous consequences we have observed in the subprime crisis.
Ladies and gentlemen, listening to the debates in committee, a significant number of MEPs would seem to be forgetting the lessons of this crisis. This crisis is far from behind us. The current recovery is all the more fragile given the fact that Europe is continuing with wage deflation and the Commission, but also the President of the Eurogroup and the President of the European Central Bank - whom we heard on Monday - are calling on the Member States to prematurely adopt exit policies that are comparable to real austerity plans.
These policies risk nipping growth in the bud when it has barely become positive again, even though capacity utilisation rates remain low. These policies will fail to reduce the deficits in Greece, in Spain and elsewhere, because the expected tax revenue will fail to materialise also. They will exacerbate unemployment and will fuel social tensions.
The Giegold report has the merit of drawing attention to some of these macro-economic imbalances. Unfortunately, the final version, amended by the Group of the European People's Party (Christian Democrats) and the Group of the Alliance of Liberals and Democrats for Europe, refuses to condemn wage deflation. However, on the whole, the debate opened by Mr Giegold may be beneficial at a time when neoliberal dogma thrown into doubt by the crisis is back in force in Parliament, in the Council and in the Commission.
Mr President, first of all, I would like to congratulate the rapporteurs Mr Scicluna - who knows a great deal about central banks - and Mr Giegold. We held long discussions with them and in the end, agreed on many compromise amendments.
I would like to talk to you today about the euro. I would like to point out to you all that I am new to politics: until nine months ago, I was giving classes on macro-economics at the University of Barcelona. In the autumn of 2008, my family and I were living in London for academic reasons and I was a direct witness of the pound sterling's sudden drop of 30% over the course of a few weeks. All of a sudden, all my English colleagues had become poorer, and the pound has still not recovered today. In light of how much the pound has dropped, I do not even want to imagine what the value of the peseta would be today if we still had that in our wallets.
These two years of terrible global economic crisis have shown that the euro has firmly anchored us to stability. It is, in fact, the only major Western currency that has not made its users poorer.
The euro has been a secure port against the huge waves of the global financial storms, to borrow the evocative image of the British financier David Marsh. A convinced Eurosceptic for many years, 12 months ago, this respected public financier published a book praising the euro, acknowledging it as a success and as the future global currency.
The euro is not in crisis today: it is the fiscal crises of certain Member States that are causing the single currency difficulties. The euro is a shining example of monetary union that is being studied and admired by the economic elites of China, India, Brazil and Russia. The euro poses no risk to the Mediterranean economies. The euro is the opportunity for their economies to be permanently integrated into the good, reforming and advanced practices of the countries of Central Europe.
The report that we are debating today includes severe criticism of the practice of state intervention in the Chinese currency. Its artificial devaluation has contributed to the creation of the huge global imbalances that are one of the causes of this crisis.
We in the euro area must not penalise the countries that export the most. The history of financial crises shows us that, once financial health has been achieved, economic recovery comes hand-in-hand with exports.
It is true that Germany needs to begin consuming again and do more as the motor for European economic growth. Nevertheless, under no circumstances must its export strength be weakened. I am a liberal Member from Catalonia, and my region - which is the source of 28% of Spain's exports - also has a very high ratio of exports to gross domestic product: almost 30%. Those who do best cannot be penalised.
Finally, the euro now has a great deal of prestige worldwide, but it needs to make a little more effort to be transparent. Mr Trichet, the verbatim records of the debates of the European Central Bank should be published, as is the case in the United States, Japan and Sweden.
on behalf of the Verts/ALE Group. - Mr President, since I would like Commissioner Rehn to understand me loud and clear, I will speak in English.
I would like, starting from where we are today, to take a look forward. Where are we? We have huge and unsustainable public deficits and, mind you, the Greens do not support this kind of deficit.
Second, we cannot ignore the fact that we already have huge and deepening social inequalities. 16% of Europeans below the poverty level is not a small figure; 40% of young Spaniards under 25 unemployed is not a small figure, and I could carry on.
Then we are facing climate change and resource scarcity, and all this means there is a need for investment in infrastructure, in education, in research and innovation, etc.
So what we believe is that we should really switch gear.
Herman Van Rompuy said, after the February summit, that coordination of macro-economic policy needs to be considerably increased and improved. Of course. What does that mean? It means, of course, that in terms of budgetary expenditure, we need to have more peer review, more ex ante control. Greece has 4% of its GDP going to military spending. They have got an air force that is as big as the Luftwaffe. I mean, how come? It is such a tiny country and they are arming themselves like hell.
But if we just look at the expenditure side, we will not succeed. We need to look, and to take a hard look, at coordinating our tax revenue because, what do we need to do? We need to rebalance tax income away from labour income towards other forms of income, including capital income. We need to make sure that we have an effective corporate contribution - effective, not just on paper - and that means CCCTB country-by-country reporting, etc.
We need to implement the financial transaction tax; we need to implement the carbon tax, both to shift behaviour and to provide income. And we cannot do that just by asking countries to coordinate their policies. We need more integration. If we do not do that, our governments will prove incapable of reconciling the need to balance budgets and to meet social needs and investment needs.
So I believe that Europe is now at a critical juncture. The choice is between a higher degree of integration, not just coordination, and decline. The lesson that I take from Copenhagen is not just that we missed the climate agreement. It is that Europe has proved to be irrelevant if it is not acting together. We spend too much time coordinating, too little time acting together. So that would be our contribution to this debate.
on behalf of the ECR Group. - Mr President, coming from a non-eurozone Member State, I am not sure whether my opinion holds much weight with my colleagues in this debate. Currently, many would claim that the eurozone problem is one which should be solved by eurozone members.
However, the euro does not sit in isolation. It sits in the global market and has been affected by the global financial and economic crisis just as those outside the eurozone have. How we manage our states' finances during the good years entirely affects how we are able to react and recover today. As many have pointed out, there is a reason why Germany faces a very different government deficit to Greece. While they may be united by a common currency, attitudes towards saving and spending vary considerably. Joining a monetary union did not unite completely different cultures and traditions of fiscal policy.
The UK perspective has a lot to say on differences in fiscal policy. We also bloated our public sector, spent and spent in the good years, borrowing more and more to create debts we could not even admit to when it looked as though the good times were gone forever, and creating a culture where a supposedly respected economist from the UK even last week stood up in front of one of our committees and claimed that governments can magic money.
Fundamentally, money to fund the public sector does not magically appear. It comes from tax receipts from the private sector. Germany realises this. Its policies in the recent past have focused upon using government spending and incentives to help stimulate the private sector. Hence, it is now in a strong position for recovery. Ultimately, the public sector has done its job in the crisis. It bailed out the banks and stepped up when the private sector failed. Now it is the turn of the private sector to replenish the coffers.
The downside of austerity measures, which will put hardworking people out of public sector jobs, must be turned into an upside for start-up companies, taking advantage of entrepreneurial spirit by reducing start-up costs for businesses so that they can create the profitable private sector that is required to dig all of our countries out of the holes we now find ourselves in. All of those countries that have practised unsustainable economic policies for the past few years - including my own - need to realise that change is essential and inevitable.
Mr President, ladies and gentlemen, I would like to make use of this opportunity to take another look at the situation in Greece, because I believe that the crisis in Greece gives us an insight into the political status of the euro area. Firstly, however, I would like to make a remark about the calls from the German Chancellor, Mrs Merkel, to exclude Greece from the euro area, if necessary.
My group, the Confederal Group of the European United Left - Nordic Green Left, believes that this proposal is absolutely absurd. On the one hand, we are talking about a community with a common destiny. If we mean this seriously, then we cannot call, on the other hand, for a Member State to be excluded during the first large or moderate crisis that we have encountered. That is preposterous! Most importantly, this would be an admission of failure which would amount to kowtowing to the financial sector.
The financial sector has shamelessly allowed itself to be bought out of the crisis by taxpayers, but we are now being asked to deny help of this kind to Greece. It will be difficult to explain to the pensioners and the workers in Greece and also in the other countries affected - according to the media, Portugal is the next country to come under scrutiny - why they are now being asked to pay up, having already supported the banks with their taxes. Taking this route would be the equivalent of driving the EU project into a wall.
Despite all the justified criticism of Greece - and the Greek Members will realise that there is much to be done in their country - the crisis is by no means solely the responsibility of Greece. I would just like to point out that the majority of decisions on financial policy in the euro area have been handed over to the European Central Bank. The euro cannot provide the answer to the different levels of productivity in the individual economies. Major exporters such as Germany are forcing Greek economic policy to its knees. Therefore, this also represents a crisis in EU economic and competition policy.
This is why we are calling for the ban on financial assistance for EU Member States to be lifted. The Member States in the euro area should make euro loans available, the European Central Bank should buy up debts in the same way that the Federal Service in the USA has done and credit default swaps should be banned. This is what we are calling for.
(The President cut off the speaker)
Mr President, 25 March is the birthday of both Europe and Greece. On 25 March 1957, the European Union was born under the Treaty of Rome. On 25 March 1821, Greece was born.
Today, on their birthday, Europe and Greece are being tested; Europe on cohesion and Greece on its economy. Everyone in this House knows that, of the 15 countries in the euro area, 6 have high public debts and financial deficits. Everyone in this House knows that all 30 countries which belong to the OECD have debt of over 100% of GDP and 30% higher than in 2008. Even the United States of America is trying, in this huge economic crisis we are experiencing, to resolve its problems primarily by printing money.
We also know that Greece has introduced severe austerity measures to the point at which it has exhausted its citizens. Many people will say it serves Greece right and it should pay for its mistakes. Yes, certain people must be called to account for this. However, we must not forget that Greece imports EUR 15 billion more products from other European countries, especially Germany, than it exports.
I would therefore ask the leaders of the European Union to bear in mind that addressing speculation will create a geopolitical situation in the wider policy.
Thank you, sir. Your time has run out. I would respectfully ask that you abide by the speaking time allotted to you.
(DE) Mr President, I would like to raise a point of order. The Members want to vote on this later and we will be in serious difficulties if we do not keep to our speaking times.
(DE) Mr President, Mr Trichet, firstly, I would like to congratulate you on what you have achieved in recent years. However, at the same time, you must be aware that hundreds of millions of people are currently holding their breath because they are worried about the euro, which is something that we did not expect to see in this generation.
Firstly, we are worried about what will happen next with the six-monthly and yearly refinancing operations and whether you will succeed in withdrawing from this package of extraordinary liquidity measures. Only those people with a masochistic tendency when it comes to financial policy could fail to wish you luck in this respect. However, inflation is also a cause for concern and you are making good progress in this area. As an Austrian, I would like to advise against the Germany-bashing that has been taking place here. Everyone should be aware Germany has been the source of a great deal of stability in the past. It should not now be punished because it has achieved better results in many areas than other countries. It is not possible to show solidarity with people who have been responsible for mismanagement, waste and excessive administrative measures.
(DE) Mr President, as the shadow rapporteur from the Group of the European People's Party (Christian Democrats) for the European Central Bank annual report for 2008, I am very happy with the report that is in front of us now. As a result of the close and effective cooperation with the rapporteur Mr Scicluna and, above all, with Mr Tremosa from the Group of the Alliance of Liberals and Democrats for Europe, I believe that we have produced a very balanced commentary on the ECB annual report for 2008. Mr Trichet and Mr Rehn were of the same opinion.
I think that the ECB was faced with particularly difficult tasks in 2008, which was the first year of the crisis. Given these challenges, in my view, the ECB has acted effectively and, above all, very prudently. Mr Scicluna's report reflects this approach. However, the ECB is not in a simple situation and this is not likely to change in the near future. On the one hand, we are very far from having overcome the crisis and, on the other hand, the planned regulatory measures present new challenges and problems for the ECB. It is important for the ECB to continue to ensure the stability of the euro area in the months and years to come. Like a tanker on the high seas, the ECB must stay on the correct course.
On the other hand - Mr Trichet, I have already mentioned this in the last but one discussion on monetary policy - the independence of the European Central Bank must be maintained, in particular, given its future inclusion in the European Systemic Risk Board. This is of paramount importance because you, as President, and other members of the ECB will become heavily involved in this area. This should be an important criterion for future assessments of other measures taken by the central bank. It is essential for us to bear this point in mind when considering other reports in the next few years.
(IT) Mr President, Mr Trichet, Commissioner, ladies and gentlemen, the king has no clothes! The gravity of the situation has been accurately described. Now it is useful to concentrate on the treatment, and the first step of this treatment can only be European economic governance, in the absence of which the economic system will not grow and the debt will become even less sustainable.
Greece must be supported and helped, and a potential domino effect must be avoided in the case of those European countries with economies characterised by a weak level of competitiveness and elevated levels of debt. Real European governance must guarantee three objectives: 1) a policy of growth; 2) financial instruments suitable for sustaining that growth; and 3) a policy for managing emergencies.
This morning, I have heard so many speeches exalting the virtues of the euro. Very well, I am obviously in agreement, but why not think of the euro as a currency that saves us not only from inflation but, by means of a little virtuous and guaranteed debt, also secures us greater liquidity to launch a major European investment programme by issuing Eurobonds? As far as managing emergencies is concerned, I agree with the idea of establishing a European Monetary Fund, which would be a sensible solution.
Ladies and gentlemen, what I should like to say in conclusion, and say it clearly, is that at this stage it is no use temporising, drifting, waiting for the long night to end. A 'Don Abbondio Europe' is of no use to us. If Europe does not show courage today, when will it have to show courage?
Mr President, we have had a heavyweight week in committee with the President of the ECB, the President of the Euro Group and the nominee for ECB vice-president. We all agree that stronger surveillance of Member States, with accurate statistics to enable early intervention, is a key requirement.
Work on this has started, including audit powers for Eurostat, and the committee is impatient to assert its enhanced role to help.
But there are indicators beyond the Stability and Growth Pact that need respecting too. Greater fiscal coordination linked to macro-economic stability is an option. But this has been tried, of course. Remember the row in 2001 over the Ecofin warning to Ireland during a time of fiscal surplus. So we know the lesson: exerting discipline in times of surplus is even harder than policing deficit. And, just like in the financial markets, failure to do so ends in crisis.
On imbalances between Member States, the focus should be on loss of competitiveness, often hand in hand with foot-dragging on the single market and failure to address structural reforms, including pensions. This, too, does not necessarily have a deficit trigger.
And finally, as Mr Scicluna said, liquidity provision by the ECB has been a valuable tool through the crisis, but it has not been passed on to the real economy. Often, it has simply been reinvested in assets bearing higher interest. And I dare say some of these were even recirculated on repo to the ECB. No doubt in some quarter, such activity is even viewed as deserving of a bonus. So I say: should we really listen to the pleas of such banks on new capital adequacy implementation dates?
(EL) Mr President, may I start by saying that this is an important report, which strikes a worthy compromise between the tensions in the European Parliament. It identifies elements of social cohesion which are not present in similar debates in the European Parliament. We should also like it to signal an important turning point in the policy of the European Union as a whole.
Of course it refers to 2009, while in 2010, important developments are taking place which, of course, concern my country, Greece. One might conclude that, apart from monetary union, we also need economic and political union, as many have said. The euro should be accompanied by a minimum social security indicator for social cohesion.
That is clear from the various things being said in Greece, much of which is inaccurate. For example, I cannot but highlight the fact that productivity in Greece was not much lower than the average of the EU of the 27. That is clear from Eurostat statistics: it was approximately 90% in both 2007 and 2008.
The increase in the budget deficit and public debt in Greece over the last two or three years was the result of the collapse in incomes, the reduction in income from abroad, such as tourism and shipping, due to the crisis, and the increase in public spending. Of course there is wastage, but people are also being recruited to the public sector in various forms.
Certainly all this needs to change; we also need to request this social protection indicator and not content ourselves with general calls not to do anything that will overly affect low incomes. Spending and arms need to be controlled, as does everything that has increased significantly over the last two years, but especially incomes, which have decreased equally significantly. The income of large sections of the population, who are on the verge of poverty, must not fall.
Obviously, there are matters which also concern the summit under way today here in Brussels. However, the Giegold report must also signal a more general change and the incorporation of these positions in the Stability Pact. Above all, we do not need to take any recourse to the unacceptable policy of the European Monetary Fund which, apart from anything else, also has a viability deficit.
(Applause)
(NL) Mr President, Mr Rehn and Mr Trichet were quite right to talk about the situation today. The Greek position in the euro area is very shaky and, as far as I can see, the answer lies with the International Monetary Fund (IMF). These days, the IMF is the right organisation to help Greece out of the crisis. If that does not work, then we need to be decisive and cut the Gordian knot. Countries that are not playing by the rules of the euro area must leave the game.
Mr President, let us try and learn from this situation. When it joined the euro, Greece was as unpredictable as the Oracle at Delphi. The figures it submitted were unclear and unreliable. It is not right for the Greek Government to keep on insisting that other States in the euro provide the solution because they were supposedly partly responsible for the current crisis in Greece. That is turning the world on its head. Anyone who submits unsound figures cannot point accusing fingers at anybody else. Allow me, therefore, to ask Mr Trichet and Mr Rehn a specific question: were you aware of the fact that the figures Greece submitted when joining the Euro area were inaccurate and incomplete? If not, should you not have known that? I hope you can give me a straight answer to that question.
(EL) Mr President, I should like to start by wishing my fellow countrymen the very best for 25 March.
The capitalist crisis has resulted in a spiralling deterioration in the living standards of the workers. At the same time, it has given capital an opportunity to step up the application of anti-labour policy choices. Under state terrorism of the workers, the plutocracy started a real war against fundamental wage and social rights, in a bid to increase the profits of capital.
The basic pillar of the anti-grassroots policy being exercised by the European Union and the governments of the Member States is the ECB. It is a harsh policy exercised solely on the basis of the criterion of the profitability of capital. The constant calls since it was founded for wages to be cut and capitalist restructurings to be speeded up found fertile soil in the capitalist crisis.
The ECB has acted as the bourgeois assistant of the plutocracy in shifting the burden of the crisis on to the workers' shoulders. It has channelled over EUR 1 trillion to the banks and monopoly groups. Today, however, it is calling on the workers to pay for the damage and to repay that money.
That is why the anti-imperialist fight needs to be stepped up, the fight to get out of the European Union, the fight for people power and a people's economy, the fight for socialism.
Mr President, I appear to have been living in some sort of parallel universe here, hearing about the success of the euro. Let us bring it all down to earth just a little bit shall we?
Unemployment, youth unemployment in the Iberian Peninsula and many eurozone countries is chronic. It has been at 30-40% for years. Nothing to do with the crisis at all. A complete disaster. GDP per capita in the USA is miles ahead of the European Union. GDP in the Pacific Rim is miles ahead of the GDP in the Union.
No, the euro has not been successful at all. It is already failing. It is already crumbling before our eyes. Just look at some economic basics. There is no lender of last resort, which is why we have this Greek crisis and a Portuguese crisis round the corner. There is no lender. This is impossible in global, in currency management, whether it is an optimal currency zone or not.
There is no coordinated fiscal policy so it is doomed to failure and it is failing as we speak.
Let me just remind everybody here about something else if I may. There are two sorts of people: wealth creators, those people that go out and work in the private sector and create wealth, and there are the others who spend wealth, which are politicians and bureaucrats and there are too many of us. Far too many of us. We are the monkey on the economies' back and, until these currency zones start cutting down public sector spending, it is going to get worse and worse and worse.
(RO) The mafia is the major cause of the crisis. I will give you a few examples from my own country, Romania. Believe you me, as a writer and historian who runs a daily newspaper and a weekly magazine, I know very well what I am talking about.
Since 1990, approximately 6 000 companies valued at EUR 700 billion have been privatised fraudulently. Unfortunately, only EUR 7 billion, or 1% of this money, has been received so far. In many cases, it was not even privatisation being carried out, but the transfer of assets from the ownership of the Romanian state to the ownership of other states, in other words, nationalisation. This is no longer a market economy, but a jungle economy.
This situation is being repeated in several Balkan countries where the local mafia has joined forces with the cross-border mafia to form an organised crime cartel. Just like 100 years ago, the Balkan Peninsula is sitting on a powder keg. The flame of social protest may quickly spread from Greece to the other countries in the region.
While in the 20th century, we spoke about exporting revolution, in the 21st century, we can talk about exporting bankruptcy. Starvation is the most powerful electoral factor in history. We must switch the focus from the fight against corruption, which is some abstract notion, to the fight against the corrupt.
The population's mood is becoming increasingly gloomy and if we fail to put an end to the fraud in our countries, the European Union's noble project will collapse like a sandcastle.
However, there is one hope of salvation: radical solutions are required at such an historic crossroads. It is not under control the mafia needs to be, but under the ground.
(DE) Mr President, first of all, I would like to thank the President of the European Central Bank, Jean-Claude Trichet, warmly for his very successful work over the last six years. Of course, I would also like to thank the rapporteurs for submitting a report that has been given majority support. Mr Rehn, I would like to remind you that you have some huge tasks ahead. I hope that the Commission finally has the courage to look at the deficiencies of the Stability and Growth Pact in a new proposal. The model of economic governance led by the finance ministers is not a possible solution in this case, because these finance ministers have failed in the past. We need a more automated system. We do not need economic governance under the control of finance ministers. Instead, we need an automatic system that responds in the case of violations, with the support and leadership of the ECB and the Commission. This could be the result of the summit.
I would like to make two remarks about what Mr Trichet has said on the euro area. I very much welcome the fact that you have referred to the need for us to be competitive throughout the world. This is not just about one euro country competing with another, but about us being able to hold our own against the USA and Asia.
Secondly, the EU has largely succeeded in balancing its accounts, thanks to the countries in surplus. If that had not been the case, the ECB would have had to put much stricter policies in place.
Thirdly, there are no examples in economic history of countries with a falling population generating long-term growth in the internal market. They have to export their goods.
As far as Germany is concerned, it made a poor start in the Economic and Monetary Union, but it has caught up and is now an example to many other countries. That is not sufficient. We have enough to do ourselves with the budgetary consolidation. It is important not to underestimate the work involved. Who came up with the idea of punishing those countries that have largely succeeded and excluding those that have not fulfilled their obligations? This is not a true European policy. Therefore, I would like to wish the Commission courage and give my warm thanks to the ECB.
(Applause)
(EL) Mr President, allow me to start by congratulating the two rapporteurs on the excellent work they have done at a particularly difficult juncture.
The work of one of the most crucial summits is due to start shortly and there is still much talk raging around the so-called Greek issue and around if and to what extent we shall adopt a European mechanism that will operate, in times of need, as an economy protection indicator needed for the stability of the euro area as a whole.
Without doubt, the basic responsibility for this situation lies with Greece and it has fully assumed it. However, there are other - collective - responsibilities. The common currency has provided a great deal, but it also has serious weaknesses. In 11 years of EMU, we did not want to see and to acknowledge that the competitiveness divide and the significant inequalities and imbalances between the economies in the euro area are not compatible with either the viability or the stability of the euro area.
The speculative attacks which, so far, have been directed mainly at Greece - but which also resulted in Portugal's credit rating being downgraded just the other day and which have already been directed at other countries, such as Italy and Spain, and no one knows what the consequences will be - have made that much clear.
If, therefore, we want to show that we can deal with the situation, we should immediately move towards a new, enhanced model of economic cooperation and economic governance which, Mr Langen, respects the rules of the Stability and Growth Pact, but which, at the same time, will be able to go beyond financial coordination in the narrow sense to economic coordination with additional criteria attached and attain the objectives of the EU strategy for employment and sustainable development.
(SV) Mr President, Commissioner, Mr Trichet, the euro is ten years old and it has largely passed its tests, even though the current turbulence is not over yet. I am certain that, already today, we will see the first important step towards a European solution, with or without the International Monetary Fund. We share a common destiny, as Mr Trichet so rightly said. The alternative, if it fails, would, of course, be a frightening prospect.
The ECB has been a bastion of strength when the financial storms have hit. It is worth repeating that the euro has been a success during the financial crisis and it has been an anchor in Europe, including for countries outside the euro area.
The euro has provided stability and the conditions for creating millions of new jobs, and that must not be forgotten in these days when everyone is talking of a crisis. Greece's problems and those of other euro area countries cannot be blamed on the euro. Careless expansion of public expenditure will result in problems regardless of the choice of currency. On the contrary, the economic crisis would have been considerably worse if we had not had the cooperation that the euro involves. We would have had to deal with speculation and competitive devaluation among more than 20 national currencies.
Many of us have experienced this and I myself sat on a Swedish finance committee with a 500% interest rate. The crisis in Greece naturally demonstrates the fact that the pact for keeping the budget deficit at a low level must be tightened up. The deficit is still extremely large. We need better supervision and coordination of economic policy at EU level, in other words, financial coordination that is worthy of the name.
I would like to finish by saying something about speculation. Sometimes, when countries are subject to speculation, as my own country was in the 1990s, it actually provides us with a good opportunity to organise the measures we take. When we were in a difficult situation, as a result of George Soros, among others, we knew what to expect and so we took the necessary measures. That is something that those of you in the countries that are currently experiencing difficulties will have to think about.
(PL) Mr President, I shall avoid the military language which the previous speaker used. The language of war does not suit the style of banks. I am a representative of what is probably the only political group in this Parliament which has attracted the majority of its members from outwith the euro area. Only two are in euroland. My point of view, therefore, will be different.
Mr Trichet's speech can be summed up by the number 36, because this is how many Members of the European Parliament were listening to his speech. Does this mean we are lazy? No - it means, in fact, that MEPs do not really believe the European Central Bank can be a solution, a remedy, to the crisis, or that it can be a lifebelt. Mr Rehn said the euro area is something of value in itself, and then spoke about the crisis in Greece. There is a certain contradiction here. Greece is currently going through a crisis because it entered that oasis of stability too soon. We should avoid such inconsistency.
(EL) Mr President, I agree with my fellow members who said that the crisis is not over. The economic situation in numerous countries is clearly negative. Unemployment is increasing in most countries. The measures being taken to address deficits are exacerbating the crisis.
Mr Trichet and Mr Rehn - and I am speaking institutionally - did you not see the crisis coming? The signs were there. When the crisis broke, you hid behind the perception that everyone had to resolve their problems on their own. Now, here you are repeating monotonously the words 'monitoring deficits' and 'austerity in the Stability Pact'.
In my opinion, the problem in the European Union and in Greece is not one of sound finances. You know that, in order to cover borrowing, countries such as Greece are prey to speculators but, at the same time, they reveal the institutional and political gaps in EMU.
As such, I would say to you that what is needed is a change to the Stability Pact. Insisting on the application of the Stability Pact, especially in a recession, will clearly increase and exacerbate regional and social inequalities, increase unemployment and wipe out any prospects of growth.
(NL) Mr President, the situation in which Greece and the euro area have deservedly found themselves is regrettable. Financial assistance for Greece should come primarily from the International Monetary Fund (IMF). The IMF has itself said that it is in an excellent position to help Greece. The establishment of a European Monetary Fund (EMF) seems to be motivated by political considerations, in particular, that is, to save Europe's face in case Greece appealed to the IMF. However, let us not rush headlong into establishing a new body as a remedy against non-compliance with the existing rules. The necessity and desirability of setting up an EMF are dubious. The penalties provided for by the Stability and Growth Pact must be implemented more actively in order to enforce compliance with the rules. It is really up to the Council now to make a move. Eurostat needs to be given the scope to carefully inspect the budget figures of the Member States of the euro area and thereby monitor compliance with the Stability and Growth Pact.
(HU) Mr President, ladies and gentlemen, the report has one serious flaw: it does not name those responsible. And yet, we will not be able to put an end to the economic crisis in Europe until those responsible have been identified. Let us finally tell it like it is: the crisis was not caused by people living off their wages or salaries, but by those banks, multinationals and insurance companies that milked European societies dry.
At the moment, if a multinational company wants to establish itself in Hungary, the way to proceed is as follows: it receives free land from a local municipal government, is given a reduction on taxes and contributions, employs people for minimum wage and does not even allow them to unionise. These are the conditions that have led to a crisis for job seekers in Europe. We demand that multinationals, banks and insurance companies play their part and shoulder the task of solving and putting an end to the economic crisis.
(ES) Mr President, the crisis through which we are struggling is the worst in eight decades and the most significant since the launch of the Community project.
It started with the North American subprime mortgage crisis and, following the collapse of Lehman Brothers, it is now in its third phase, after leaving Europe with a 4% drop in GDP in 2009, more than 23 million unemployed and a sharp deterioration in the state of the public finances, with debt in excess of 80% of GDP.
The European Central Bank played a decisive role in maintaining liquidity in the system, using non-conventional mechanisms to counteract the credit restrictions and cooperating closely with the main monetary authorities.
Now that a moderate recovery is expected and there is no inflationary pressure, it must continue to contribute to the reestablishment of credit and avoid compromising the economic recovery through the early or indiscriminate withdrawal of the extraordinary measures.
The crisis has shown us that the monetary and economic pillars - the basis of monetary policy - need reinforcing. One eye needs to be kept on the progress of the prices of the principal financial assets and private debt in order to guarantee the stability of prices and the economy in general.
Twenty Member States currently have excessive deficits. The true meaning of consolidating public finances - an unavoidable task, that must be done in a coordinated and intelligent way - is restoring demand, promoting investment, and favouring reforms that will allow the economy to be revived, increase the potential for sustainable growth and create jobs. Greater economic union may make the difference.
Global imbalances need to be corrected. The European Union is one of the most balanced regions. That could come under threat unless its competitiveness is strengthened and there is greater international monetary cooperation. We will only improve our ability to compete globally if we strengthen internal economic cooperation in the areas of competitiveness and the balance of payments, in order to correct the imbalances and differences within the euro area.
The efforts and courage of Greece deserve clear and resolute support. It is a question of common interest and uncertainty harms all Europeans. Subsidiarity and solidarity are two sides of the same coin: the European currency. As Mr Trichet said in English, French and German, the euro is more than just a currency: it is our common destiny.
I have repeated it in Spanish, which is one of the European Union's global languages. I will finish by saying it in Greek, which is the language that best expresses our universal vocation: Το ευρώ είναι το κοινό μας μέλλον.
(GA) Mr President, the economic crisis has had a negative impact on Member States all over the European Union. Unemployment rates have increased dramatically all over the Union, and it is young people that are suffering the most. The public funds of many Member States have declined as a result of this crisis. To deal with this issue, the Irish Government took decisive action in the years 2008 and 2009.
Unchecked, Ireland's deficit was heading towards 14% of GDP. The government's action stabilised the deficit at 11.6% of GDP in 2010. The action taken by the government has gained recognition in international markets. Since its last budget, in December of last year, the cost of Irish borrowing, relative to benchmarking, has stabilised. In fact, I understand that at the meeting of the Committee on Economic and Monetary Affairs this week, the President of the Central Bank recognised and praised the actions of the Irish Government. In many ways, Ireland is ahead of many other countries in its fiscal adjustment. Countries such as the UK and the US, both with deficits in excess of 10%, will have to undergo significant adjustment in order to restore sustainability to their public finances.
Can I say in conclusion that Ireland is still a good location for business as the fundamentals of the Irish economy are in place and we will retain our 12.5% ...
(The President cut off the speaker)
(PL) Mr President, the widening crisis in the euro area shows the dangers which may face economic projects that are not backed up by economic calculation, but are based on ideological assumptions, especially when integration includes the economic integration of different Member States which have different economic conditions.
We have to ask whether some states should have entered the euro area as early as they did. At a certain point, the euro project became, primarily, not so much an economic project as a political one, aimed at accelerating European integration. European taxpayers in many countries may, today, pay a great deal for this haste. It would be good if we could draw some conclusions from this lesson for the future. The euro is not an answer to the structural problems of individual economies, or to excessive debt or a lack of financial discipline. It is the Member States which are responsible for the state of their finances, and these problems should be solved in the countries where they arose.
(FR) Mr President, ladies and gentlemen, I have read the reports with some surprise, and the speeches I have heard this morning only strengthen my beliefs.
With a few exceptions, it is still a matter of budget restrictions, containing inflation, and the Stability and Growth Pact, even though 20 of the 27 countries no longer meet all the criteria.
It is true that many are demanding economic governance. However, we want a political Europe that ensures control of both its economic and its social choices and that is able to intervene with regard to monetary choices.
The Greek crisis is telling: it is Germany that has control and is imposing its demands. In the United States, the central bank has just intervened directly to finance the state budget by buying treasury bonds. In Europe, the European Central Bank flew to the banks' assistance, but in terms of Greece and more generally of the PIGS, it is still the same ones who have to pay, in other words, employees, civil servants and pensioners, even though their countries have also been victims of financial speculation.
It is not minor reforms that we need, but a different Europe, an economic and social Europe for the benefit of the majority, not just of a few.
(SK) The report on the annual management of the euro area and of public finances in 2009 analyses in detail the management of the EU during the global financial and economic crisis.
The decline of economic output in various EU countries has led to a dramatic rise in unemployment and a growth in the debts of European countries. The impact of the crisis on individual countries has varied and the measures through which individual countries have tackled the crisis have consequently differed from one another. Despite the efforts of EU bodies to adopt coordinated and collective measures, it appeared that in certain countries, populist governments with no proper sense of responsibility for the administration of public finances were courting disaster.
That is why the European Union as a whole has found it harder to deal with the impact of the crisis than other major economic centres, such as the United States, China, Japan and India. It has become apparent that the European economic environment as a whole may be diverse and extensively regulated but, compared to competing economies, it is very cumbersome. In the forthcoming period, we must therefore, along with efforts to consolidate the public finances of the euro area, also strive to restructure and greatly simplify the rules of the internal environment. We should not forget that it is the productive sector alone that generates the resources on which the whole of society lives.
(HU) Ladies and gentlemen, in the course of its activities in 2008, the European Central Bank was faced with unprecedented challenges as the world economic crisis wound its way into Europe in September 2008. The financial crisis turned into a crisis of the real economy as the capital markets froze up due to mistrust, and financial institutions would not extend credit to each other or to businesses. The ECB reacted quickly and, in my judgment, appropriately to these financial events, but when we evaluate the crisis relief measures, we cannot overlook one deplorable fact, namely, the discrimination towards countries not in the euro area.
I am convinced that the ECB acted contrary to the spirit of the European Union when, at the height of the crisis, in October 2008, it did not set equal conditions for drawing on liquidity facilities. The ECB arranged currency exchanges with the Swedish and Danish national banks in order to ensure proper euro-liquidity for the banking systems of these two countries. By contrast, with the Hungarian and Polish central banks, it was prepared to do the same only against collateral.
This course of action on the part of the ECB contributed, unfortunately, to a growing uncertainty on the markets, further aggravating these countries' situations. Now, when we are in the process of designing a new financial system, we have to take measures to ensure that in future, similar inequalities will be eliminated. We cannot, therefore, introduce regulations that treat certain parts of the Union less favourably than others. I would carry this idea further, when talking about the creation of the European Systemic Risk Board that we are all working on now. The ECB will have an important role in this area. The presidency of that Board will be held by the president of the ECB, and we will need to ensure that countries within the euro area - as well as those outside it, such as the Central and Eastern European states - receive equal voting rights in the new organisation.
There is a danger that if we do not raise our voices against the discrimination we have already experienced during the crisis, inequality will become the practice in the new financial supervisory bodies, and this is something to be avoided at all costs. The ideal of reunification must not be allowed to be whittled away by replacing the former political disunity with economic division.
(RO) It comes as no surprise that the exceptional measures which had to be adopted by the European Central Bank at a time of crisis feature at the heart of its annual report.
Against this backdrop, I think it is appropriate for the European Central Bank to continually increase liquidity provisions to banks in the euro area. However, we must not forget that Member States outside the euro area were also themselves among those hit hard by the crisis and that intervention is required from the European Central Bank in this area as well, in the form of liquidity-enhancing measures.
In addition, an increase in budget deficits, government debt and the unemployment rate among young people under 25 is being seen in most European Union Member States. The Stability and Growth Pact is going through an identity crisis and losing credibility, thereby making it impossible to apply its principles effectively.
I think that what is required is a less automatic and uniform implementation of the pact and an approach which takes into account the circumstances of each Member State where the emphasis is placed much more on the long-term sustainability of public finances and less on the government deficit.
The pact's main aim was prevention. It was meant to provide multilateral supervision of budgetary development using an early warning system. This is why, in keeping with the spirit of Mr Scicluna's report, I feel it is absolutely necessary to set up a European Systemic Risk Board, which will meet the objective of providing a rapid warning against systemic risks or imbalances threatening the financial markets.
The current financial crisis and its recent deepening in general must produce a prompt explanation of the mutual support mechanisms available at EU level, while also strengthening the coordination instruments between Member States in support of common economic governance. One of the main lessons of this crisis is the need for greater fiscal responsibility and, by extension, for economic monitoring procedures for maintaining budgetary balance.
(LV) Thank you, Mr President and Commissioners, last December, in Strasbourg, Mr Almunia, who was then Commissioner for Economic and Monetary Affairs, said that barring any significant developments, next summer, Estonia would be invited to join the euro area, with effect from 2011. Well, there have been some significant developments, not only for Estonia, but also for the euro area. Estonia is practically the only EU Member State that currently satisfies the Maastricht criteria. What sort of signal will it give if Estonia is not accepted into the euro area, in accordance with the rules? To my mind, it would signal to the financial world that the malaise in the euro area is so deep that it is incapable of accepting a small but fiscally responsible country. In other words, a sign will be put on the euro area club door, saying: 'The club is closed for major refurbishment'. What sort of signal would it be, however, for the new Member States, such as my country, Latvia, which is under an IMF programme and maintains a fixed rate of exchange against the euro, and which, in order to introduce the euro, devalues its economy with a double-digit fall in GDP and extraordinarily high unemployment? The signal would be why should we do our utmost to repay private debt with a high exchange rate for our national currency, when this debt has been issued as euro loans by EU banks against, for example, immovable property? Thank you.
Mr President, 2008 was an extremely important year for the European and indeed the global economy. It was the year that was characterised by a great deal of uncertainty as regards the extent of the crisis, which only seemed to worsen.
A great deal of uncertainty was also present with regard to the time it would take for the European economies to recover as well as the tools that we should use to stimulate such a recovery.
This was no easy year for the ECB, which had to face a number of challenges. During 2008, the ECB engaged with other major central banks to form a coordinated approach in order to provide the banking system with plenty of short-term liquidity, and this approach by the ECB proved to be extremely successful.
In this respect, I must support my colleague in the conclusion he has come to concerning the performance of the ECB. I agree that 2008 was instrumental and that those responsible have risen to this occasion. I also share some of the rapporteur's concerns with regard to the lack of transmission of interest rate cuts from the bank to the consumer and I feel that this should be further looked into, so please take note, Mr Trichet.
All in all, I feel that this is an extremely well-balanced report, an excellent piece of work by my Maltese colleague, Edward Scicluna.
(FR) Mr President, unfortunately, due to another engagement President Juncker is unable to join us as usual. Quite clearly, I am sorry to hear this.
Here we have two very good reports that enable us to go more deeply into our discussion at a critical moment for the euro area.
Mr Scicluna's report allows us to lay the foundations of a number of elements of the debate, in particular, relating to the conditions of appointment of your successor, Mr Trichet. In terms of democracy, the monetary dialogue is an important element, but also with regard to the very functioning and running of the European Central Bank.
The report by our friend, Mr Giegold, asks questions of you, Mr Rehn, which come under your responsibility and not that of the European Central Bank.
The risk we face, as regards the functioning of the euro area, is the dismantling of our social model. When your predecessor, Mr Almunia, gave an assessment of the euro area's 10 years of operation, one factor was blatantly obvious, namely, the increasing divergence between the Member States of the euro area. That is where we are and that is what the very authors of the treaty and the authors of the Stability and Growth Pact underestimated. This is what we must take into account.
We must take this into account for two reasons. Firstly, to understand that, even if the sustainability of public finances is a key element, it is not enough. Faced with national competences, the Member States do not have a natural appetite for sanctions and therefore their coordination, their cooperation is not good cooperation. This is the spirit that we have to discover. This is the magic panacea that we need.
The second pillar which cannot be overlooked and which we cannot do without is the matter of fiscal harmonisation. As you know, I deplore the fact that, from this point of view, the 2020 strategy does not even mention the work in progress on the harmonisation of the tax base for corporate taxation, which we absolutely must continue with determination.
(FI) Mr President, in the wake of the financial crisis, public debt has become rapidly worse, even if, in many countries, they are beginning to turn off the taps of recovery. Having dealt with an acute economic crisis, we need to focus very closely on the long term and serious imbalance in public finances.
We have had the Stability and Growth Pact, but the problem lies in the fact that the Member States have not complied with it, and so we now have acute deficits in public finances to deal with. Attention has been given to incorrect statistical information in the case of Greece, but the core of the problem is a badly managed economic policy.
We politicians are faced with very difficult decisions, amid slow growth, an ageing population and an employment situation that is improving only sluggishly. There are only a few cures for public finances: to increase revenue from taxation, to boost economic growth or to cut expenditure.
In the search for remedies, key indicators are the sustainability of public finances and the deficit. The sustainability deficit is a reflection of how much the tax rate should be raised or the rate of expenditure lowered for public finances to be on a sustainable basis over the long term. To achieve a balance, we have to continue to recognise that accrued debt will increase by the difference between interest rates and the growth in Gross National Product, and an ageing population will cause the cost of pensions and care to rise substantially in the years to come. In order to boost income in public finances, it is absolutely essential to have growth and employment, increase the productivity of public services and implement the structural measures that can guarantee the sustainability of pension schemes, for example.
In the long term, an increase in the birth rate and preventive health care will be of significance for the balance in public finances. In the midst of the economic crisis, we called for better coordination of public finances, and I would like to ask how Commissioner Rehn intends to bring this about. I believe, however, that this economic crisis cannot be used as a way out of the back door for the economies of the Member States to be brought under control. We just have to observe strict budget discipline in public finances.
(SV) Mr President, I would like to highlight three main points in the reports that we are discussing.
Firstly, we should not devote the debate on public finances to issues relating to austerity alone. We also need to focus on what we can do to initiate growth and combat unemployment. In many countries, cuts in public expenditure are needed. At the same time, however, it is also important to increase revenue via positive growth, by getting more people into work and paying taxes.
Secondly, I appreciate the fact that Mr Scicluna takes up the issue of increased transparency in the financial sector in his report. There is still much to do in this regard. Transparency is not only an excellent way to counter harmful risk-taking behaviour on the financial market. Enhanced transparency is also necessary for supervision to be effective and for the public financial institutions to have the public's trust, which is extremely important.
The ECB should lead the way in this area and take immediate measures to make its work more transparent. A good first step would be to begin to publish the minutes of the ECB Council meetings. Openness should also be a key principle in the establishment of the European Systemic Risk Board (ESRB). In order for the Systemic Risk Board's recommendations to have an impact, the guiding principle should be that they be made public.
Thirdly, I am pleased that, in his report, Mr Giegold emphasises the importance of having a clear environmental and climate perspective, even in times of crisis. We must not allow the financial crisis to slow down the switch to a green economy. We should instead promote economic recovery by investing in renewable energy sources, environmentally friendly transport systems and the development of green technology. Only by making these kinds of investments can we create growth that is sustainable in the long term.
(FR) Mr President, 2009 was, without doubt, the most difficult year for the euro since its introduction, but it was also the most useful. Without the euro, the European Union would have sunk into a war of competitive devaluations against the backdrop of the crisis. In 2009, monetary instability could have weakened the political solidity of the European Union.
Thanks to the euro, we have been spared the pain of a continued imbalance of exchange rates and monetary policies. But for how much longer? Today we are hoping and praying for better governance of the European currency - more restrictive, more visible and more responsive governance.
The fact is, the attempts by countries to take back control of the euro's ground rules do not contribute whatsoever to the emergence of proper European economic and monetary governance. Only solidarity can curb the speculative activities of which Greece is a victim today and which may hit other countries in the euro area at any moment.
Solidarity goes hand in hand with solidity in the emotionally charged context of sovereign debt markets. The political prevaricating of recent weeks has not only damaged Greece. It has seriously shaken confidence in the euro. Non-assistance to countries in danger is undermining the monetary stability of the whole of the euro area.
Beyond emergencies, let us finally give the euro the instruments it needs. We need a coordinated European bond market to avoid bottlenecks with too many sovereign debts in too many countries coming to maturity at the same time. We need representation outside the euro area at all levels, in all bodies, including international financial institutions. Why is the President of the Eurogroup not in the G20?
Let us also accept that the new members want to join the euro area as quickly as possible. We must welcome them with enthusiasm, not with petty-mindedness. Contriving to exclude euro area members amounts to abandoning the ambition of a strong Europe in the world. The expansion of the euro area must go hand in hand with the implementation of the instruments needed for genuine economic union: coordination of budget policies and harmonisation of economic and fiscal policies. This is the price of the euro's continued success.
(PL) Mr President, a crisis is a disease which usually ends not only in recovery, but also strengthens and creates mechanisms of resistance. It may also lead to what are known as complications, and even to certain kinds of permanent impairment of the body. Let us think about how this illness, which we call the crisis, arose.
In most cases, an illness is the effect of the various ways in which we neglect our bodies, or it has an external origin. The cause of the crisis was activity which was contrary to market principles - speculative activity. The market itself is not able to reject, counteract or limit these factors if there is not suitable supervision and monitoring of the progress of processes, particularly in situations which are not typical for the market. Until now, financial markets were monitored and supervised mainly by state and national institutions. Globalisation has led to the establishment of world financial institutions and a global finance market. However, adequate world, regional and, in our case, European institutions for supervising and monitoring these markets have not been established.
The market is not guided by values, but, above all, by the need to achieve profit at any cost. The crisis did not begin in 2008 with the collapse in the financial markets, but in 2007, with the crisis in the food markets, as well as the undermining of the energy market, which is controlled by political instruments. The situation in the European Union is the sin of not observing the universally established and accepted principles of the Stability and Growth Pact.
It is a pity that the warnings from the Commission were too gentle. Some Member States were allowed to get away with more, because, after all, they were not going to let some Commission or other lecture them. Some Member States behaved like children, hiding their misdeeds. This kind of behaviour cannot be the basis of Community or our integration. It is important to admit the mistakes which have been made, to tell our citizens, to apologise to them and to ask for understanding and cooperation as we emerge from the crisis.
We must take action so that the costs of the crisis do not fall on the weakest and poorest. European Union solidarity obliges us also to support the countries which have been worst hit by the crisis. Recovery will not come from outside, if the body, or the state, does not take up the fight.
(DE) Mr President, ladies and gentlemen, Mr Trichet, I would like to thank you very much, not only for what you have done in recent years, but also for your approach in recent weeks. You have been competent, independent and consistent. You and your staff have been a calming influence in troubled times.
Mr Rehn, you have made some very encouraging statements over the last few days. We should do everything possible to continue on the path that you have taken.
The euro is a stabilising force, even in times of crisis. We must put an end to the myth that the euro and the Stability and Growth Pact are the cause of the problems experienced by Greece and other countries. Last week, the Greek Prime Minister said very clearly in this House that the euro is not to blame. On the contrary, it is part of the solution. There can be no reform without the euro. There can be no appropriate restrictions on the objectives that we can set ourselves without the euro. We must not make the euro weaker, if those countries which are affected feel that the euro protects rather than weakens them.
I would also like to add that Greece is not begging for money, which is the impression often given by the daily press. It would be a good thing if many members of the Council stopped focusing on popular opinion on the domestic political front when they talk about this subject but instead worked with us to find common European solutions. Greece cannot be given subsidies, but it wants support for implementing its reform and savings plan. The President of the European Central Bank, Mr Trichet, has also stated very clearly in a three-step plan what is possible and when the measures can be taken. No one has said that nothing could be done.
We have a monetary union, but we do not have an economic union. To achieve an economic union, we need the political will of the Member States rather than advice. The economic union includes the coordination of budgetary policy, the harmonisation of taxes and the coordination of education, economic and social policy. This is what we are calling on the Member States to do and we expect them to show commitment. We must continue on this route in the interests of the euro.
(PL) Mr President, last year was an extremely turbulent one for the euro area. It began with Slovakia's entry to the Eurogroup, and ended with huge economic and financial problems in Greece. During this period, the world experienced its biggest economic crisis for years.
Discussions are currently under way on how to cope with the new challenges, what direction the global economy should take and what European Union policy should be. The resolution we are considering at the moment is part of this debate. I would like to draw attention to one aspect of it.
Ladies and gentlemen, the economic crisis, the problems in Greece, and also the current debate on assistance for Greece, show that the division into the new and the old Europe is still a reality. Last Friday, the head of the European Commission, José Manuel Barroso, referred to the idea of creating a mechanism of support for countries in the euro area which are struggling with financial problems. According to the head of the Commission, the principles and conditions which would govern the use of this instrument should be established only by members of the euro area.
I would like to take the opportunity of this debate to give my strong support to the position of the Commissioner for Financial Programming and Budget, Mr Lewandowski, and Professor Jan Rostowski, the Polish Minister for Finance. I would like to add my voice to their appeal, and also to the opinion of many fellow Members, that all Member States, including those which are outside the euro area, should now, already, take an active part in measures to strengthen the euro area and create aid instruments for its members. Poland, which is one of the countries outside the euro area, will soon adopt the common currency, and we would like, today, to be responsible for the future form of the Eurogroup. Therefore, let us not exclude the new Member States from such an important debate. We have had the 'two-speed Europe' slogan. Let us not now divide Europe into a Europe in the euro area and a Europe outside the euro area, because we are a single Union.
Finally, I would like to give my wholehearted support to all parts of the resolution which call on the European Central Bank, the European Commission and members of the Eurogroup to support the process of euro area enlargement - enlargement based on the current criteria. I would also like to thank the President of the European Central Bank, Mr Trichet, for his good work, especially this year, which has been such a difficult one for Europe.
(HU) I am grateful to the Commissioner, to the President of the ECB and to the rapporteur for having taken an open and highly professional approach to this problem that concerns us gravely. Indeed, it is alarming that despite all our efforts, the rate of unemployment and the level of state indebtedness keeps rising in almost all Member States of the European Union. My country, Slovakia, is no exception to the rule. Unemployment has risen above 13%. Slovakia was the last state to join the euro area, on 1 January 2009, and this had positive repercussions on economic as well as political and social areas. The vast majority of the population still feels positive about the euro. We think it is important therefore to maintain the strength and prestige of the euro. Parliament must help the Commission and the ECB in their efforts in order to avoid failure in this endeavour. The first thing to do is to bring the integration of the European economy to a higher and sustainable level. This is, however, a strategic question, in which the Council's committed support is indispensable.
(LT) The way out of the complicated economic and financial crisis was not as effective as we had hoped. When the crisis began, the Member States' programmes of support for banks were not coordinated with joint conditions set down at European level and some banks used additional funds allocated from the European Central Bank to cover their losses. Support for economic activity, in particular, small and medium-sized enterprises, was not coordinated either. The impact of these actions is clear: when they failed to receive loans from the banks on time, small and medium-sized businesses folded en masse. It was easier for the countries of the euro area to overcome the difficulties, as the European Central Bank ensured the provision of liquidity to these. If we believe in European solidarity, if we operate in one open market with the same competitive conditions and the main goal is to exit from this complex situation as soon as possible, I think that the European Central Bank should have ensured and must ensure the provision of liquidity to Member States not in the euro area that were hit particularly hard by this crisis.
Mr President, the rapporteur, Mr Scicluna, said that the ECB had tried to expand liquidity, but that liquidity had not been passed on by the banks to their customers. That is true outside the eurozone as well as inside it.
My party is pleased that the UK remains outside the eurozone. A state's currency must reflect the condition and needs of its own economy and not the average needs of 27 different economies. However, keeping our own currency is only part of the answer. The central problem is that credit creation and distribution is in the hands of private companies - the commercial banks - and that is true outside, as well as inside, the eurozone.
The function of credit creation - in effect, money creation - must be removed from the hands of private companies. Extra spending power, when it is needed - either to distribute existing or imminent growth or to finance large infrastructure projects - must be created by the government and spent into circulation, not created by the banks and lent into circulation.
(RO) We have been able to observe during this crisis that the fluctuations triggered by interest and exchange rates have come up against a single currency which has properly shielded the euro area.
The single currency has not provided a solution to all the internal and external imbalances which have occurred. However, the benefits provided through allowing national financial institutions to have access to the European Central Bank's liquidity and the elimination of the risk of exchange rate fluctuations have increased the interest shown in it by the Member States outside the euro area.
The efforts made by these states through improving their own economies and fiscal policies in order to adopt the single currency must be welcomed. I call on the Commission and European Central Bank to further encourage the expansion of the euro area as quickly as possible in order to provide them with greater protection against the effects of the economic and financial crisis.
(DE) Mr President, Mr Trichet, I would like to thank you very much for the part of the report which warns against excessive cuts in wages with the aim of reducing deficits, because low incomes result in a fall in economic growth. I want to thank you for this paragraph, because I believe that this not only slows down economic growth and reduces the competitiveness of Europe, but also restricts the opportunities for European citizens to play a full part in society.
It is essential for us to draw up our budgets according to the guidelines, but it is equally important for the Member States to have room for manoeuvre in an economic and social context. If we have a Europe where there is no longer any investment in education, health and research, we will also have a Europe that is unstable and cannot compete with the rest of the world. Those groups which are not responsible for the crisis must not now be made to bear the cost. If we do not invest in people, we will not have a future in Europe. This is why I am calling for the emphasis to be put on the social aspect in future.
(DE) Mr President, ladies and gentlemen, the current economic and financial crisis, which is also a structural crisis, is forcing us to impose long-term controls and to introduce cautious budgets. Globalisation is compelling the euro area to play an effective role with regard to financial policy. However, this must not happen at the expense of the ordinary citizens and I would like to remind everyone that caution and responsibility are needed.
Mr President, I have to say that I have been addressing Parliament for six and a half years now, and this is the first time that I have noted so many speeches, so many analyses, so many suggestions and so many proposals.
I am very impressed by the wealth of what we have just heard and very impressed also by the diversity of views that have been expressed.
I will try, if I may, to summarise my main points after hearing these remarks, which were all interesting and relevant, and to which the European Central Bank will, of course, attach the utmost importance.
First of all, I would say that I have heard a lot on the challenges the ECB faced and praise for the ECB for having been able to react in real time in very difficult circumstances. Let me tell you that I think my colleagues and I tried to do our best in very exceptional circumstances: the worst since World War II, and it would have probably been the worst since World War I if we had not acted promptly.
The challenges were faced by all; many of you have said that the challenges existed for other central banks in Europe and in the rest of the world. So we all had to face up to enormous responsibility and I fully agree with those who have said that we cannot say that the difficult times are over. We are not over the difficult times. We are not going back to business as usual. We have to remain extremely alert.
I also got the message on growth and jobs, which is a very strong message from Parliament. I fully agree with that. By delivering stability, by being credible in delivering stability in the medium and long run, we trust that we are contributing to sustainable growth and sustainable job creation. But you know that our message is structural reforms; structural reforms to elevate the growth potential of Europe and the job creation capacity of Europe are absolutely essential.
A firm message coming from you, which we fully share in the ECB is - and I do not want to respond in the place of the Commissioner - governance of Europe of the 27, governance of the 16 members of the euro area is of the essence. We call for the utmost level of responsibility from countries, whether members of the 27 or of the 16, to exert their responsibility, to exert surveillance on the peers. We absolutely need full and complete implementation of the Stability and Growth Pact. Surveillance of fiscal policies is at the heart of EMU, and I must also include surveillance of structural reforms and implementation of structural reforms, and surveillance of the evolution of the cost competitiveness of the various economies, particularly, members of the euro area. This is a key issue.
I do not want to elaborate more on Greece and the various issues at stake. I have already had occasion to respond to many questions in the Committee on Economic and Monetary Affairs and in front of Parliament. Let me only say that Greece has a role model, and the role model is Ireland. Ireland had an extremely difficult problem - this was said by one of the MEPs here - and Ireland took its problem very seriously ex ante, with extreme determination, professionalism and capacity, and this has been recognised by all. I want to stress that. That being said, I repeat: the judgment of the ECB on the new measures which have been taken by the Greek Government is that they are convincing and, I would add, courageous.
A word on the long-term situation inside the euro area: during the next 10 or 20 years, we will deliver price stability in line with the definition we have delivered since the inception of the euro. You can trust us. We can prove that. This is not theory. These are facts; these are figures.
(FR) And I must stress this: all the members of the euro area know that average inflation in the euro area will be less than 2%, or close to 2%, in the medium and long terms. They must draw consequences from this nationally. They benefit from belonging to the euro area. They must not put themselves in a national context, in terms of national inflation, since that would be far from what we guarantee, because that has been asked of us, because we are faithful to our remit and because it is a contribution to the prosperity and stability of Europe.
Mr President, allow me to conclude - if I can, in a few words - on the matter of transparency. As I have often said to MEPs, we are the most transparent in the world when it comes to the immediate publication of our studies, the introductory statement. We are the most transparent in the world when it comes to the press conference that immediately follows the Governing Council.
The only area where this decision does not stand - and we have a good reason - is that we are not giving the names of those who are voting for this and of those who are voting for that, because we consider that our message is that we are not a collection of individuals. We are a college. The Governing Council is the pertinent entity. It is the Governing Council which counts.
I have already said that it is not business as usual and we must absolutely reform the financial markets in a very profound way, in order to be sure that we do not start another crisis of the kind that we have had to cope with.
A last point on Poland and Hungary: one MEP mentioned Poland and Hungary and told us that they were not treated as they should be by the ECB. I think the MEP is not well-informed; I would encourage her to go to the national central banks of the two countries and it will be demonstrated to her that the ECB has a very intimate cooperation with those two central banks to the benefit of all of us.
Member of the Commission. - Mr President, first, I would like to say thank you to the Members for a very serious and substantive debate. I have listened to your views very carefully. I can conclude from them that there is strong and broad support for an effective reinforcement of economic governance in the euro area and in the European Union as a whole.
In my view, today's debate has been a very worthy and valuable setting of the scene for the European Council today and tomorrow. I also welcome the opportunity to continue discussions on economic governance soon in the Committee on Economic and Monetary Affairs, preferably as soon as possible after Easter. I would like to consult you and move forward soon with concrete proposals.
There are two lines of action in reinforcing economic governance which are of the essence. First of all, its cornerstone will be a truly credible and better preventive fiscal and budgetary surveillance that is stronger and more rigorous, also covers the mid-term budgetary policies, and uses recommendations and, if needed, warnings to the Member States.
Its second building block will consist of more effective preventive and more systematic and rigorous surveillance of macro-economic imbalances and divergences in competitiveness between the Member States of the euro area and of the European Union. Binding policy recommendations will also be used in this regard. This is needed to prevent an accumulation of imbalances. It is self-evident that without a doubt, the most pressing and urgent need exists in the countries with large deficits and weak competitiveness - not only in Greece, but, of course, starting in Greece.
It is equally self-evident that we cannot - and will not - mean by this that anybody would weaken the export performance of countries with current account surpluses. In other words, the aim is not to make Bayern München play worse against Olympic Lyon but to improve both export competitiveness where needed and domestic demand where needed and possible, thus making both Bayern München and Olympic Lyon play better as a European team by making both offensive and defensive strategy ever stronger.
That is what the euro area - and, in the final analysis, the European Union - is all about.
rapporteur. - Mr President, a few points first. I would like to take the opportunity to thank the ECB for its cooperation and availability in responding to my various queries. Secondly, I would like to thank my fellow shadow rapporteurs for their joint team work in agreeing to amendments to this report and thus widening the agreement on it.
We have seen that the recent recession is proving to be a challenge. However the tensions in the euro area are not new and are well known. We know we are not yet an optimal currency area. However, that is why we have to be innovative. We have to follow sensible economic principles and policies. Of course, they must be couched in line with European social cohesion principles.
Some observers have stated that the ECB cannot help Greece because this is forbidden by the 'no bail-out' clause of Article 103 of the EU Treaty. Nevertheless, it is one thing to implement a bail-out and another, very different thing to provide temporary financial assistance.
We know that there are several options before us. Some can be executed in the short term and others in the medium term. As my colleagues before me pointed out, and as Europeans, we all look up to the euro and we all want it to succeed. We can make it succeed, so let us all - Parliament, Commission, Council and the European Central Bank - put our heads together and find a successful path forward.
Finally, we must restore public confidence in financial institutions through measures which include greater transparency, better risk management and appropriate regulation. We need to ensure that a crisis of this magnitude does not occur again.
rapporteur. - Mr President, following this debate, I would like to make three quick points.
Firstly, looking at the different opinions here in the House, we do not have the same opinion on the question of imbalances. There were differences which were quite clear and I think we have to be careful.
In particular, I would like to address that to you, Mr Trichet and Mr Rehn, and ask you not to be blind in one eye, because the central problem, as we agree in principle, is that costs should grow according to the inflation target plus productivity. Some countries had cost increases which were too high, and it is good that you are acting.
On the other hand, there are several countries which use tax policy as well as their wage-setting arrangements to ensure they fall below this threshold. If you do not act on those - and I know that some in the Ecofin do not agree with this approach - then we will be setting fire to the economic basis of the eurozone and that is very dangerous. I urge you not to be blind in one eye and I urge my colleagues likewise.
Look at Greece and the stability programme, which was praised. I would like to stress that there is a major problem, and I refer to what I learnt during my visit to Greece last week.
Most people in Greece feel that during the last 10 or 20 years, a lot of people became very rich under circumstances which were not just. If you praise the Irish efforts, you cannot compare it to the situation in Greece. People in Greece feel they should not suffer because of things they have not caused.
Therefore, I urge you, Mr Rehn, also to put pressure on the Greek Government to get serious on illegitimate wealth which has been accumulated in the past. Otherwise, the programme will be not accepted and it will also fail for economic reasons. We have to make sure that the programme is socially just - and it is not yet socially just.
The debate is closed.
The vote will take place on Thursday, 25 March 2010.
Written statements (Rule 149)
in writing. - There are lessons to be learnt from the current eurozone crisis. The economic crisis is also responsible for the eurozone difficulties, but I believe there are also structural weaknesses of EMU that we should address in order to avoid future crises. For the ECB to be able to take efficient action supporting employment and growth, we have to provide it with the necessary tools. The ECB does not have the same tools as the Fed, which is why it could not have an active monetary policy supporting growth. The ECB is bound by its main objective of ensuring price stability, which prevents it from efficiently stimulating growth. I also believe that we need greater coordination of economic and fiscal policies, so that we avoid unfortunate situations like the Greek one. Better coordination would enhance euro area stability. The SGP needs to be respected strictly, but I think it should be revised. The preventive arm should be strengthened. The punitive arm is not an efficient one since paying fees only increases budgetary deficits and prevents compliance with the rules. On the other hand, sanctions should not be decided by the Council, because Member States will always be reluctant to punish each other.
in writing. - We should proceed from one central fact - during the most severe economic crisis that Europe has known, the euro has been an anchor of stability and credibility. Without the functioning eurozone, overcoming the crisis would have been much slower and uneven. This applies also for those Member States which have not yet joined the eurozone. Now it is especially important to realise that the European common currency is a common value for which every member of the eurozone bears individual responsibility. There is a general agreement that the economic crisis was a logical outcome of a widespread crisis of values.
Those who have joined the eurozone are expected to bear higher responsibility for balancing their expenses and incomes. It does not make sense to take the role of supposed victims of financial speculation or economic mafias. Almost all European economies have sinned against the principles of sound and balanced fiscal policy. The lesson has to be learnt - we need much tougher supervision and better coordination of financial policies with the establishment of a European Monetary Fund. But, first of all, each and every member of the eurozone must slow down in living at the expense of tomorrow.
The activities of the European Central Bank have, since its inception, been a subject of constant criticism from the left, and not only throughout the EU. The first cause of this justified criticism is the objectives of the bank. Since the main objective of the bank is to ensure that inflation does not exceed 2% and the budget deficits of the EU Member States do not exceed 3% of GDP, then everything is clearly fine in times of growth, when unemployment 'falls by itself', the liquidity of the banks is 'secured by itself' and the ECB is able to 'press governments' in individual Member States to reduce their debts. From the moment when an economic crisis erupts, however, it is a very different story. The badly formulated objective of the central financial institution has the effect of making fundamental divergences from the objective necessary. The report, which is concerned with assessing the ECB's annual report and performance in relation to solving the financial crisis, nonetheless stubbornly insists on this badly-formulated pivotal objective. The report also states, among other things, that it is necessary to draw back from the policy of stimulation packages and from securing the liquidity of the banks, which was the main so-called unconventional measure for overcoming the crisis. The report does not concern itself at all with the critical state of the finances of at least five EU states, and it seems that the authors of the report are also indifferent to the meteoric rise in unemployment. All of this only confirms the harmfulness of the current concept of the European Central Bank. The report must therefore be rejected.
The European Union as a whole and the euro area in particular are in a grave situation. Greece is on the verge of bankruptcy and Spain and Portugal are also in difficulties. Because of the seriousness of the situation, new proposals are constantly being made. On the one hand, people are talking about giving the European Monetary Fund extensive rights of intervention. On the other hand, the Commissioner for Economic and Monetary Policy, Mr Rehn, is calling for Brussels to be involved in the budgetary planning of the Member States. The European Union obviously wants to use the current crisis to strip the Member States of their financial autonomy, which is one of the last core areas of national sovereignty remaining to them. However, taking another huge step towards a centralised European superstate will not solve the existing problems. On the contrary, it will further exacerbate them. The alarming state that the monetary union finds itself in and the fact that the euro has become a high-risk currency are a result of countries such as Germany, the Netherlands and Austria, on the one hand, being brought together with states such as Greece, Italy and Spain, on the other, with a deliberate disregard for the existing differences between them concerning their economic development and the ethos on which their financial policy is based. These historical differences, which not only relate to the economy, must be taken into consideration, instead of further tightening the existing centralist constraints on the European nation states.
In the context of the European Central Bank annual report, I would like to highlight the disturbing change in financial policy which has resulted in far too many dollars being printed without it being possible to come anywhere near covering their value. The accompanying current or forthcoming devaluation of the dollar by the United States as part of its currency reform programme would have a severe negative impact on the European market. In order to avoid this risk, the European Central Bank and other European institutions should seriously consider moving away from the dollar as a key currency. The euro is much stronger, and famous economists, such as Nobel prize-winner Joseph Stiglitz, have said that the leading role played by the dollar has been the cause of many financial crises. The European Union should stop exposing itself voluntarily to the problems of US financial policy.
Mr President, the debt crisis in Greece has raised questions about our ability to maintain the stability of the euro area. I am convinced that the strength of the single currency will be guaranteed if the rules we have agreed upon are followed in every single Member State. It has been said that, as well as Greece, there are other European Union Member States which can expect serious financial difficulties. In addition to the soaring national debt, some Member States have also reached almost dangerous levels of government spending, something which the European Central Bank was already concerned about a couple of years ago. The euro is an anchor to which the Member State economies are tied. Actions by any Member State which weaken the euro are unacceptable. I consider it essential that every country fulfils the conditions set up for the euro area. At the same time, I support the collective approach to looking for solutions, including compiling an aid package for Greece, tightening the regulations concerning the single currency and carrying out stricter supervision. The idea of the possible creation of a European Monetary Fund, which was raised as a result of the Greek crisis, is an approach which could prevent potential problems, but we should not forget the overseas factors operating in a globalised investment market, which necessarily have an impact on the euro area. It is, therefore, clear that at a national level, we should henceforth concentrate more on creating legislation which would protect the euro from the influence of dangerous factors, both internal to the European Union and outside it.