Capital requirements for the trading book and for re-securitisations, and the supervisory review of remuneration policies - Remuneration of directors of listed companies and remuneration policies in the financial services sector (debate)
The next item is the joint debate on:
the report by Arlene McCarthy, on behalf of the Committee on Economic and Monetary Affairs, on capital requirements for the trading book and for re-securitisations, and the supervisory review of remuneration policies - C7-0096/2009 - 2009/0099 (COD)) and
the report by Saïd El Khadraoui, on behalf of the Committee on Economic and Monetary Affairs, on remuneration of directors of listed companies and remuneration policies in the financial services sector.
rapporteur. - Madam President, firstly, I would like to put on record my thanks to those who have helped to secure the agreement we have reached on CRD III (Capital Requirements Directive) regulating bank capital and bankers' pay and bonuses. A very special thanks goes to my shadows in the Committee on Economic and Monetary Affairs, to the staff, and also to Commissioner Barnier for his continued support for the committee's proposals, and of course, not least, to the Spanish Presidency for their persistence and efforts in 12 hours of trialogues to mediate between Parliament's negotiating team and the 27 Member States.
The final law we are debating today fully implements the Basel rules on capital against the trading book and re-securitisations and it robustly implements the international remuneration rules agreed at the G20. Financial experts all agree that a high risk short-term bonus culture, combined with a lack of capital, were central elements in the 2008 global financial crisis. Governments and taxpayers ended up bailing out the banking sector across the European Union with an injection of some EUR 3.9 trillion of support. In my Member State, the UK, an estimated GBP 1.2 trillion of support was extended, almost equivalent to one full year of GDP. Savers and investors saw the value of their pensions and investments decline as a result of the banks' risky practices. The bankers walked away with the short-term profits from these risky practices, while the risks they took will remain on the banks' books for years to come.
The new law amending the Capital Requirements Directive addresses these fundamental flaws and weaknesses in the banking system which led to the crisis. It will force banks to hold more capital against riskier activities on the trading book. The law also forces banks to reform their remuneration and bonus practices with rules that break the link between financial reward and excessive risk-taking. The effect of Parliament's amendments is also to ensure that those remuneration policies, first and foremost, prioritise the health and stability of a financial institution and indeed, lending to the real economy.
We are constantly told by the banks that they have learned the lessons of the crisis. If that is the case, why did the Bank of England financial stability report state in June that the proportion of bank revenues allocated to salaries and bonuses has, in fact, increased since the banking crisis? The extra GBP 10 billion paid out by UK banks in salaries and bonuses represents GBP 10 billion that could have been put towards banks' capital and, as such, support, as the Bank of England makes clear, around GBP 50 billion of lending to small businesses and families. Furthermore, the Bank of England reports say that lending to small and medium-sized enterprises in the UK has actually declined in recent months and that mortgage lending is expected to contract in the next few months.
So, colleagues, at a time when governments across the EU are making substantial budget cuts, scaling back public services and support to families and businesses, we cannot continue with a banking culture that prioritises bankers' pay and perks over sustaining capital and credit for Europe's economic recovery. It is therefore imperative that these rules on bonuses apply in 2011.
These rules are deferral, in line with the business cycle with annual review clawback; tough measures for bailed-out banks; a cap on the ratio of bonus to fixed salary; payment in contingent capital alongside shares; increased transparency and accountability and improved corporate governance; and, of course, coverage of bonus-like pensions so a banker responsible for the collapse of his own bank will no longer be able to walk away with a GBP 16 million pension pot.
Parliament has insisted on a tough interpretation of the G20 principles to ensure that the upfront cash proportion of a bonus is strictly limited. Paying a large part of the bonus in cash without any deferral or assessment of actual performance leaves, the Parliament believes, an unacceptable incentive for taking dangerous short-term risks.
Colleagues, we have a duty, as legislators, to defend the taxpayers' interest. We have a duty to respond to the public's concerns. Our voters demand and expect banks to prioritise stability and lending over bankers' own pay and bonuses. In the last two years, since 2008, the banks have failed to reform their structures. They have failed to do this and we are now doing the job for them in order to rebuild trust and confidence in Europe's banking system.
Madam President, Commissioner, ladies and gentlemen, I should like to start by thanking the shadow rapporteurs for the constructive cooperation that has enabled us to establish what is, in my view, a coherent package of opinions and recommendations.
The financial crisis has made clear that remuneration policies in the financial sector have been excessively geared towards short-term profits and that this has encouraged risk-taking behaviour, with all the associated consequences for the economy as a whole in the wake of the banking crisis. In addition, the limited impact of non-binding recommendations on remuneration policies has been demonstrated, and so it is important that we lay down ground rules aiming to contribute to sustainable growth of the companies involved and of the economy as a whole. The political agreement concerning the Capital Requirements Directive just proposed by my colleague, Mrs McCarthy, is an important step forward, as it sets out, for the first time, binding provisions concerning the structure and payment of bonuses in the financial sector. The limits on payment in cash, the stipulation that there must also be the possibility of limiting bonuses in the event of underperformance, and the spreading of bonus payments over several years strike me as particularly important aspects.
My report seeks to show that this is insufficient and that we need to look at remuneration policies from a broader perspective and strengthen the corporate-governance rules so that the ground rules and internal procedures for all the companies in the financial sector, on the one hand, and listed companies, on the other, meet the same criteria.
To begin with, it is important to exercise and expand sound internal and external supervision of remuneration policies. Therefore, companies should have a remuneration committee, which must be independent, and is accountable to the shareholders and supervisors, who must also be given access to all the potentially relevant information. This committee should also be able to cooperate closely with the risk committee on the evaluation of the incentives created by the compensation system. People engaged in risk control should, of course, be independent from the business units they control, be able to assert sufficient authority and be compensated independently of the performance of the business units under their supervision.
Risk management arrangements should be reviewed in detail by the supervisor, and companies should establish an internal procedure to address problems and conflicts which may occur between risk management and its operational units.
The remuneration itself must reflect the company's long-term performance as far as possible. Bonuses should not just be guaranteed. The levels of variable remuneration should be based on predetermined and measurable performance criteria, which should be not only quantitative but also qualitative in nature. In addition, in the interests of social justice and for ethical reasons, the difference between the highest and the lowest remuneration in a company should remain reasonable. A proportion of variable remuneration should be paid out over a sufficient period. Furthermore, more than half should be paid out in shares or share-linked instruments, and effective recovery of a proportion of these bonuses must be possible. Also, an upper limit of two years' pay should be set for severance pay, which should certainly be banned in cases of non-performance or voluntary departure.
With regard to transparency, it is important that details of companies' pension and supplementary pension arrangements be published and that shareholders be able to express their views on their company's remuneration policy. We also call for the development of an international structure enabling disclosure of the individuals earning upwards of EUR 1 million, to include the main elements of salary bonuses, long-term pay and pension contributions.
We call on the European Commission to continue its work and develop strict, binding principles on remuneration in the financial sector on top of those we have already agreed. We call for the establishment of a system for listed companies that provides full transparency, enabling us to find out which companies are keeping to the arrangements and which are not. I think that we can go even further in this matter. Commissioner, I am looking forward to your proposals on corporate governance, which have been announced in the Green Paper, as that is another dossier we shall certainly be continuing to work on in the coming months and years.
Madam President, ladies and gentlemen, we are now debating another aspect of the response to the economic crisis, namely the lessons that can be learnt from it. After supervision has been dealt with, the next issue is how best to reform those remuneration practices which encouraged reckless risk taking, how best to reform capital requirements.
Regarding these two points, I should like to thank and congratulate your two colleagues, Mrs McCarthy and Mr El Khadraoui, the shadow rapporteurs who have worked with you, and who have demonstrated the commitment of your Parliament to a more responsible, more sound, more stable economy, to markets that should be placed once more - I repeat - at the service of the real economy, at the service of the citizens, rather than the reverse. This is an objective on which the Commission, in general, and I myself, in particular, are in full agreement.
Since my hearing, I have supported responsible European businesses, focused on the citizens, in order to improve the governance of financial institutions. I would like to thank Parliament for its support on these issues, on these tasks. I agree with your observation, Mr El Khadraoui. There must be binding measures on the remuneration policies of financial institutions. I am therefore delighted with the compromise reached by the three institutions on the revision of the directive on capital requirements, known as CRD 3. It is a balanced, well-conceived compromise which sends a strong political message to the banks and to the public.
This revised directive will strengthen the regulation system and increase the requirements for capital in areas where risks are under-capitalised. It will limit those remuneration practices which, I repeat, encouraged excessive risk taking, which have, rightly, been condemned by European citizens. It is a very important reform which tackles aspects which made a very significant contribution to the causes of the recent crisis: the trading book, complex securitisations, and remuneration practices. It is a text which not only transposes at European level the principles of the Financial Stability Board, which we agreed at the G20 in Pittsburgh, in September 2009, but which also goes beyond this by setting clear and stringent limits on variable remuneration, while allowing credit establishments and investment companies a margin of flexibility.
The payment of bonuses to directors of banks receiving State aid is greatly restricted. I think that that is fair. The clawback mechanism will also allow for a portion of the bonuses to be reimbursed in the event of under-performance. I also welcome the fact that these measures must be implemented by the Member States from 1 January 2011. I think that it is very important for the bonuses awarded in 2010, but not yet paid by 1 January 2011, to be fully covered by these new rules.
Finally, ladies and gentlemen, rapporteurs, we shall propose corresponding rules for the other financial sectors, such as the insurance sector or investment fund sector, while showing respect for, and taking full account of, the particular features of each of these sectors.
A few words about corporate governance in general, because beyond these aspects, Mr El Khadraoui's report clearly illustrates how necessary it is to improve the governance of all businesses. This is one of the key elements of a more robust and more stable regulatory framework. I have begun this task. I recently put forward an international agenda for a financial regulation for growth. The Green Paper of 2 June 2010 on corporate governance in financial institutions is a first step in this direction. We are examining the role of auditors, of members of management boards, in order to check that everyone with a responsibility is fully competent to fulfil it. This is one of the requests made in your report, Mr El Khadraoui. Your report also deals with conflicts of interests, the role and function of boards of directors, risk management, the roles of shareholders, supervisory authorities and auditors in financial institutions. We shall open a two-month period of genuine consultation on all these issues.
I also intend to undertake a study next year on corporate governance beyond the financial sector, in particular, concerning the role of shareholders, diversity, and the role of women, for example, in the composition of corporate boards of directors.
Thirdly, there is the matter of the modernisation of capital treatment. I have just referred to CRD 3 and the issue of remuneration. This is a different issue to those of the capital requirement for high-risk activities and the bank trading book, which are both at the root of the crisis. We now know that the current levels of capital held against these assets were totally insufficient in the face of the financial crisis. CRD 3 strengthens regulation in this area, remedies deficiencies in the ways in which capital in relation to the trading book has been calculated and considerably increases the levels of capital held against its assets.
Ladies and gentlemen, some of you are undoubtedly concerned that these crucial reforms will not come into effect by the end of 2011. I am very aware of this risk. Nevertheless, when it became clear that the United States would not be in a position to implement the Basel Committee's new rules on the trading book by the end of 2010, during my recent visit to the United States, I reviewed this matter with the US Treasury Secretary, Tim Geithner, and we reached an agreement, at international level, on a date for the application of the new rules. This international agreement was reached in May, when the Basel Committee agreed that the member countries would apply the new rules by the end of 2011.
With very flexible and internationalised markets, I think that it is extremely important to have global convergence, particularly between the Americans and the Europeans. I believe that by negotiating this deadline, we have ensured that all our international partners, chiefly the United States, will implement the rules in accordance with the amended timetable.
I am aware that these negotiations on CRD 3 have sometimes been very difficult. I should like, Madam President, to thank Mrs McCarthy and the shadow rapporteurs once again for the perseverance, creativity and receptiveness they have shown. I am delighted that I, my staff and my colleagues within the Directorate-General are able to work with you with such understanding.
Madam President, the financial incentives that bonuses have provided and that have affected the behaviour of stockbrokers, portfolio managers and directors in the financial sector were a major contributing factor to the financial crisis. We know what the outcome of this was, and therefore it is clearly a good thing that the directive is being amended so that we can avoid something similar happening in future. In this regard, I would like to congratulate the rapporteur on the new agreement and thank her for the work she has done.
We actually discussed remuneration policies in the Committee on Employment and Social Affairs, and we therefore welcome those areas of the agreement, for example, that focus on more openness and transparency in connection with the provision of information to all stakeholders, shareholders, employees, the general public and the authorities.
Moreover, in the Employment Committee's opinion, we were almost unanimously in favour of a ban on stock options. Stock options have been the bonus scheme instrument that has provided the greatest incentive to take unnecessary risks that have resulted in losses. Even the financial sector recognises this problem, and I therefore regret the fact that the agreement does not contain a ban on stock options.
Madam President, ladies and gentlemen, the Council is again absent. One must presume that the Council is not really aware of the political message conveyed by these regulations or by its absence.
During the negotiations, the Council came out on the side of the bonus recipients. The European Parliament is in favour of clear European regulations. We are in favour of maximum limits. We are in favour of payment methods involving less risk. We are in favour of liability. We are in favour of restrictions on bonuses for managers of banks supported with public funds. We do not want cash amounts to be higher than the tied-up capital. We have managed to get our way with splitting the timetable. We are delighted that Commissioner Barnier has agreed with the Americans that the second part, the banking book and trading book, should be implemented globally together.
It is also important that we have adapted the trading book and banking book. The disclosure requirements have been clearly tightened, the inclusion of risk for re-securitisations in the trading book has been adapted to the banking book and the stress test has been introduced in the trading book to build up capital buffers for crisis periods.
It is also important that we have tightened the preventive measures against insolvency in the trading book, but on this point, I would like to mention that we need a harmonised European insolvency law on top of this. We support this compromise as it takes us further in the right direction.
Madam President, the area of bonuses and remuneration systems is one in which we have heard a great deal of rhetoric in recent years. On the other hand, there have been very few specific measures. It is therefore a positive move that we are now establishing legislation that is both clear and practicable. This legislation will most likely reduce the short-sighted and exaggerated risk taking in the financial sector. That will reduce the risk level and increase stability.
The financial services industry should have removed the elements of the bonus systems that are damaging to society long ago, but since this has not happened, there is nothing else we can do but legislate. It is too risky for society to largely accept the status quo. Taxpayers have already paid out too much to cover losses in banks that have taken risks that were far too high. It is now vital that the directive is implemented properly in the Member States and that the regulations are used effectively, thereby helping to change the current bonus culture.
on behalf of the ALDE Group. - Madam President, the reform of bank capital is Europe's most important legislative response to the crisis so far and it deserves big billing. Yes, I mean up there alongside the supervisory architecture. Under-capitalised trading books were a fundamental cause of the crisis, making speculative proprietary trading attractive and almost cost-free. So the three- to four-fold increase of capital required against such trading positions should be welcomed as directly addressing the root cause of the crisis and cutting down on the motive for casino banking.
On remuneration, when I first suggested that big bonuses and pension lump sums could be paid in subordinated debt, many said that this could not fly. So I thank the rapporteur and my fellow shadows for supporting this idea, which we transformed into contingent capital and is already becoming part of mainstream thinking elsewhere. I regret that my specific tax-avoidance texts could not be included, but we have prohibited payment in ways designed to undermine the purpose of the directive.
Madam President, Commissioner, my political group is particularly delighted that this directive has been adopted. It is a directive which arguably contains the most ambitious rules in the world on remuneration factors. I must say that the ability to strictly limit the variable remuneration of directors of banks assisted by the public purse, and even the possibility to defer up to 70% of traders' bonuses in the long-term interests of the bank and, potentially therefore, to take account of the risks taken and the negative effects of these risks in order to reduce these bonuses, are important rules which translate the G20's commitments in principle into real figures at European level.
However, I must also say that in negotiations with all the other shadow rapporteurs and with the rapporteur herself, we constantly came up against a lack of commitment by the States, against the huge gap between fine rhetoric on the regulation of capitalism, on the raising of the moral standards of capitalism, on the one hand, and the negotiating positions of the Council and the main States, which constantly refused to agree figures, and tried to reduce the scope of and water down all of our ambitious proposals, on the other. I must say, Commissioner, that the Commission has largely been on our side in this struggle. Therefore, I think that this is an achievement which we can share.
Now, there is an important issue at stake. As we lost, we have had to make compromises. We lost a number of battles aimed at agreeing figures, and we have had to replace these figures with a number of words, often rather portmanteau words, such as 'justified', 'appropriate' and 'balanced'. The challenge now is for the future European banking authority to translate these principles and portmanteau words into real figures, which will then be applied by all banks and all Member States. I would therefore like to know, Mr Barnier, how you intend to apply pressure on and strictly monitor this future process so that it does not distort the text on which we are going to vote tomorrow.
(DE) Madam President, we have obviously learnt something from the crisis after all, as irresponsible economic activity is now no longer to be encouraged or rewarded. The system supporting the payment of only some bonuses, in this case 20% or 30%, promotes efforts towards managing companies in a more sustainable way. The regulation should also set an example to citizens, as they have already footed enough of the bill, and it is incomprehensible why their taxes should be used to pay bonuses to irresponsible managers.
We have here a regulation which is unique on a global scale. If the EU wants to avoid the possibility of emigration towards New York or Tokyo, it must now have a second trick up its sleeve, which means pushing more strongly for a common regulation on the international stage. After all, any managers who are successful and responsible also want to continue making a good living.
In addition, it might be worth considering applying corporate governance requirements which do not affect the capping of executive pay, even in companies not listed on the stock exchange. This is a fundamental change towards greater sustainability and cost efficiency, and hopefully away from gambling.
(PL) Madam President, it seems to me we have been able to do something very significant in regulating or creating a new framework for remuneration policy. On the one hand, we have managed to agree that the escalation of remuneration was one factor which helped cause the financial crisis. We have also been able to agree with each other that we have to increase the role of management bodies and particularly of supervisory bodies, including both internal and external supervision in companies. We have also agreed that general principles have to be established for situations when a completely independent management committee has to be formed in a company. We have finally managed to agree what previous speakers have talked about, that bonuses should be linked to long-term financial results and that they can be set aside.
We were also able to agree with something else, which seems to me no less important - we were able to agree that remuneration policy, although undoubtedly incorrect, was not the main cause, and certainly not the only cause, of the financial crisis. I welcome this last point in particular, because if we had written this into the report - and there were such suggestions - we would have accepted information which is simply not true, and this would not have helped us fight the causes of the crisis. Thank you to all fellow Members for their cooperation on this report.
(SV) Madam President, I was shadow rapporteur for the second report, and I would first of all like to thank our rapporteur for his excellent cooperation.
After the extensive financial crisis, it is probably only natural for us to review remuneration policy within this sector. At the same time, we have to admit that the issue has, without a doubt, been politically interesting and quite simply populistic. It is clear that we need principles that promote and create guidelines for a sound remuneration policy. We know that there have been individual cases where remuneration policy could have given rise to the problems that we have seen over recent years.
At the same time, we must avoid broad generalisations and blaming the sector as a whole. We should perhaps remember that it is hardly in the interests of an individual company to encourage exaggerated risk taking. I am therefore also pleased that we were finally able to agree on the comply-or-explain principle, among other things. In the end, we succeeded in achieving a relatively balanced result. I believe this is a good result, even though I think that as politicians, we should perhaps, in principle, not go into as much detail as we are doing in this case.
(DE) Madam President, Mr Karas has already mentioned some key points. I fully concur with him on them. I think that we need better capital requirements for financial institutions in both qualitative and quantitative terms. One thing is therefore certain, namely that the Basel rules need to be developed further. However, it does not help to force the situation as this could have totally the opposite effect.
The financial crisis is obviously a global crisis. The lessons we need to draw from it must therefore be drawn at a global level as well. This means that if we tighten capital requirements, we must coordinate this measure internationally too. The level playing field must be retained. Judging in particular by the decisions that have been made in the last few days by our friends in the US, I have certain doubts about this.
Another consideration, which is especially important to me, is that the accumulation of current projects must not result in inconsistency. For example, texts and annexes must remain consistent. Calculation examples in the annex must also match the wording. However, the future supervisory authority will be responsible for the interpretation.
There is one other thing we should not forget. The financial economy and the real economy are not two self-contained systems. Capital requirement regulations have an impact on the real economy. However, at the moment we do not know exactly what this will be. We therefore need at least to carry out thorough impact assessments before we make any further changes to the legal framework. This has been the negotiating line adopted by the Group of the European People's Party (Christian Democrats) from the outset. The compromise which has now been reached with the Council is therefore, in my view, the only sensible solution. I wish to thank Mrs McCarthy and Mr Karas, in particular, for the work they have put in to this report.
(IT) Madam President, Commissioner, ladies and gentlemen, I would like to thank the two rapporteurs for their excellent work. The restriction on bonuses to top managers is a very important sign: first of all, because it is the first time, anywhere in the world, that a ceiling on payments to bank directors has been established; secondly, because this is a package of clear rules - managers' bonuses must only be paid when the bank has collected the profits and no longer only on the basis of forecast results; and thirdly, because the new measures will put an end to the encouragement to take excessive risks. Finally, there will be greater transparency and responsibility since shareholders will be able to take part in shareholders' meetings and exercise the right to vote on the remuneration of directors.
(SK) Inappropriate systems of remuneration contributed to excessive and careless risk taking at the expense of employees, savers, investors and overall economic growth, which finally also contributed to the financial and economic crisis.
For this reason, I welcome the initiative leading to the regulation of remuneration policies in the financial services sector, which takes account of the fact that managers are often led by their own financial interests when managing a company.
Excessive risk taking is also, in many cases, contrary to the long-term interests of a company and its shareholders. In the case of banks and other financial institutions, moreover, taxpayers are faced with the risk that they will have to take part in rescue measures in case of financial difficulties.
In my opinion, we should ensure a high degree of transparency in remuneration and strengthen the rights of shareholders to supervise remuneration policies for company managers and to express their opinions on this at AGMs.
(DE) Madam President, there is a real wave of post office closures at the moment in Austria while, at the same time, there has been a 40% wage hike at Post AG, but only for executive salaries. However, particularly during times of crisis, the general population is unable to comprehend such fantasy salaries, bonus excesses and serial severance pay recipients. It will not be that easy to put an end to this.
It is well known that the German law on the appropriateness of management board remuneration has simply brought about more red tape and greater influence from foreign investors on remuneration policy and company strategy. The attempt to make management executives more accountable with retentions was thwarted by new insurance policies. The EU draft should draw a lesson from this.
When one hears that disclosure of managers' salaries in the US has led to their increase, it becomes clear that our plan is tantamount to fighting against a hydra. A chief controller will, at any rate, find it difficult to be responsible for two companies at the same time which compete with each other. The factors determining the bonuses must definitely be transparent.
Madam President, I would like to thank the rapporteurs and the Commission. This is a specialist area but every single citizen in Europe is pleased that Parliament, the Commission and the Council are tackling the issue of excessive remuneration. We only know about the excesses of the banking sector because of the disasters that have happened. I would argue that, even if things were profitable in banking, the remuneration is way out of line from the general public perception.
Transparency is the key to all of this. When people have knowledge of what is happening, then we can take action on it. We published the payments of farmers, from the very smallest right up through the chain, and we regard this as transparent. In my view, bankers make profits from public money, from their shareholders and those of us who take out loans, so it is time to tackle this particular problem. I am not, however, convinced that the mindset of many bankers has changed at all and I fear that when this does eventually blow over, unless the Commission is very strong, we will revert to type.
Madam President, I am deeply touched that you still have the patience to listen to me as I have been with you for four hours now, and I am delighted to be here, to answer your questions and to listen to your debate on some very important matters.
Once again, my thanks go to Mrs McCarthy and Mr El Khadraoui and to all the members of the Committee on Economic and Monetary Affairs for their commitment, their contributions, and the important improvements that you, the rapporteurs, have made to these texts.
We still have a great deal of work to do on the issue of the financial sector, on remuneration in the other financial sectors, on corporate governance, on CRD 4, on derivatives and on short selling, and I shall propose some regulations on these areas in September.
Only today, the College approved two legislative texts on deposit guarantees and compensation for investors, and a White Paper on guarantees in the insurance sector.
To return to today's texts, on which you will vote tomorrow, I think they are sound texts which have benefited from a considerable number of contributions in the course of the negotiation process, from positive amendments, tabled by your committee, in particular, concerning details on the calculation of remuneration, transparency in remuneration policies, restrictions on bonuses in those companies which have benefited from State aid, and clawback.
With regard to international competitiveness, I would like to remind you that the Financial Stability Board's remuneration principles are general principles designed for states, which differ considerably in terms of their economic development. There is considerable diversity amongst these states and, where the Financial Stability Board's general principles allowed them too much room for manoeuvre as regards the implementation of those principles, it was indeed necessary, at European level, to ensure that the Member States implemented the text of the directive consistently. Clear rules have been implemented which cannot be interpreted in different ways. As I have already said on numerous occasions, I do not believe that a clear, consistent legislative framework would in any way compromise our international competitiveness. I even believe that if Europe becomes one of the very first continents to implement these intelligent regulations and intelligent supervision, it will enjoy a competitive advantage.
With regard to what you were saying about the workings of the new European authorities, we still need to establish these authorities. They have not yet been established. This is the aim of the debates we are having with the Council at this very moment. In my view, these new authorities will have to have real powers of coordination and be able to ensure that these common rules are applied coherently and consistently. Furthermore, there must be the opportunity to take decisions relating directly to institutions, in the event that European law is not applied correctly. This includes, Mr Canfin, decisions on rules relating to remuneration.
Therefore, I assure you that the Commission will be extremely vigilant as regards these various points in the coming days.
I should now like to say a few words about the application of these new rules. They must apply to all investment banking firms. The directive includes a general principle of proportionality, which allows for the application of the principles to be adapted to different credit institutions, taking into account their legal structure, size, complexity and the nature of their activity. We firmly believe that CRD 3, thanks to you, will make significant changes to practices which have been all too frequent until now, and which have led to excessive risk taking by the banks and hence to the economic crisis, the consequences of which we are suffering today.
I should like to thank Mr Karas for his support on the issue of implementation, as agreed, in parallel with the US, in respect of insolvency law. We shall work on this issue within the framework of the programme for resolving the crisis, but it is a long-term project.
Mr Christensen, you stressed the need for transparency. This is a very important point on which the European Parliament still has a great deal to do to improve the Commission's original proposals, and I thank you for it.
Mrs Bowles mentioned the central issue of capitalisation, as did Mr Balz a short while ago. Capitalisation is indeed important. However, I think that an appropriate internal and external supervisory framework, which we are also debating, is equally important. Regarding CRD 4, which is under discussion with the banks, I must tell you, Mr Balz, that I am extremely anxious to carry through to the end and with great care the impact and macro-economic studies that we need in order to adjust the measures contained in CRD 3 and CRD 4. There is the adjustment within the Basel measures themselves, there is the adjustment between the Basel measures and the other measures relating to precaution and prevention, internal and external supervision, corporate governance, resolution funds and the range of tools for precautionary purposes, and then there is the final adjustment, with regard to which I am very vigilant - I say this one last time, by way of conclusion - which is a confident but clear-sighted adjustment between what the United States is doing and must do, on the one hand, and what we ourselves must do from a European point of view, on the other.
We need to achieve exactly the same objectives. They have been set by the G20. We must achieve them in parallel, and I shall be careful to ensure that this does indeed happen.
rapporteur. - Madam President, just very briefly, I agree with Mrs McGuinness that mindset and culture have not changed. In fact, over the last week, some banks and institutions have attempted to derail and undermine the proposals that we will be voting on tomorrow. It is why enforcement is vital, it is why national regulators must have the backbone to enforce this legislation and it is why tomorrow, Members will have to give a strong vote and a strong signal to banks and the public that we do intend to reform and, indeed, transform the discredited bonus culture in the long term. I believe, colleagues, that it is the beginning of the process, not the end. Therefore, I urge colleagues to give a strong vote to this report in the plenary tomorrow.
Mr President, ladies and gentlemen, I too shall keep it brief. I believe we all agree that ground rules are needed for remuneration policies, and it is clear - from an evaluation of the Recommendations on remuneration policies published by the Commission one year ago - that these must be as binding as possible. I am, of course, aware that not everyone wants to go as far in this matter and not everyone is as ambitious, but we must all agree that what we are discussing today and will hopefully be adopting tomorrow is just an initial step in the right direction. It cannot be the end of the story.
It is clear that there is still work to be done. Supervisors must be strengthened so as to enable external monitoring, too, of companies' remuneration policies. The role of the remuneration committees must be clarified, as must the link with those engaged in risk management. The role of the shareholders must also be strengthened. Therefore, Commissioner, I am delighted to hear that you are in favour of a corporate governance regulatory framework for all companies, and I gather that there is to be an in-depth discussion on this with stakeholders in the coming months. This is important, and it is also an important signal to our citizens that we are serious about establishing solid ground rules for this in the interests of the companies themselves and of the economy.
The debate is closed.
The vote will take place tomorrow (Wednesday, 7 July 2010).


7. Union for the Mediterranean (


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Nuclear test by the Democratic People's Republic of North Korea (debate)
The next item is the Statements by the European Union's High Representative for the Common Foreign and Security Policy and the Commission on the nuclear test by North Korea.
Mr President, ladies and gentlemen, you have asked me here this afternoon, together with the Commission, to give a brief assessment of what happened early on Monday morning, when the North Korean Government may have carried out a nuclear test.
I say that it was very probably a nuclear test, as we cannot, from the information available to us at present, be completely certain that it was indeed that. The most likely explanation is that a nuclear device made from plutonium was detonated, plutonium no doubt coming from the Yongbyon nuclear reactor constructed in North Korea in the 1980s and 1990s. In all probability, it was a nuclear test and was therefore an act which we condemn, which we condemn in the strongest terms and which we also condemn because of the degree of irresponsibility it shows on the North Korean Government's part.
That nuclear test is not just a threat to the region around North Korea but also an act of aggression against stability and security across the world. It is not inconceivable that such an act may have implications for the global arms race generally.
I would like to begin by saying that countries in the area have reacted calmly and responsibly. I have had an opportunity, over the last 48 hours, to talk to all countries involved in the region: to South Korea, to China and to Japan. I have also talked to Russia and the United States of America. All countries have shown the same firmness in response as we Europeans are showing, but also the same calmness, lest the situation get out of hand.
I would like to point out very clearly that this reprehensible act came just a few days after the election as Japanese Prime Minister of Shinzo Abe, who immediately upon taking office, in a gesture which does him credit, visited Beijing, which the previous Prime Minister had not visited for years. After Beijing, he went on to Seoul, embarking on a full tour of the countries most affected by the North Korean threat. In the middle of that kind, good-neighbourly trip, North Korea decided to carry out its nuclear test.
With regard to the condemnation expressed by all countries in the area and with responsibility being the watchword, I should highlight yesterday's meeting at the Japanese parliament, where Prime Minister Abe stated very clearly that Japan would not respond by developing nuclear weapons. That, I think, shows great responsibility on the part of the Japanese Government, which we should all commend.
Emphasis should also be placed here on the constructive response by the People's Republic of China. As you will be aware, China was leading the 'Six Party Talks' which, although stalled since before the summer, were regarded as a positive way of trying to resolve the North Korean nuclear proliferation problem.
As I said, I have recently been speaking to all political leaders in the region, including the future Secretary-General of the United Nations, who is at present still in office as South Korea's Minister for Foreign Affairs.
I told them all that North Korea poses a threat to peace and security, not just within the region; and, I should add, not just in its nuclear activities but also in its attitude towards missile proliferation.
As you will be aware, North Korea is continuing to produce, and maybe illegally exporting to other parts of the world, technology for missiles to deliver either nuclear or conventional warheads. It is important also to point out that this act by North Korea is an act directed against its own population. North Korea is a poor country, where most of the population go hungry and do not enjoy the living conditions we would all wish them to have; yet their government goes on spending millions of dollars on an arms race and on achieving a nuclear capability of which it has no need whatsoever for the development and well-being of its people.
I would add that the response of the United Nations Security Council, since Monday night, has been correct, and that the reaction of the European Union's Member States has also been extremely correct.
It is important to point out that China has also made constructive statements concerning its willingness to cooperate on approving a tough resolution which clearly condemns North Korea's conduct and will prove effective in avoiding proliferation of weapons of mass destruction and nuclear weapons.
I would like to say, lastly, that the European Union, which voiced its unanimous and urgent condemnation of Monday morning's act at the appropriate time, has also to consider its commitment to and attitude towards North Korea. As I said earlier, this is a poor country, with which we have increasingly tenuous relations, but with which we do still have a humanitarian link, to which I am sure Commissioner Benita Ferrero-Waldner will be referring.
We shall be keeping a close watch on developments over the days ahead, and I shall personally remain in touch with the political leaders of all countries in the region.
I would like, Mr President, before drawing to a close, once again to condemn in the strongest terms on behalf of the European Union what was very probably a nuclear explosion carried out by North Korea.
Mr President, Secretary-General, High Representative of the Council,
the nuclear test which North Korea claims to have conducted at Gilju on the morning of 9 October is an extremely serious matter, which I unreservedly condemn. As the High Representative just said, not only does it threaten regional stability in north-east Asia, it also constitutes the latest in a series of challenges by Kim Jong-il to the international nuclear non-proliferation regime.
Following the announcement of its intention to carry out such a test last Tuesday, North Korea has proceeded in defiance of the near-unanimous advice and wishes of the international community. This action increases North Korea's international isolation and it is difficult to see how it can serve the interests of the country's long-suffering population.
As ever, North Korea's motives are very opaque. It does not seem unreasonable, however, to regard this as a deliberate escalation and provocation by the DPRK, possibly to test the ability of the international community to remain united.
The European Union has spoken out very clearly in response to this nuclear test and I am pleased to note that the international community has been swift, resolute and united in condemning these actions. The very forceful and clear-cut position of China is particularly significant and welcome. I have just come back from a trip to Singapore and Malaysia, and I can assure you that my colleagues are most concerned by this act by North Korea.
I am pleased that we will have an opportunity to discuss the EU's response at the General Affairs Council next week. But what should we do next? Over the past decade, the European Union has played an active role in support of wider international efforts to promote peace and stability on the Korean Peninsula. Since the beginning of the humanitarian emergency in the early 1990s, we have been a major donor, delivering some EUR 345 million in assistance since 1995. We also played our part in support of earlier non-proliferation efforts through the Korean Peninsula Energy Development Organisation, and we have offered political support for the six-party talks, although we are not direct participants in that process. Clearly, as a global player that has done its share in the past, we should now play our part again in response to what is clearly a global problem.
The international community will have to take clear action. Somebody will have to talk to the North Korean regime to bring it out of its very paranoid and aggressive posture, and the man who I believe has been designated as the next UN Secretary-General might be the right person to do so.
It is still a little early to say what action we should take, although various options are on the table. As a staunch advocate of multilateralism, the European Union must pay particular attention to what is decided in the United Nations. In line with the Treaties, we look to the EU Member States sitting on the Security Council to take due account of EU views as they participate actively in these important discussions in New York. I am pleased to note that the negotiations within the Security Council appear to be making good and rapid progress towards a substantive and clear resolution on this matter.
With regard to humanitarian assistance, the population has suffered enormously, and therefore I would like to keep up the humanitarian assistance to these people in the future. They should not be put at risk and punished even more by the terrible regime.
(Applause)
on behalf of the PPE-DE Group. - (ES) Mr President, Commissioner, Mr Solana, ladies and gentlemen, North Korea's nuclear tests are a provocation and a threat to the international community: a provocation, because North Korea is a dictatorial regime in the Stalinist style, Mr President, which keeps its people starved and which should dedicate its resources to a nobler cause than nuclear proliferation, rather than taking advantage of the suspension of the six-party talks and of the fact that it is outside of the Treaty on the Non-Proliferation of Nuclear Weapons.
Mr President, it is also a threat to international security because it seriously compromises the values of peace and stability in a region of the world that is particularly sensitive, namely South-East Asia.
It is therefore very important that the international community react effectively and appropriately, and hence it is good news, as Mr Solana and the Commissioner have said, that the permanent members of the Security Council and Japan have met to examine a whole list of sanctions in response to that provocation.
Mr Solana, it would be good to hear the Council's position on the list of measures or sanctions that could be applied to North Korea by the United Nations, a list of sanctions that range from the application of Chapter VII of the United Nations Charter to that of Article 41, which only provides for economic and commercial sanctions.
I also believe, Mr President, that it is excellent news that, for the first time, China has been prepared to respond, within the context of the United Nations and the Security Council, appropriately and with possible sanctions.
Mr President, this is very much a model case. We must not forget that Iran will be watching how this crisis develops extremely closely. On behalf of the European Union, Mr Solana has been involved in the resolution of Iran's nuclear escalation; it is therefore clear that the international community in general and the European Union in particular cannot remain blind, deaf and dumb in the face of this provocation, and its response must be firm, effective and appropriate, in accordance with the values of peace, democratic consolidation, reconciliation and multilateralism that we in the European Union advocate.
on behalf of the PSE Group. - (DE) Mr President, ladies and gentlemen, this debate is being conducted against the backdrop of a difficult situation, but I do think that what Mr Solana and Commissioner Ferrero-Waldner have said shows that the European Union, in the persons of its High Representative and its Foreign Affairs Commissioner, is trying to respond to it in the right way. It is only normal that our response should be one of anger. It is quite clear that what is happening is that a system that is on its last legs is trying, by means of provocation to get others to respect it and pay it attention, and perhaps to reap some advantage in so doing. That is not a matter of doubt, and the normal response is to say that this will not be allowed, that it cannot be allowed, and that boundaries must be set, knowing full well that the choice of possible responses is limited by that fact that - to turn the argument on its head - the possession of a nuclear weapon by a regime such as this one, whose actions are so unpredictable, itself constitutes an incalculable risk.
In a situation such as this, we have to think before we act, and so, Commissioner Ferrero-Waldner, our group unreservedly endorses what you said about the need for a distinction to be drawn between what a delusional dictator gets up to with his armed forces and what the other side needs to do with humanitarian considerations in mind. The people should not be punished for the madness of the dictator who rules over them, and it is for that reason that we support these measures.
Secondly, we must try to reopen diplomatic channels; there is no alternative to that, for, whatever this dictator does, one must try to read his behaviour and discern what chances are still open to us. Have all the avenues been closed off whereby North Korea might be brought back to talk to the Six? I do not believe that they have been. Not every avenue has been closed off. It is still possible to make the attempt to get the North Koreans back to the negotiating table.
Difficult though that task might be, it is also clear that it is not merely fortuitous that North Korea should test a nuclear weapon at the same time as South Korea's foreign minister is elected Secretary-General of the United Nations. We have to read the signs and ask ourselves whether they were shutting the door on us, or whether the action of shutting the door might be seen as an attempt at drawing attention to themselves; I believe the latter to be the case. It is for that reason that we, the Socialist Group in this House, along with the international community of social democrats, take the view that we must, despite everything, carry on with dialogue, quite simply because, at the end of the day, there is no alternative.
Mr Solana, I think that the reactions to date have been level-headed, not least in North Korea's immediate vicinity; the Japanese government and the governments of the other neighbouring states have, I think, been appropriate. What is not appropriate is a policy of arrogance. Let me remind the House that there was a time when the United States of America, under the Clinton administration, reached agreement with North Korea on energy supply programmes. I would also remind the House that what was known, in the 1990s, as the Kedo programme, was not intended to appease the dictator, but - in so far as possible - to keep the regime on-side. The administration that succeeded Clinton's put a stop to all these efforts.
Nor do I have any desire to conceal, or make a secret of the fact, that our group sees this as another failure on the part of the United States and an example of its unilateral approach. While that does not excuse what the North Korean dictator is doing, it does indicate that the only way to resolve international conflicts is to bring all the parties together.
The last thing I have to say I say on my own account to all those who always recommend the development of nuclear energy as the solution to the problems of mankind; I would remind them that every nuclear power plant and every enrichment facility that is built becomes, in the hands of a criminal such as the North Korean dictator, something that puts the whole world at incalculable risk.
on behalf of the ALDE Group. - Mr President, two days ago, North Korea crossed a red line. The Presidency of the European Union, in its statement, strongly condemned the nuclear test, which is unacceptable. The Presidency signalled its willingness to work in close cooperation with the international community towards a decisive international response to this provocative act.
The High Representative and Commissioner Ferrero-Waldner confirmed and repeated this stance. I am very happy about that, and I welcome the statement, but we expect it to be strictly implemented. North Korea has always tried to negotiate using threats and intimidation. It has worked for them so far, but we must be clear that it will not work for them again. There seems to be an unprecedented international consensus on possible counter-measures against the North Korean regime. Let us take this opportunity to send a clear signal that we will not tolerate acts that lead to instability and that further increase tensions.
North Korea's action is a threat to regional stability because it might trigger a regional arms race, which is highly undesirable. It is also a threat to the immediate security of all if North Korea succeeds in enhancing its position in the illegal arms trade with shady regimes, not to mention international terrorist organisations.
When dealing with North Korea, we must also keep Iran in mind. By taking a firm stance on this matter, we also create incentives for Iran to return to the negotiating table.
North Korea must refrain from further tests and unconditionally return to the six-party talks. At the same time, it must be obvious to all participants that the aim of the six-party talks is to convince North Korea to abandon its military nuclear programme and provide for its participation in the NPT regime. Nothing less is acceptable, and we have to achieve that now; we can be flexible on modalities and specifics, but we must be firm on the principles.
North Korea must see that a military nuclear programme is not the way to guarantee its safety and stability. We have seen in the past that North Korea can be open to limited but mutually fruitful economic cooperation with its neighbours and other partners. The European Union and other donors have provided substantial humanitarian aid, as the Commissioner indicated a few minutes ago, and we have always been open to giving further assistance and continuing dialogue, but with conditions.
The question is: why is North Korea turning its back on the international community now? The answer is simple: the leaders of North Korea think they have nothing to lose. They are wrong: the price they have to pay for growing international isolation and possible sanctions will increase dramatically. We already know that they do not care much about the welfare of their own population, but through such irresponsible acts they risk losing international support and cooperation for a gradual opening-up of their country and for reforms without which the political and social structure of their country will inevitably collapse. They might understand no other argument, but they must understand this argument.
(Applause)
on behalf of the Verts/ALE Group. - (FR) Mr President, I come from a country that 'deals' in nuclear technology. It is therefore very hypocritical to be surprised that this danger has resurfaced when it has been spread here, there and everywhere.
That being said, I am going to focus my speech on North Korea. I could not care less about whether it has nuclear technology that is genuinely fully-developed or an appropriate vehicle for such technology. I am one of the very few MEPs to have stayed in North Korea. That country is not just a harsh dictatorship that plunges its people into complete poverty: during my stay there, I also visited one of the largest psychiatric hospitals in the world. It must be pointed out, in fact, that millions of people living there are completely out of touch with reality, unaware of the outside world. Their lives consist in grovelling before a leader who tells them each morning that the entire world wants to overrun them. In North Korea, we are confronted with a world that would appear to be very close to that of George Orwell.
What sanctions should be applied under these circumstances, then, when dealing with a regime that is on the fringes of what is generally accepted to be reasonable behaviour and that could not care less about its own people, since it let a million people die only a short time ago? Block what when they are already cut off from the world? Destroy what industry when the one they have is already in ruins? Try to starve them even more? That would be downright disgraceful.
In my view, the only real card that we can play is China, China that created this regime, China that has kept it going, China - and this is a very interesting point to note - that was amongst the first, if not the first, to condemn this week's explosion. If we really want to be of help in this matter, I believe that we must show determination, a great deal of composure and, given that we disseminate nuclear technology, a great deal of humility, too.
(Applause)
on behalf of the GUE/NGL Group. - (DE) Mr President, North Korea's nuclear test is, quite clearly, deserving of condemnation, for it makes the region even less stable and, like every other of its kind, exposes the people who live there to the risk of radioactive fall-out. It is particularly cynical of North Korea to invest money in nuclear testing that the government could instead have used to feed the country's people better, and it is good that the EU wants to carry on providing aid to this end.
The Russian Defence Minister has said that this nuclear test makes North Korea, the de facto ninth nuclear power, joining the USA, Russia, China, France, the United Kingdom, Israel, India and Pakistan. The situation must now be prevented from escalating further. Those now talking of the need for military strikes are dangerous warmongers. On the contrary, it is negotiations that will provide the solution we need, and the EU could certainly play a part in them, as indeed Mr Solana and Commissioner Ferrero-Waldner have already indicated.
One of the North Korean government's core demands would appear to be that it should be allowed to negotiate directly with the USA. Why, then, should it not be possible for the USA to conduct bilateral negotiations with North Korea directly? That is what the US administration must do, even if it seemingly involves a superhuman effort. Calling for sanctions will only make the situation worse; those who are doing that right now must explain how they propose to prevent the sanctions hitting only the North Korean people, who are starving already. The experience of imposing sanctions on India and Pakistan in the days when they were fledgling nuclear states shows that sanctions very rapidly run out of steam. The Nuclear Weapons Non-Proliferation Treaty was always inconsistent, but is now in serious danger; in its sixth article, the parties to it undertook - and I quote - 'to pursue negotiations in good faith on effective measures relating to cessation of the nuclear arms race at an early date and to nuclear disarmament, and on a treaty on general and complete disarmament under strict and effective international control', which amounts to a requirement that all nuclear weapons be disposed of.
Europeans, too, have their own obligations where nuclear weapons are concerned. I would remind Mr Solana that the nuclear weapons within the European Union are not held legally, contrary to what your colleague Annalisa Giannella tried to tell those of us who sit on the Committee on Foreign Affairs. On the contrary, the EU's Member States have committed themselves, on the basis of the Non-Proliferation Treaty, to nuclear disarmament, and this is where we come up against the problem of the double standards that are so characteristic of Western and EU policy. I ask you: what nuclear power do you know of that abides by Article 6 of the Nuclear Weapons Non-Proliferation Treaty, in which nuclear disarmament is laid down as an obligation?
I can tell you that the EU Member States are doing the precise opposite, in that the United Kingdom and France are not merely failing to dispose of their nuclear weapons but are also developing new and powerful ones. Nuclear weapons are always criminal in nature, and the testing of them always produces misleading and dangerous results; what is interesting is the differing treatment meted out to North Korea and Iran. Let me spell it out: threats of military attack always have the opposite effect to that intended. There are no such things as good nuclear weapons; they must be got rid of everywhere, and all nuclear tests are worthy of condemnation and must be stopped.
on behalf of the UEN Group. - (LV) Mrs Ferrero-Waldner, Mr Solana, ladies and gentlemen, this nuclear test has undoubtedly been highly detrimental to stability, peace and security. We can, however, once again sound a warning regarding this issue and, of course, we can here and now condemn it. It should be said that in this situation, of course, we should voice support and appreciation to all those who have reacted speedily to the specific situation brought about by North Korea's actions. On the other hand, however, listening to the speeches by Mrs Ferrero-Waldner and Mr Solana, I was not really convinced that the reasons for North Korea's actions have been thoroughly analysed. Certainly, we are all aware that North Korea is a totalitarian Communist state, and that consequently plain common sense is perhaps not a characteristic of that regime. On the other hand, however, I would just also like to ask some provocative questions that occurred to me a few days ago, reading the comments made in the media by Mr ElBaradei, head of the Atomic Energy Agency, our watchdog. In something that I read by him, he said that in fact double standards lie at the root of the whole problem. Here, the question I would like to put to our foreign ministers is whether they agree with these comments by Mr ElBaradei to the effect that the USA and the EU states conduct a hypocritical policy in relation to Israel on the one hand and to states such as Iran and North Korea on the other since, undoubtedly, Israel can possess weapons of mass destruction, Israel can have that defence system, but for other states which have not signed up to the Nuclear Non-Proliferation Treaty such an option is forbidden.
on behalf of the IND/DEM Group. - (NL) Mr President, the destabilising effects of Pyongyang's nuclear test last Monday are evident, particularly in North-East Asia, but also globally. We are now facing two nuclear crises: an acute one in North-Korea, and an urgent one in Iran. The question is whether both remain manageable without military means, and the attitude of two members of the UN Security Council, namely China and Russia, is of decisive importance in this respect. What importance do Beijing and Moscow still attach to the Non-Proliferation Treaty? Their conduct in the Security Council will tell. I expect the Member States of the EU, sitting, as they do, on this high-level UN body, to insist on reminding China and Russia of their crucial responsibility in this. Meanwhile, what matters is that the international community should keep tabs on Pyongyang's trade activities, especially the maritime routes. Indeed, only last week, the North Korean regime announced that it is supplying technology, materials and nuclear weapons to other countries as it pleases. That sort of explicit provocation cries out for a tough response from the international community. It is, without a doubt, also up to the EU Member States to adopt tough sanctions that affect the North Korean leadership whilst sparing the emaciated and brainwashed people as much as possible.
I dare say that the Council and the Commission can imagine the enormous concern in Israel surrounding the reckless North-Korean nuclear test, which, at the same time, gives the Islamic Republic of Iran enormous encouragement to follow Pyongyang down the nuclear path, probably with actual technical and material back-up from Kim Jong-Il's terror regime. The Council and the Commission claim to guarantee Israel's continued existence as a state; I urge them to translate this into political action in this twofold nuclear crisis.
(PL) Mr President, it is a good thing that the world is no longer divided between the Warsaw Pact and NATO. It is a good thing that the former states of the Soviet bloc are today united in the European Union and NATO, or are on their way to membership.
United, Europe is stronger and in a better position to face the issue of the day - North Korean nuclear tests. Fortunately, today even Russia has supported the voice of the civilised world and, like us, has condemned the nuclear tests, although some terrible events have been going on there such as the murder of journalists, the latest being Anna Politkovskaya.
North Korea is today one of the last blank spots on the map of the world as regards political, economic and democratic development. What is actually the problem with North Korea? Perhaps it is simply trying to attract our attention, and this is a desperate cry for help.
We are pleased to note that even China has condemned Korea's proposed arms race. Today, more than ever in world history, all countries want economic development and to live in peace. North Korea also needs food and prosperity more than it needs weapons.
(DE) Mr President, Commissioner, Mr Solana, ladies and gentlemen, what has happened is particularly problematic and dangerous, and for two reasons.
The first is the obvious one that a dangerous weapon has got into the hands of a dictator who is well known for his lack of concern for human life, even for the lives of his country's people, and who is, then, prepared to take any risk, even that of their being wiped out. This makes it extremely difficult to assess the precise degree of risk involved.
The second point to be made is that, if this test really does turn out to be successful and has been carried out using rocket technology, the region could see a new race to acquire and deploy weapons of mass destruction. I do not know what debates there will be on that subject in South Korea, in Indonesia, in the Philippines or elsewhere. It also needs to be borne in mind that there is an exchange of rocket technology going on between North Korea and Iran. The Iranian Government is playing the hedgehog to our hare and it seems less and less likely that it is doing this only to secure its own peaceful use of nuclear energy - far from it, it is up to much more besides. You, Mr Solana, have tried unstintingly to get things on track and conduct the talks accordingly. There are particular dangers in this alliance, and that is why Iran is under a special responsibility to clear the decks once and for all and get stuck into some proper negotiations.
Mr Salafranca asked what sort of sanctions we are talking about. We have to come up with some that really will have a serious impact on this man; if they affect the people, he will not be bothered, so what is needed is sanctions that hurt him personally, and they must be implemented and complied with.
What I will say to Mr Pflüger is that we should not now be seeking refuge in blaming one party or another for making mistakes at one time or another; the USA is not to blame for the fact that we have a deranged dictator to deal with. We should ensure that this man is not given more escape routes by this House, for he is defying every rule made by the international community, and so we must compel him to return to the meetings of the Six, and, if they prove successful, he can be guaranteed security for his country, but this must be spelled out plainly if we are not to end up in 20 years' time with a world which will have 30 or 40 countries with nuclear weapons, and all set to destroy it.
(IT) Mr President, ladies and gentlemen, I believe that, as a European Parliament, we have no choice but to associate ourselves with the universal condemnation of the nuclear tests apparently carried out by North Korea. Our firm condemnation should be accompanied by a commitment by the European Union and the whole international community to try at this time to find a solution to this very grave problem by negotiation. We must persuade this dictatorship to respect the rules of international coexistence.
Nevertheless, the international community has no choice: we must seriously find a way to achieve non-proliferation. I should like to say to Mr Brok that this is not a matter of blaming anyone; but it is in my view impossible not to recognise that the weakening of the Non-Proliferation Treaty, which was clearly due also to the failure of the 2005 conference, was a fatal mistake. I therefore consider that any prospective emergency solution must be based on the resumption of the negotiations for the revision of the Non-Proliferation Treaty.
This is an obligatory task that the international community must carry out consistently, since only thus - although in another situation - shall we have the necessary clout to impose respect for this line of conduct upon the Pyongyang dictatorship. It must be said that this pre-emptive Iraq war has, perversely, convinced dictators that possessing nuclear weapons is a sort of safe-conduct. It is our job to convince world governments, including the rulers of authoritarian states, that this is absolutely not the case: otherwise we will not halt rearmament.
Finally, Mr Solana, I should like you to explain the differences between North Korea and Iran, since the two cases are too often associated with each other - yet I believe that there lies in the differences the details of a possible solution.
(DE) Mr President, ladies and gentlemen, enough has been said about North Korea, but too little, I think, about how it can be an object lesson for us in Europe and for the world at large.
When North Korea, in 1962, embarked on its nuclear programme, it was of course described as 'civil', with talk of 'atoms for peace', 'we do not want bombs' and 'we do not want weapons'. Not long afterwards, just as also happened with many other countries, it came to be suspected that this was not the case. When Pyongyang, in 2003, after a great deal of to-ing and fro-ing, admitted that it was reprocessing for military purposes, it was established that what was described as a civil nuclear programme was being misused for military ends. In 2005, it was reported from Pyongyang that the country was in possession of nuclear weapons, and the test was carried out at the beginning of this week.
The only thing I can say right now is that all those who argue in favour of more widespread civil use of nuclear energy are, at the same time, ensuring that it is also used for military purposes, and repeatedly paving the way for, among other things, the war in Iraq, which was claimed to be justified by the suspicion of misuse. And what was the background to that? The stuff had been exported to Iraq - for civilian purposes - from Europe. Why, then, does Iran possess the technology, allegedly for civilian use?
There are those who represent Europe and claim that new reactor technologies could make it possible to clamp down on the military use of nuclear energy: they are lying, they know they are lying, and they should desist from further undermining the Non-Proliferation Treaty by making civil atomic technology more widely available.
Mr President, it is indeed chilling to think of the possible consequences of the totalitarian, Stalinist regime in North Korea now having a nuclear capacity. Quite apart from the opportunity for direct aggressive use, an aspect which would alarm me is that North Korea may now be in the marketplace with crazed terrorist groups for the export of nuclear devices and technology.
North Korea is already heavily involved in, and indeed reliant upon, multiple illegal export businesses, including drugs and, especially, counterfeit currency, and this is on a massive scale. If it were now to be in the marketplace for selling nuclear technology, then we all have very great reason to fear, for those in the terrorist world who would seek such technology know no constraints in their lust for killing.
I think it is a very alarming prospect that we could have rogue use by a rogue state selling nuclear technology to rogue elements. It behoves the EU, and more particularly the more relevant United Nations, to be extremely robust and resolute in handling this crisis. Mere condemnation is unlikely to be anything like enough. I have no doubt that severe sanctions will be required.
(DE) Mr President, Commissioner, High Representative, by carrying out this test, North Korea has demonstrated that it cares not a whit for the Nuclear Weapons Non-Proliferation Treaty; its political leadership has thereby presented the international community with a serious and deliberate provocation, quite heedless of the fact that it would, by carrying out this test, be imperilling the peace and security of the region and of regions beyond it, and, finally, accepting the possibility of a new nuclear arms race being triggered within and beyond Asia. It has also - and without any regard for its own people - taken on board the inevitability of the country being completely isolated.
We in this European Parliament must make our position abundantly and forcefully clear. We must denounce in the most vigorous terms the carrying-out of this test; we must call upon North Korea's political leadership to return to the negotiating table in order to discuss the Non-Proliferation Treaty, in order to resume the six-country talks, and, ultimately, to bring about a peaceful solution to this temporary crisis. This House must also call upon the international community and the Security Council to respond with greater firmness than they have to date.
It is quite simply unacceptable that the government of North Korea should use its own money and money sent to it from elsewhere to develop nuclear weapons at the same time as it relies on the world community to supply its starving population with food.
Further to what you said earlier, Mr President, I ask you to put out a written statement setting out this House's protest to the government of North Korea, to the international community, and to the Security Council, along with the demands that it makes of them. We cannot accept that a second test should be carried out, thereby repeating something that was deserving of the most forthright condemnation the first time it occurred.
Mr President, this debate is about a nuclear test by the deplorable North Korean regime. However, Mr Solana has stated on more than one occasion that this is only a 'possible' nuclear test. In order to be clear about what we are discussing, would Mr Solana reassure us that he will be able to tell us in the very near future whether in fact it has taken place?
Mr Matsakis, that is in no way a point of order. You have jumped the queue of speakers. I would ask you not to abuse the Rules of Procedure in order to take the floor.
Mr President, North Korea's latest challenge to the nuclear non-proliferation regime is clear, and deserves to be condemned in the most forceful terms. We all agree on that, but we also have to find the right, smart response, directed at the authorities responsible but sparing the population. We should also stay focused on the ultimate objective, which is to achieve verifiable denuclearisation of the Korean Peninsula, as the foundation for lasting peace and stability there, given the tense armed stand-off across the demilitarised zone. In the end, only diplomacy can achieve this goal.
With regard to a possible analysis of the motivation for this, I am sure the reasons are manifold. The fact that it is misinterpreting the stance of the international community could be a result of the regime's total isolation, but it could well also be aimed at enforcing bilateral talks, which it has not yet achieved.
This week's developments will make it harder than ever to relaunch the six-party talks, but, in the medium to long term, this framework remains the best chance for a lasting solution.
I therefore sincerely hope that the resumption of talks will come sooner or later, even though the outlook now is not at all promising. The European Union is not a direct participant in the six-party talks but, as a responsible global player with a clear stake in preserving regional stability, we have been profoundly supportive of this framework. We have also signalled that we stand ready to play a more active role, if the six-party talks find it useful.
In the end, dialogue will be the answer to this very difficult, provocative situation. North Korea's stated objective is to increase its own security; this goal could be achieved through the six-party process, which is what we would recommend.
Mr President, at the conclusion of this debate, there is a point which I think we have to underline. Not a single Member of the European Parliament has spoken out against condemnation of North Korea's behaviour. I think that is a very important conclusion to this important debate.
There may be some doubts about what to do next and how to deal with North Korea in the future, but the fact that the test has been a source of concern for the international community - and that the international community has taken responsibility for addressing the issue - has been supported by all the Members who have spoken in this debate. I think we should be happy about that, because on issues of this nature and of this degree of importance, the responsibilities of Members of the European Parliament are on a par with those of the members of the international community.
There are different conclusions we can draw as to why the test was carried out and what the consequences are for the future. Some of us have been to North Korea. I have been there and talked to the country's leader on several occasions. In Kuala Lumpur in July, I had the opportunity to talk with the Foreign Minister and he told me then that there was to be no return to the six-party talks. So it was almost certain by then that something of this nature might happen.
We have to praise the Chinese, who have been leading the six-party talks and standing their ground. This time, however, they unfortunately failed to convince North Korea, and instead of a meeting, a nuclear test has taken place.
I agree completely with those who have said that the Non-Proliferation Treaty should be reviewed. Mrs Napoletano made that point most coherently and vehemently. I share her concern about the fact that the last revision of the Non-Proliferation Treaty was a failure. It was a failure on the part of everybody involved in the revision, including the nuclear powers, some of which are Member States of the European Union.
The Non-Proliferation Treaty dates back to 1968. We have gone through five revisions already and none of them has been able to address the difficulties and loopholes involved in that Treaty. That must be said. Let us also point out, however, that North Korea is not a signatory to the Non-Proliferation Treaty. It abandoned the Non-Proliferation Treaty in 2003, and therefore is under no obligation to comply with it. It abandoned the Non-Proliferation Treaty because it did not want to admit inspectors, which is something that is mandatory under the Non-Proliferation Treaty.
As we are seeing today, and as we will see in the future, the Non-Proliferation Treaty needs to be revised and updated. As I said, the Treaty was drawn up in 1968. That is a long time ago in historical terms, and therefore we have to make an effort. The Europeans can plead that these regimes be adapted to the realities of today and not to the realities of yesterday. I quite agree with that.
As far as sanctions are concerned, I do not think that the Security Council can just make a statement. The Security Council has to act, otherwise other countries that are watching to see how the Security Council responds will draw the conclusion that the international community does not take an act of this nature seriously. Remember what happened when Pakistan did it? North Korea was watching for the international community's response to Pakistan's actions. And probably part of today's situation is a reflection of what happened then.
That does not mean, of course, that any sanctions must target the people of North Korea, who have already suffered a great deal. They suffer politically, they suffer economically, they suffer in their daily lives. Therefore, other things have to be put in place and taken into account. I think the most important kinds of sanctions that should be put in place are sanctions which prevent proliferation by North Korea and prevent North Korea from passing nuclear technology on to other states which might be looking to acquire such technology so that they too can move in the same direction. This is probably the most important step that the United Nations Security Council can take.
As far as diplomacy is concerned, everybody in this House will agree that diplomacy is what we like to do. We Europeans like to solve complex, difficult problems with what we value most: our minds, our intelligence, our diplomacy. And there is no doubt that this problem is indeed complex and difficult.
Before we proceed to the next item, Mr Pflüger has requested the floor to make a personal statement pursuant to Rule 145 of our Rules of Procedure.
According to this Rule, Mr Pflüger, you may speak for three minutes, on the understanding that you may only make observations relating to opinions that have been attributed to you or correct observations that you may have made in the course of the debate.
(DE) Mr President, further to Mr Brok's statement, in which he implied that I had laid responsibility for North Korea's nuclear test at the door of the USA, any such insinuation is utterly false. On the contrary, the issue - and Mrs Napoletano raised something similar - of those governments - the USA, but also, and to an increasing degree, the EU, among them - that believe they have to use nuclear weapons to defend themselves against attack is something that calls for serious discussion in this House. For that reason, Mr Brok is quite wrong to make that insinuation.
Atomic warfare is threatened not only by the USA, but also by Jacques Chirac, and that is why this issue has to receive serious consideration, and why Mr Brok is wrong to imply what he did.
I fear that Mr Brok has not been able to hear you. I hope that someone will pass on to him what was said.
(DE) Mr President, if I might be permitted to make a brief comment, it has to be said that those who are ready to give it out have to be willing to take it as well. Mr Pflüger has made an accusation, to which I have responded, and he should accept that. This is a political statement rather than an insinuation.
Mr Brok, nobody is going to take any measures against you. You have made a comment, and Mr Pflüger has seen fit to respond to it, but that is the end of the story.
That concludes this item.