Developments in the ongoing debt crisis and the EU response (debate)
The next item is the Council and Commission statements on developments in the ongoing debt crisis and the EU response.
President-in-Office of the Council. - Mr President, I fully understand the significant interest in this Parliament in the actions being undertaken within the Union and beyond to tackle the challenges which some Member States are facing in relation to their public finances.
The global financial crisis has had a significant impact on both revenues and expenditure in all our countries, even if the extent and nature of that impact is not the same in all cases and the capacity of individual Member States to handle the consequences is also very different.
The first thing I would like to stress is that it is the Member States themselves which are, first and foremost, responsible for ensuring that their public finances are sustainable and on a sound footing. Similarly, it is for each one of them to ensure that their economies are competitive, flexible and resilient. Of course, that does not mean that public finances and economic performance are not also a matter of collective interest.
We are part of a Union, and our economies are interlinked in a number of ways: through the single market and, in many cases, through the sharing of the common currency and the deeper economic integration which that implies. More generally, we all have a commitment of solidarity towards each other, based on a desire to protect and promote the wider European interest. What that means is that we all want to see a stable and strong economy across the EU as a whole and, within it, of the euro area in particular. Where necessary, this has to involve taking steps to ensure the stability of individual Member States.
We have a number of tools at our disposal to do this. We have the coordination mechanism that seeks to ensure that appropriate economic and budgetary policies are pursued by each and every Member State. These are being updated and reinforced, and I am pleased that negotiations between the Council and Parliament are advancing well. We also have access to the European Financial Stabilisation Mechanism, which can offer support at EU level to any Member State, whether inside or outside the eurozone.
In addition, and for the eurozone countries specifically, further instruments have been set up and are continuing to be developed. Greece has received a package of coordinated bilateral loans from Member States as well as a loan from the IMF. Ireland has received a package consisting of bilateral loans, a loan from the European Financial Stability Facility (EFSF) and also a loan from the IMF. The support package for Portugal, which will also draw on both European and IMF support, is also being prepared.
Ministers of the eurozone Member States are also finalising the technical details of the European Stability Mechanism, which is due to take effect from 2013 as a permanent financial support mechanism to replace the European Financial Stability Facility. Non-eurozone Member States are also participating in this process.
I would now like to turn briefly to the situation in the three eurozone countries to which I have already referred. I should, however, mention that, from the outset, many of the issues in relation to these Member States are discussed outside the regular Ecofin format, reflecting their specific characteristics as members of the eurozone. The chair of the Euro Group would be better able than I to give you further details on many of these points.
First, Ireland. Following the agreement last December of an overall EUR 85 billion assistance programme for Ireland, the Irish authorities have undertaken a great deal of work to implement the adjustment programme to which the financial support was attached. This programme has been kept under constant review by the new government. The Ecofin Council will review compliance with the programme for the first quarter at its meeting on 17 May, next Tuesday. I cannot say much in advance about that discussion, but the overall assessment is likely to be that Ireland's performance is in line with expectations.
However, some specific challenges remain. Ireland will, in particular, need to stick to the powerful fiscal adjustment as well as ensure that its financial sector is on a stable footing for the future.
Second, Greece. Greece has come a long way since the very difficult situation last year, and its efforts should be commended. It has been faced with a daunting challenge and has demonstrated unwavering commitment and clarity of purpose. The adjustment programme is broadly on track. The latest implementation report, drafted jointly by the Commission, the IMF and the ECB in March, concluded that the programme has made further progress towards its objectives. Some of the reforms needed to deliver the programme's medium-term objectives are being put in place. The report also identifies further areas where reforms are required in order to build the critical mass necessary to ensure fiscal sustainability and economic recovery. The Commission, the ECB and the IMF continue to monitor progress on the implementation of the adjustment programme closely. The next review is scheduled for this month.
The Member States participating in the bilateral loan agreed in March to reduce the interest rate by 1% and to extent the maturity of the loan. This is also a positive development. The technical details of the implementation of this agreement are currently under discussion.
Finally, Portugal. On 6 April, the Portuguese caretaker government announced its intention to seek financial assistance from the European Union. This followed a period of intense pressure from the financial markets. However, Portugal was also going through a period of political uncertainty which, as we know, led to the resignation of the government on 24 March. The Portuguese Parliament had previously rejected the new fiscal conciliation package proposed by the government. Negotiations between the Troika and the Portuguese authorities have now been finalised and the memorandum of understanding on the policy conditions attached to the financial assistance is being agreed.
The financial envelope will be around EUR 78 billion covering a three-year period. In line with recommendations by the Ecofin Ministers at the informal Ecofin in Budapest in April, the programme covers reform in a number of areas, including public finance, labour and product markets and the financial sector. We consider that such measures are essential for growth potential and increased economic stability. Endorsement of the final financial package is also expected at next week's Ecofin Council.
This is only a brief overview of the measures being taken to address the impact of the global financial crisis on the EU and on three Member States in particular. As I said at the outset, the Hungarian Presidency is not directly involved in all of the detailed negotiations, some of which were more specifically within the remit of the Euro Group.
The Presidency is, however, committed to doing its part to assist in ensuring that all necessary measures are in place in order to address the current problems. We consider that this is essential if we are to boost Europe's competitiveness in the longer term and, in so doing, deliver the strong role which Europe as a whole needs.
Member of the Commission. - Mr President, Europe's economic outlook today is quite dualistic. On the one hand, the recovery in the real economy has taken hold and is becoming more solid and self-sustaining. On the other hand, it is uneven and we still face turbulence in the financial markets, especially in the sovereign debt markets.
Thus, the key task of the EU's economic policy now is to contain the sovereign debt crisis and thus protect the ongoing recovery in the real economy of Europe. Now, with the EU-IMF programme of Portugal waiting for its adoption next Monday in the Eurogroup Ecofin meeting, we are beginning another chapter in this necessary endeavour.
Last week, the Portuguese Government presented an economic reform programme following our productive negotiations with the government, the opposition, civil society, social partners and the academic world. These talks are reflected in the programme. It is a Portuguese programme that deserves the support of the European Union and of the International Monetary Fund. Our joint assistance of EUR 78 billion shows the strong commitment to help Portugal and safeguard the financial stability of Europe.
It is a demanding but fair and necessary programme of adjustment. It will require major efforts on the part of the Portuguese people. Great attention has been paid in its preparation to social fairness and protecting the vulnerable. Europe stands by Portugal for the sake of the country and for the sake of economic stability in Europe.
Considering recent developments, it would be wrong to say that the debt crisis is no longer a burden for the European economy, yet it would be equally wrong to claim that the EU has not responded to the crisis. Consider this: only a year ago, the euro area Member States agreed on a conditional loan package to Greece in order to prevent a meltdown of our financial system. Within this one year, from last May until today, we have created effective stability mechanisms which were at first temporary and which will then become permanent as of 2013. We are implementing a very systematic programme of fiscal consolidation in all Member States, and they are committed to bold structural reforms to boost growth and job creation.
We are, with your active support, addressing the systemic weaknesses in EU economic governance in order to prepare for a profound change in the policy making landscape of the European Union. We are, again with your support, addressing the shortcomings of our integrated financial market by toughening financial regulation and implementing the new supervisory architecture.
At the present juncture, financial stability is being safeguarded by the EU-IMF stability mechanisms and especially by the actions that the Member States - especially the vulnerable Member States - are themselves taking. Still some people argue that the crisis management strategy, especially with regard to Greece, is failing. I disagree with this view. The first - and the primary - objective of our strategy has been to prevent another cardiac arrest of the kind that followed the failure of Lehman Brothers in September 2008 and subsequently led to the financial crisis and economic recession worldwide. We have done that and thus protected the ongoing recovery in the real economy in Europe.
Secondly, we have been able largely to contain the distress in the sovereign debt markets to the three countries in the programme. As seen in the bond spreads, Spain is decoupling from these countries thanks to its determined action on the fiscal, financial and structural fronts.
Thirdly, the programmes in both Greece and Ireland are still in the relatively early stages. The Greek programme has been running for one year and its counterpart in Ireland for about five months of the three years of the programme. Both countries are pursuing very ambitious programmes of fiscal consolidation, structural reform and financial repair. Our review mission is currently in Athens with the ECB and the IMF to assess the implementation of the programme and to prepare an updated analysis of the debt sustainability of Greece. The work will be concluded in the coming weeks, which will facilitate well-informed decisions.
In any event, while the fiscal effort of the past year is unprecedented - over 7% of GDP, or EUR 20 billion - it is clear that Greece has to seriously reinforce the implementation of the economic reforms, achieve a breakthrough in the privatisation programme, and then ensure its full implementation.
It is absolutely necessary and urgent that the domestic disputes are put aside and cross-party support achieved for the recovery of Greece. It is an illusion to think that there were any real alternatives to the economic reform programme. This is, therefore, a real test of the credibility of the Greek political forces, both government and opposition, and ultimately, of the will of the Greek people.
The present stage of the crisis is a closely intertwined combination of sovereign debt crisis and banking sector fragilities. We cannot solve one without solving the other; we must resolve both in parallel. Therefore, the banking sector repair must be completed to safeguard the provision of credit to the real economy, to enterprises, households, individual citizens. A new round of bank stress tests is being conducted. The results will guide the necessary restructuring and recapitalisation of the banking sector. Ahead of the publication of the results, the Member States will need to release their strategies for possible restructuring or recapitalisation of their vulnerable institutions. Such plans should be ready as soon as possible and should include a detailed timeline.
In conclusion, the fundamental reforms of financial regulation and economic governance in the European Union are profoundly changing the economic and financial architecture of Europe. In the near future, a whole new set of rules will provide the basis for stable, sustainable growth and job creation.
In the meantime, we must continue our work to safeguard financial stability and thus protect economic recovery in Europe, which is the key for sustainable growth and improving employment. This continues to call for very difficult decisions at European and national levels. I trust we all have the wisdom and courage to take such decisions.
Mr President, I would like to thank the minister, Mr Kármán, and Commissioner Rehn for their explanation, given what we have seen over recent weeks. If confidence in the market is weak, every trace of doubt has direct consequences for those countries that already find themselves in difficult circumstances and thus, for the euro as a whole. Unfortunately, that became apparent last weekend and then it was denied in the press that any secret meeting was taking place, which then has a double whammy effect on the already fragile confidence. I hope that the parties in question learn very quickly from this.
Mr President, easy choices and pain-free solutions have been out of the question for quite some time. The support measures for Greece, Ireland and Portugal need to be robust in order to restore financial and economic stability. The package must pave the way for sustainable public finances and economic growth. I therefore want to call on the Council and the Commission to look deeper than the funding needs of these countries over the coming year in order to avoid us facing the same problems in a year's time.
Mr President, it is important that decisions be taken in June on an ambitious package of legislation aimed at strengthening economic governance in Europe in order to win back the confidence of the markets and also in order to ensure growth and jobs on behalf of all our citizens and to increase the cohesion of our economies. I therefore want to call on the Council to give its backing to Parliament's ambition to provide greater accountability and more public debate in this House, greater involvement of the national parliaments, and to put an end to horse-trading in the Council when the Commission's view is not to its liking. This package must include a strong monetary arm alongside a strong economic arm, including the Europe 2020 strategy to secure the tenability of our social market economy for all 27 Member States. I am thus calling on you to show resolve in the Economic and Financial Affairs Council (Ecofin) next week.
(The speaker agreed to take a blue card question under Rule 149(8))
(NL) Mr President, I have a question for Mrs Wortmann-Kool. How can it be that you, as a Dutch parliamentarian, do not even mention the scandal that the Dutch Finance Minister was not invited to the summit last week? How can it be that you, as a Dutch parliamentarian, do not even mention the fact that the Netherlands is paying so much, and how can it be that you completely betray the interests of Dutch taxpayers by pouring billions' worth of taxpayers' money into a bottomless pit?
(NL) Mr President, I have clearly stated what is necessary to restore confidence. Mr Madlener's simplistic solutions would worsen - rather than improve - the position not only of Dutch citizens, but also of the citizens of all our Member States. I find it quite worrying that Mr Madlener still fails to grasp that fact.
Mr President, Commissioner, given that it will shortly be one year since the Greek reform programme was agreed, and the fact that the programme for Portugal was announced just yesterday, I think that it is important for us to evaluate where we stand today, what has been done correctly, and where we made mistakes and missed the mark. One year on, therefore, in addition to Greece, another two countries in the euro area, Ireland and Portugal, have taken recourse to the support mechanism, as they are unable to secure the necessary financing on the markets. The peculiarities and different problems of each country are reflected, without doubt, in the different reform programmes which, nonetheless, are underpinned by a basic philosophy: the absolute emphasis on rapid budgetary reform.
However, in the case of Greece, Commissioner, despite what has been achieved, as you have repeatedly emphasised, with the 7-point reduction in the primary deficit and a 5% reduction in the overall deficit, the fact that the recession was deeper than forecast in 2010 has resulted in less revenue for the State. So this is a first data point for evaluation, provided that we agree that the target of the programmes is to overcome the budgetary and economic crisis and not to create a culture of punishment leading to euro-scepticism in Europe. The second data point for evaluation is that, despite the efforts being made, the markets are not responding. However, the decisions by the European Union have not only failed to convince the markets; in some cases, they have exacerbated the situation, such as the famous Deauville decision on the involvement of private individuals in the permanent support mechanism to be created in 2013. The conclusion is that any success the budgetary reform programmes may have risks being wiped out by the fear which the markets and rating agencies are still stirring up, even today. We have reached the point over the past few days, with scenarios about restructuring and even bankruptcy and/or the exit of a country from the euro area still doing the rounds, that we are debating things which we would have considered inconceivable until just recently.
Commissioner, knowing your attachment to Europe, I believe that you will agree with me that the solutions we are debating today, the way in which we shall manage this crisis, will no doubt be a major chapter in European history. Today, we are creating the conditions in which the epilogue will be written. I believe and hope that we all feel that these are historic times and that the epilogue will not be written in black colours for the future of the European Union and EMU, but will mark a brave and decisive step which will make Europe more cohesive, more united and even stronger.
Mr President, my fellow Member just said that a year is a good time to look back over and I can bring news from Finland where it will hopefully be announced this evening that the Finnish Parliament will support the financial rescue package for Portugal. This will hopefully be the case, but we should not start applauding yet. We can hope that it will be the case, and my party certainly supports this move.
I will briefly look at why we in Finland are hesitating right now with regard to whether or not we should support Portugal. One of the reasons is - and I turn here to the Council, and even though I know that the Hungarian Presidency is perhaps not the one to blame, you will have to be the messenger - that difficult decisions are constantly being taken in the form of small partial decisions because we cannot manage to resolve this problem all in one go. It is perhaps not so easy to do this either, and I understand that there is no simple and absolute solution, but the fact that we are constantly forced to take small and difficult partial decisions means that the political patience and the political will in Finland's Parliament, for example, is beginning to wear thin. Unfortunately, this seems to be the case in other national parliaments, too. This is worrying in view of the fact that we probably have several difficult decisions ahead of us, including with regard to the situation in Greece, and there is a risk that at some stage, we will find ourselves up against a wall. Therefore, the Council probably needs to consider a more ambitious strategy than this partial strategy that you are currently applying. If you do not do so, we will not get ourselves out of this situation. You need a new strategy because the current strategy is not working. Thank you.
on behalf of the ECR Group. - Mr President, the sovereign debt crisis will not be solved until the banks are sorted out, and you cannot sort out the banks if regulators' stress tests refuse to admit that the sovereign debt crisis exists. There is also a public confidence crisis. Some countries bailed out their own banks at huge cost to the taxpayers, without any handouts from the EU. I understand why the same public is now asking why they should fund bail-outs in other countries.
Last week's proposals for reform in Portugal had some positive recommendations for improving competitiveness, but the situation in Greece seems dire. Eurozone leaders tell us that there is no Greek debt restructuring, but since when is a delay of a repayment date not a restructuring?
If public lenders extend their maturities, that is not just a shuffling of deckchairs on the Titanic: it is taking the public lenders below decks to sink in the ship while the private loan holders are helped away to the lifeboats.
Mr President, Mr Rehn, first of all, I would like to say that the situation is indeed getting worse, as you have described. In the euro area, the divide between the countries which are showing signs of recovery and those which are in a more precarious position is widening. Also, the cost of supporting the weaker countries is constantly rising.
Given this situation, I have some questions for you in your role as Commissioner responsible for economic and monetary affairs. Liabilities between the central banks amounting to more than EUR 400 billion have accumulated in the TARGET2 accounts of the European Central Bank system. This is due to the fact that the banks are still not being adequately financed by the capital market. What is your view of these unplanned liabilities within the euro system?
The major problem which is preventing us from making progress with debt restructuring is that the banking system, as Mrs Ford has also said, has not been properly reformed. The proposal for a European restructuring system has been delayed. When will the Commission submit this proposal? As Commissioner responsible for economic and monetary affairs, what is your view of this delay? What are you doing to speed things up?
It has also become clear, as we in the Group of the Greens/European Free Alliance have been predicting for a long time, that the measures put in place to support Greece and Portugal will not take effect until the macro-economic conditions in the euro area improve. These countries are still subject to a growing burden of interest. The export and outflow of capital in some of these countries is increasing. There is still a lack of demand among some of the European partners of these countries and among the strong countries in the euro area in particular. Resource and food prices are also rising, at least if you disregard the most recent ups and downs.
In addition to the bail-out of these countries, and in addition to the financial aid, I would like to know which measures are being taken to relieve the burden of taxes, external demand and interest on these countries from a macro-economic perspective. How is this being achieved? I would therefore like to encourage you to put forward a strong package which will improve the macro-economic conditions in these countries in the euro area.
Finally, the measures, which, in my view, run contrary to the spirit of the Treaty on the Functioning of the EU, have hit the weakest countries, including Greece, Portugal and Spain, while the stronger, wealthier countries have not yet taken on their share of the burden. Which measures will you be taking to encourage the wealthy countries to contribute to the costs of this crisis?
Mr President, I should like to express my deep indignation here and give voice to the protests being heard in Portugal against the policies that have led us to the crisis we are experiencing, in particular, the veritable submission and aggression pact imposed on the Portuguese people by what are known as the 'troika': the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission. These bodies have been charged with implementing a shameful act of outside intervention that does not even respect the rights and exclusive competences of the Portuguese Parliament, or take into account that we are in the run-up to parliamentary elections.
These are antisocial, regressive policies that abandon development and condemn the Portuguese workers and people to unemployment, poverty, underdevelopment and extreme dependence, turning Portugal into a mere protectorate or colony of the powers of the European Union. All this is happening, moreover, when it is already known that such measures do not solve the problem, as demonstrated by the Greek example.
Even if the real responsibilities of EU policy - and we are talking about the irrational criteria of the Stability and Growth Pact, of the policy of the strong euro, and of the ECB guidelines and statutes, which do not respect the particularities of the weaker economies - in relation to the current situation are covered up, nothing justifies applying a package to Portugal that punishes the Portuguese people in return for a loan which needs to be paid back at interest rates higher than those normally charged by the ECB. Contrary to all the proclamations of solidarity at election propaganda time, what we have is a policy of social regression and of prolonged economic recession.
They are intending to do all of this just to favour the international banks, along with a handful of big companies and financial institutions in Portugal, and a few of their lackeys. That is why we are saying here that the euro area itself is under threat; that the future of the European Union could be its implosion, and that a change of policy is needed ...
(The President cut off the speaker)
Mrs Figueiredo, I am afraid I have cut off your microphone. I apologise for this but you went quite over time. You do have a chance, however, for another 30 seconds if you agree to answer a blue card question by Mr van Dalen.
(NL) Mr President, I wanted to ask Mrs Figueiredo, if what your country has agreed is as bad as all that, and if it is so bad to find yourselves under a real regime whereby you even have to restructure your whole economy, why not leave the euro area? The euro is a strong currency and there have to be prerequisites for that. If that troubles you, you should just leave!
(PT) Mr President, what is unacceptable is that a question like this can be asked when Europe's leaders were unable to admit in time that their policies were responsible for exacerbating the situation of Portugal, which, as is well-known, had a fragile economy and had to be subjected to the policy of the strong euro, which serves the interests of Germany, France and others, but does not serve the interests of Portugal or of other countries with weaker economies.
That is why the Portuguese people are fighting this policy, as are the Greek people and workers across Europe. What we need is another policy here in Europe too.
on behalf of the EFD Group. - Mr President, I am a baby boomer. I was born just after the war. From that time, we have probably had the longest period of peace and prosperity globally. I have put a little bit of modest money away so that I can hand something down to my family when I pass on - largely because I have never spent more money than I have earned. I have been prudent and I have worked moderately hard.
It always seems to me to come as a complete surprise to politicians how countries get in debt. Let me explain, because I do not think you really understand. It is because politicians consistently spend more money than they raise in taxation - more money than they can possibly raise in taxation -, most of which, in point of fact, they actually waste. The reason we are talking about countries which are broke - and they are broke - is because their ridiculous, ineffective, ignorant politicians consistently spend more money than they can raise. Then they borrow, and they borrow, and - worse - they then print money, because politicians and their central banks have a machine which prints money. If you do that as a private citizen, it is a criminal offence. You would go to prison for that, yet politicians and their central banks do it all the time.
Let me explain to you that these countries are broke. They are broke because of their own stupid leadership and politicians. It is immoral - immoral! - to ask ordinary taxpayers of any country to pick up the tab for failed politicians and failed banks. They have defaulted. They are broke. For God's sake, let us all admit it.
(The speaker agreed to take a blue card question under Rule 149(8))
(FR) Mr President, I would like to know if Mr Bloom is aware that Spain is less indebted than the United Kingdom, that Ireland was well below 60% before the banking crisis, and that Ireland, by getting into debt to save its banks, essentially saved the money of the British banks.
Absolutely right. I was not suggesting my politicians were any less stupid than anybody else. It is an absolute disgrace, and there was not even a debate in our national parliament on actually rescuing these bust banks. If you want to invest in bust banks, do so with your own money, not money from my old age pensioners in Yorkshire on GBP 98 a week, you scoundrels!
(FR) Mr President, on 9 May 2010, the EU-ECB-IMF troika triumphantly announced that it had saved Greece from total bankruptcy by lending it EUR 110 billion. A year later, Greece plunged into recession. Public debt soared to 150% of GDP and two-year interest rates have reached more than 25% per annum.
If, today, Greece is out of breath, it is because the method used to save it is not the right one. While the Greek economy now needs a weak currency to get out of the depression, the troika is going to impose a new, even more drastic, fiscal austerity package.
This remedy will be no more effective tomorrow than it was yesterday. The currently punitive interest rates to which Greece is subject are, in fact, preventing its private economy from undertaking any investments, whether it be in the production process or in real estate. Greece is becoming a third-world country, ruining all hopes of reimbursement.
The new draft rescue package of EUR 60 billion envisaged last Friday demonstrates that the EUR 110 billion loan already granted a year ago must be considered a gift. For how long and to what extent will European taxpayers be pouring money into the Danaides' cistern? Pursuing this path is suicidal and will lead to the fragmentation of Europe.
There are two possible solutions: Greek debt restructuring accompanied by the restructuring of the public debt of failing States leading, ultimately, to the collapse of our banking system, or a concerted, rational and pragmatic exit from the euro area enabling Greece to catch its breath.
Europe is at a crossroads. Is saving the euro worth the sacrifice being made by the people of Europe?
(PT) Mr President, the sovereign debt crisis requires a European response: a response that looks at each specific situation, that defends the euro to make it strong, and that defends the Member States. That is why the series of proposals on economic governance currently being debated in the European Parliament are particularly important.
Parliament has been helping to ensure that positive steps towards intelligent debt management are taken. It has been advocating a reasonable transition period; arguing that the necessary reduction in debt should not be made year on year but using a three-year average; advocating the need for budgetary discipline; arguing for the need for growth and increased transparency in European policy through debates in the European Parliament; and advocating the necessary solidarity. This solidarity is what has just happened with Portugal.
I should like to say something to you as a Portuguese. Portugal has a 900-year history. Portugal is capable. Portugal is capable of putting its public accounts in order with discipline. Portugal is capable of reforming its banking system; it is capable of reforming its labour market; it is capable of making its tax system more competitive; and it is capable of using innovative measures to reform its health and justice systems. Portugal is capable of having a civil service that is more efficient and controlled. Portugal is capable of having a liberalised economy that is successful and more competitive.
Fundamentally, however, Portugal is capable of participating in the European project; of participating and of helping to resolve whatever challenges there will be in the future. For this very reason, we are very happy in the Union and want to help it become progressively stronger.
(FR) Mr President, in the face of crazy rumours and speculative attacks against a number of Member States, let me remind you of a few facts.
The euro is a strong currency. In 10 years, the euro has established itself as the second most widely used currency in the world. Thirty per cent of international monetary reserves are denominated in euro. More than a third of international private borrowing is carried out in euro. The euro has a purchasing power 40% higher than that of the dollar, which means that euro area Member States pay less for their raw materials, particularly oil.
The euro is here for the long haul in all euro area Member States. With all due respect to Mrs Le Pen, leaving the euro is simply not an option. Any Member State leaving the euro - which is what Mrs Le Pen wants for France - would see its new currency dramatically devalued.
In the wake of the crisis in Iceland, the value of the Icelandic currency has been halved. This 50% devaluation of the Icelandic currency has caused the rate of inflation in Iceland to leap from 5% to 14%. The only way to restore calm in the markets is to allow Greece, Ireland, Portugal and others to restructure their debt through the issue of Eurobonds guaranteed by the Union at reasonable rates. I am talking here about the Tremonti-Juncker initiative.
In fact, Eurobonds already exist. The European Investment Bank (EIB) borrows under the guarantee of the 27 Member States. Last year, the EIB raised EUR 80 billion at average rates of between 3% and 3.5%. It is rates like those that would enable Member States under pressure to overcome the crisis and to return to the path of financial stability.
(The speaker agreed to take a blue card question under Rule 149(8))
Mr President, the previous speaker said that if Greece were to leave the eurozone, its currency would collapse, but in that case, it would default. However, we know perfectly well that it is going to default anyway, so it has a choice of defaulting within the euro which merely kicks the problem down the road and it will return to bite us, or it can default outside the euro, in which case it can solve its problem. So his solution will not work.
(FR) Mr President, I did not get a question but a circular argument from Mr Helmer, and Mr Helmer is simply wrong.
Once again, any Member State leaving the euro would see its new currency dramatically devalued. I repeat my example of Iceland, which is not in the euro but which has been through all that.
(SV) Mr President, Mr Rehn, the work you are doing is absolutely excellent. During this year, you have come up with a series of different proposals that have improved the situation, and that is something that we should all acknowledge.
I am surprised listening to this debate. I thought this was a House for Europe, not a House for 27 different Member States. There is a spirit of nationalism here that is frightening and that will not help to solve our problems. It is a question of solidarity.
(The speaker speaks in English)
(Speaking to Mr Helmer, who had expressed his disagreement) You may laugh, but you are wrong. You are definitely wrong, Mr Helmer, because it is about solidarity. Europe is about solidarity and we all are linked together: even the pound sterling reflects on the euro. I am astonished.
(SV) In Sweden, we have experienced what it means to be in serious debt. We were a country in debt, people were in debt, but we succeeded in dealing with it. Why should our friends in Greece, Portugal and Ireland not manage to deal with it? Are we special up in the Nordic countries? Of course we are not. However, right now, these countries need our help and assistance. If we do not give them this help and assistance, it will also be our downfall.
(The speaker speaks in English)
Europe is a common destiny for us all, and we have to realise that - even you, Mr Helmer. You are a part of Europe and you can do more.
(Interjection from Mr Helmer: 'Absolutely no!)
Mr President, currently we are celebrating the first anniversary of the Greek bail-out, but there is nothing to celebrate. One year later, we are back at square one. Instead of lengthening the pain and piling even more burdens on the Greek economy, it would be far better to accept the inevitable and the judgment of the markets.
There is no way to avoid default. An orderly default has at least five advantages. It would share the loss more fairly between Greek taxpayers and external creditors; stop the replacement of private debt by an ever-growing proportion of official debt coming from other countries; offer Greece more growth opportunities by alleviating debt service; make it much easier for Mrs Merkel to 'sell' the default to the Bundestag, because it would mean supporting German banks rather than Greece; and, finally, isolate the debt crisis from the competitiveness crisis and save the eurozone from contagion.
Do it! Do not throw good money after bad.
(FR) Mr President, Mr Bokros, since you have raised the issue, I am going to continue. I believe, Mr Rehn, that we should listen to what is being said. I believe that, when the figures are placed alongside each other, the only conclusion is that debt restructuring in Greece, and probably in Ireland, is inevitable. I think that everyone realises that. It seems so obvious that one might well ask how it is possible that the European Central Bank, the Commission and the Council cannot see it. Unless you refuse to see it?
In other words, the first option is that you decide, for ideological reasons, to say that default is out of the question, in which case that would be to deny reality. On the other hand, you could perhaps say that it would be better to play for time, in which case I would really appeal to you because the more that time goes by, the more painful and the more costly restructuring will be. It will, in particular, be more costly for taxpayers because the more that time goes by, the more of a burden the Greek public debt will become on public or quasi-public entities - I am thinking of the European Central Bank, I am thinking of the European Financial Stability Facility (EFSF) - and it is increasingly the taxpayer who is going to be asked to pay up.
You know, Mr Rehn, there has been a great deal of talk about stress tests and resistance tests in recent days. They are mentioned in relation to nuclear power stations; they are mentioned in relation to banks. Yet those whose resistance is being severely tested every day are our citizens, especially the most disadvantaged among them, who perhaps bear a disproportionately high share of the burden of the response to this crisis.
Clearly, one cannot therefore say that the crisis is simply the responsibility of the banks, of enterprises, or of politicians, as some would simplistically have us believe. I believe that this is a collective responsibility and that it would therefore be healthy if everyone contributed their fair share towards tackling the crisis.
I would like to end by stressing that, even though I might often disagree with you, we should honour the work you have been doing lately. I am sure that your nights are not very long and I promise that, on the day you return to a more decent life, I will gladly invite you to dinner.
(EL) Mr President, Commissioner, I would have expected you to reply with honesty that the austerity programme, the memorandum being applied with religious devotion in Greece, has been a total failure. The deficit is bigger than forecast, the debt has increased, unemployment has increased, there is even greater austerity and, in the midst of this, you, Commissioner, see in these facts the recovery of the economy and the avoidance of a heart attack, while your representative sees targets and successes. At the same time, the aim is to apply this recipe to Ireland and Portugal. These recipes have been a total failure.
At the same time, recent data in Europe illustrate that the German economy is growing and that its export figures are higher than at any time since the 1950s. I think that this combination of facts, this inequality and the disparities which are appearing and operating within the European Union are the problem and one of the causes of the problem. This being so, what are you waiting for in order to change policy? Tell us what you talk about at your secret meetings, because a lot of rumours are flying around. Will you eventually change tack in order to address the problems?
(NL) Mr President, first of all, I have a question for Commissioner Rehn. How can it be, Mr Rehn, that the Eurogroup, chaired by Mr Juncker, could hold a summit without the Dutch Finance Minister present? How can that be? It is an outright scandal that the Netherlands, as one of the biggest contributors to all the rescue packages, was not even invited to the meeting I refer to. Mr Rehn, could you give me an assurance at this point that you will ensure that this never happens again?
I have to tell the House that Greece will either have to leave the euro or restructure its debts. That is an inevitable reality - the question is 'when?' I believe, and I fear that that will happen when all the guarantees and all the money has been paid out to Greece. This is the swindle of the century! Mr Rehn, can you give me a guarantee now that the scenario whereby Greece first refinances its debts to the maximum degree with Dutch taxpayers' money and then leaves the euro and cancels its debts is a scenario that will not occur? We cannot trust these Greeks, the Greek politicians who, together with the European Commission, swindled their way into the euro with inaccurate figures and who now seem to be primarily occupied with increasing their own salaries. These are politicians that we can never trust, so, Mr Rehn, how are you going to guarantee that Dutch taxpayers are not going to be terribly swindled once again?
(The speaker agreed to take a blue card question under Rule 149(8))
(FR) Mr President, for the last time, is Mr Madlener aware, when he argues against European solidarity and against Greece, that, after Germany, the Netherlands is the second largest beneficiary of the European internal market and that practically one out of every two jobs in the Netherlands is linked to activities relating to the export of goods and services to the European Union?
Is he not therefore arguing against jobs in the Netherlands?
(NL) Mr President, Mr Goebbels, you must know that the Netherlands has hard work and keeping on top of its finances to thank for its strong position. Did you know that the Netherlands has been the biggest net contributor to the European Union for years now and that the Greeks have been the biggest recipients of Dutch money for years? What has been the outcome of that? The outcome was crisis in Greece! This is mismanagement of Dutch taxpayers' money. It is a disgrace that you have not grasped that fact.
Mr President, our duty is to look for the best solutions to cope with the crisis, to which end the learning process is of great value. My feeling is that we have learned why things went wrong and how we got ourselves into the difficult situation we are in today, but my feeling is also that now we are less open to drawing lessons from the evolving reality. In this context, I would like to raise two issues.
First, we can see great similarities between Member States with regard to public debts and deficit ratios, while, at the same time, for the same Member States, there are substantial differences between the risk premiums paid on their sovereign debt. In my view, this is clear proof that factors other than sovereign debt enter into the picture and influence markets. Among other things, it is foreign debt or excessive external imbalances on which markets have focused, and this clearly means that in responding to the situation, we must go beyond fiscal adjustment.
The second issue is related to the fact that those economies that are the most strongly affected by the crisis have to cope with a combination of high risk premiums and severe austerity measures. This double challenge makes achieving debt sustainability practically impossible. If we reject debt restructuring, then we need a better balance between punishment and assistance and the design of response packages which would make it possible to avoid pushing countries further into a debt trap.
(PT) Mr President, Europe is mired in an unprecedented crisis that could threaten the euro area and the European project. It is a crisis of the euro area, of which Greece, Ireland and Portugal are the first victims. The attacks on these countries' sovereign debt aim to weaken the single currency. Those thinking that this is a problem for the Greeks, the Irish and the Portuguese are fooling themselves: it is not. If there is not a robust response from the European Union that calms the markets, this pressure will spread to other Member States.
Portugal does not have a problem regarding the sustainability of its public accounts or the insolvency of its national banks. Portugal needs to continue with the structural reforms already started, to increase productivity, and to promote economic growth. As in the past, the Portuguese people will overcome this challenge, too, and make the necessary sacrifices, but not more than the necessary sacrifices.
We cannot understand why the European Union is going to charge Portugal higher interest rates than the International Monetary Fund. Portugal will pay the European Union around EUR 3 billion in interest per year. There is no need for the Mr Blooms and Mr Madleners in this Chamber, and outside it, to worry: the taxpayer will not suffer. What is at issue is a loan, not a gift. This is a loan that will be paid back in full, and at interest rates similar to the market rates Portugal was paying around a month ago.
In a globalised world, no country can solve all its problems on its own. The financial crisis has already shown that something that happens on the other side of the world can hit all of us at home with devastating force. That is why we need more and better Europe: a more united and ambitious Europe. We are all in the same boat: if the boat sinks, no one will be saved.
(The speaker agreed to take a blue card question under Rule 149(8))
(FI) Mr President, I have good news for the Portuguese. According to information I have just received, an agreement has been reached in Finland and the Commission's proposal concerning loans to Portugal has been accepted, so Finland is no longer an obstacle.
As it is also my role to ask questions, I would like to ask my colleague the following: do you believe that the belttightening taking place in Portugal will allow you to achieve the kind of economic growth that will enable the loans to be repaid?
(PT) Mr President, I should like to thank the Finnish people and the Finnish Parliament for making that decision, which is very much in the spirit of community and solidarity that prevailed at the founding of the European Community.
Regarding your question, I was saying to you that these austerity measures will be observed by the Portuguese people and that, although it is a tough, onerous package, we will do everything to increase economic growth, create more employment and escape these difficulties.
(FR) Mr President, the debt problem is of a magnitude that far exceeds the purely budgetary dimension. In fact, it is policy as a whole that is being affected by the public debt crisis - the budgetary, economic, social, European, and national dimensions. First and foremost, however, we have a political crisis on our hands.
In Finland, a party for which dissociating itself from Portugal has become a hobbyhorse illustrates the extent to which the debt problem is worrying the public. However, it should be recalled that the rhetoric of the party of the true Finns, which advocated against coming to the rescue of Portugal, could not be more similar to that used by Germany's main political leaders a year ago shortly before aid was granted to Greece.
The populist slogans contributing to significant electoral success, today in Finland, tomorrow in a different country, are, in fact, simply repeating the words previously articulated by very respectable political leaders.
The political centre is where the ideas tearing economic and monetary union apart are generated.
I firmly believe that the difficulties can only be surmounted if senior politicians understand that their role is, first and foremost, to calm tensions rather than fan the flames.
(EL) Mr President, it is a rotten lie that the economic crisis is a crisis caused by debt. It is a crisis caused by the over-accumulation of capital, a crisis of the capitalist system which illustrates that it is an out-dated system that has been overtaken by events. The capitalist crisis in Greece, Ireland and Portugal is getting worse and will continue. The debt and deficit in these countries are not national peculiarities; they are the effect, not the cause. They stem from an extensive reliance on big business: subsidies and tax relief for the monopolies, NATO spending, the destruction of industrial production and the mining, manufacturing, textile and ship-building and repair industries, the severe undermining of agricultural production and the billions of euro for large business groups.
The basic reason for this attack by the European Union, the bourgeois governments and capital on the income and rights of the working classes, the main weapon in which is in the agreement on the euro and the European stability - for which read controlled bankruptcy - mechanism, goes beyond capitalist management of the crisis and the debt. The strategic objective of the European Union, of the bourgeois governments and of capital is not only to shift the burden of the crisis on to the workers, but to pare the workforce down to a minimum, in order to safeguard the profit margins of the monopoly groups.
Today's awe-inspiring general strike in Greece will send a strong fighting message ...
(The President cut off the speaker)
(The speaker agreed to take a blue card question under Rule 149(8))
(NL) Mr President, you have my sincere thanks for your helpfulness and your tolerance. I have a question for Mr Toussas. He knows precisely how to explain all the things that are wrong, what is not right in this system, and all the things that are utterly wrong in what is happening in Europe and the Member States. My question is, what is the alternative? Do you want a return to the Communist utopia, as in North Korea, in Cuba and other dictatorships? Is that the solution that we need to turn back to? Is that what you want?
(EL) I understand that you are unable to present proposals to resolve the acute problems faced by the workers both in your country and in the other 26 Member States of the European Union. May I inform you that, before Greece acceded to the European Union, the Greek Communist Party voiced its opposition and informed the Greek people of the consequences. Thirty years after the accession of Greece to the European Union or, if you like, even since 1957, when it was founded and converted from the European Coal and Steel Community to the EEC, what we have seen is this: profits for capital, hardships for the workers. The people will fight to resolve this contradiction.
Mr President, the eurozone imposes a single currency value and standardised interest rates on 17 different economies. If the failing countries had remained outside the eurozone, their currencies would have fallen in value, leading to export-led expansions facilitated by low interest rates that would be set by their central banks. The excessive currency value, and now rising interest rates, have aggravated stagnation, which has brought about falling tax revenues, cuts in services and rising government debts. It would be in their interest to leave the zone, but the fall in the value of their currencies would then increase their debt burden.
Britain, being outside the eurozone, should be unaffected by these debts, but our previous government underwrote GBP 10 billion worth of debts under the exceptional occurrences clause of the Lisbon Treaty and the present government will continue to supply loans directly and indirectly. Greece and Ireland will eventually default on their debts, and we will all be shown to have thrown good money after bad.
(PT) Mr President, I should like to start by saying that I, naturally, believe that the agreement reached for Portugal is a balanced one. It is a very tough agreement for the people, but it essentially emphasises structural reforms to increase growth and competitiveness. I think that is very positive.
I am not taking the same attitude as others here who believe that countries like Greece, Ireland and Portugal did everything right: that they made no mistakes and did not go too far; that they did everything right and it was only the international crisis that caused problems. No, our governments made mistakes and had the wrong policies, but that does not mean there is not now an opportunity, in the context of the Union, to get back on track and head in the right direction again.
It is therefore important to remember that it is, in fact, necessary to say to those bodies of public opinion against supporting countries in difficulties that they are not giving money to those countries: they are lending money to those countries. Moreover, they are lending it at very high interest rates, so they are actually doing a deal that is positive for their budgets and their people. However, I would also say here that it is perhaps time to have a general European response by accepting Eurobonds and accepting the possibility of selling them on the primary market, to respond to the international markets.
Perhaps it is time for the Commission itself, the European Financial Stability Facility and the International Monetary Fund to review the interest rates so that they can make it possible for there to be sustained growth in these countries that are currently in difficulties, by lowering these rates.
(The speaker agreed to take a blue card question under Rule 149(8))
Mr President, firstly, I would like to say to that I feel ashamed by the amount of nationalism and short-sightedness which has been expressed in this debate. Mr Rangel, I have a question for you. Do you feel that the interest rate which you will have to pay under the future programme should be lowered? Would lowering these interest rates help your country?
(PT) Mr President, I believe that the rate should be lower not just for Portugal, but also for Ireland and Greece. I think that it will be extremely difficult to achieve the goals without lower interest rates, as we are seeing at the moment in the Greek case, in fact. However, whatever the case, I think that there is a possibility and a door open here.
If Portugal is able to comply rigorously with the results of the agreement in the first few months, I think that it will be in a position to go to the European Financial Stability Facility and the International Monetary Fund and ask for a review of the rates within six to nine months. I think that would be good news for the Portuguese people and I think it would be good news for the European Union.
Mr President, just to add an Irish voice to this debate: I, too, share the disillusionment with the extent of nationalism across this floor. I am disappointed that the Chamber is half empty for what is the most important debate for Europe in this session.
On interest rates: let us be very clear that countries should not be charged penal interest rates. They do not help them to recover, and they do not help debt sustainability. In my last 30 seconds, could I ask the Commission to address the issue of debt sustainability, for Ireland and our colleagues who are in difficulty?
Could I also ask a question about the political capacity of the European Union? On Monday in our Parliament in Dublin, I spoke about a sundering of solidarity in the European Union. I do not say that with any delight. I have said it privately to the Commissioner. It is a real and serious problem. I rue the day when we might be ruled by the extreme right or the extreme left. For God's sake, let the centre unite.
(FI) Mr President, this debate has been useful. This is a very serious situation for those countries in crisis, but it is just as serious for Germany, Austria and Finland, because taxpayers in these countries have suffered budget cuts and been through serious crises.
The questions have been justified, and that is why it is very important that the Portuguese issue should be made a model example of how a crisis can be held in check, dealt with, and prevented from spreading. I think that Portugal must now first ensure that it repays the loans by selling its assets, as has been said. It must also negotiate with its individual lenders to establish concrete proposals and ideas about how this crisis can be beaten.
Voters in Germany, Austria and Finland will not stand for it if, for example, there should be new bailouts for Greece or if this case should fail.
(SK) Mr President, Portugal is another country in need of financial assistance from the Eurobond, but us be honest and admit that the labelling of this crisis as a 'debt' crisis or a 'euro' crisis is highly misleading.
It gives the impression that the euro is in crisis because certain Member States are incapable of running their affairs sensibly and have taken on too much debt. Ireland and Portugal, however, ran their affairs in a disciplined way, and got into a crisis that was not of their own making. It is the poorly regulated banks that were irresponsible. It was the cost of protecting these banks that got some euro area states into financial problems. The actual crisis is therefore rather a crisis of the European banking sector.
If we are honest, the Eurobond, or rather the new form it will take after 2013, will surely not be enough. The cost of protecting the euro must be reduced in such a way that we force the commercial banks to acknowledge their losses. The next step should then be effective regulation of the financial sector.
(NL) Mr President, the current approach to the debt crisis exacerbates the problems. Yes, Greece, Portugal and Ireland are being offered a debt settlement, but their debts are being increased, not reduced. This approach is a disaster - it is solving a debt problem by taking on more debt. Mr President, Europe needs to move on from its taboo on writing off debt. We can move forward by restructuring public debt with a partial writing off of debts in combination with enforcing the requirements of a tightened-up Stability and Growth Pact, including automatic penalties. Obviously, this is a tough approach designed to bring about a 'shake-out' amongst the banks, some pensions institutions and bondholders, but we need to get through this. It is a question of no pain, no gain. Writing off public debts in combination with enforcing strict requirements paves the way for a new future. If we do not do that, there is only one future, which is weak countries leaving the euro area.
(PT) Mr President, Commissioner Rehn, last month, the President of the Portuguese Republic asked the Commission to be 'imaginative', and your reply to the President of my country, with the arrogance of a colonial governor, was 'we have been imaginative with Portugal'. That is why I want to reply to you now. The European Commission has been imaginative in imposing a three-year government programme and a preferred government on a country three weeks before an election. The European Commission has been imaginative in demanding an interest rate of 6% from that same country, and in plunging Portugal into recession for the next two years.
The only place the European Commission has not been imaginative is where it needed to be, because we all need to restructure the debt, to renegotiate the debt, and to involve creditors in the solution. Please, Commissioner, search your conscience: resign, and Europe will thank you for it.
(DE) Mr President, in contrast to my fellow Members who have overrun their time, in a similar way to the budget overrun, I will attempt to be brief.
Among the many clever analyses and responses, there is one question which has not been asked. That is the question of what the citizens of the net contributors would say. Tax rates of 50% with a high standard of living and high levels of social services are not a coincidence. This means that the citizens are working hard and earning a great deal.
Solidarity, which has often been referred to today, also involves solidarity with the citizens in our own home countries. The case of Sweden has been mentioned. The EU did not intervene here with financial aid. Instead, restructuring has taken place, cuts have been made in social services and public services have been reduced. In other words, a strict fiscal policy has been introduced. We must explain this to the countries which are obviously the subject of today's debate. Without a strict fiscal policy and major efforts on their own part, this will not work.
Member of the Commission. - Mr President, I will focus on one issue only because I need my five minutes for that.
In recent weeks, and today in this House, many voices have spoken in favour of debt restructuring in Greece. It sounds very easy and neat. However, I must say that the proponents of sovereign debt restructuring seem to ignore the potentially devastating implications for financial stability in the country itself and in the euro area as a whole, and the consequences and ramifications for economic growth and employment.
Let us think about what the consequences of debt restructuring could be. Of course, we are talking about a counterfactual situation, as are the proponents of debt restructuring, but we have enough understanding of the channels of impact on financial stability and economic activity to make a likely and most possible scenario. This is how it could very likely turn out.
Bondholders would take a big hit - i.e. households through their savings instruments like pension savings, as well as institutional investors such as pension funds and insurance companies. Banks would also bear the cost. From last year's bank stress test exercise, we know that the Greek banks hold EUR 48 billion of government securities, Greek Government bonds. What would happen? A restructuring of sovereign securities would seriously erode their capital base. For instance, even a 30% haircut would mean that a large part of the banking system would end up under-capitalised, while a 50% haircut, which many have advocated, would imply that a large part of the Greek banking system would simply become insolvent.
Thus, a debt restructuring in Greece would have major consequences on the soundness of the banking sector in Greece, as well as on any banks having exposure to Greek securities.
Now, I do not love banks, nor do I do my job in the first place in order to save them, but it is a fact that such a major banking crisis would lead to a massive credit crunch. It is not a kind of theoretical virtuality. It is a very likely result. A massive credit crunch. Moreover, through rating actions, the collateral pool at the disposal of the Greek banks would most likely be wiped out. It would melt down. A massive credit crunch, possible bank runs, a deposit freeze and/or capital controls could well be part of the consequences. What is absolutely sure is that the contraction of the economy would be unprecedented in Greece.
Let me recall that Argentinian GDP collapsed by almost half over five years. Would that help Greece or Europe? I doubt it. Even such a severe haircut as 50% would not reduce the debt ratio below 100% of GDP, assuming that the international creditors, like the euro area Member States or the IMF, were excluded from this haircut.
Greece still has a large fiscal deficit which it has to finance. Who would be ready to lend to Greece the morning after it wiped out 70% or 50% or 30% of previous investors' financial wealth? Who would be ready to lend to Greece the morning after?
Debt restructuring would cut Greece's access to financial markets for a very long time, and the goal of the EU/IMF programme is indeed a relatively rapid return to the markets to finance the Greek sovereign debt so that European taxpayers do not have to guarantee loans to do that. That is the goal of this exercise.
Let us recall that in the final analysis, fiscal solvency requires stabilising and then reducing the government debt ratio - i.e. achieving a primary structural surplus and achieving a debt-stabilising level.
Greece is still living beyond its means, and the key is that Greece has to start earning more than it consumes and also be able to pay the interest rates on its debt burden.
That is the primary structural surplus that Greece needs, and debt restructuring would not solve this very fundamental fact. Therefore, at the end of the day, the main determinants over the solvency of Greece are of a political and social nature - the consistent rigour to keep the primary surplus stable at a high level of around 5% of GDP for a long period of time.
We have examples of this. Belgium successfully did so in the 1990s for almost a decade. Moreover, six EU Member States have been able to maintain a primary surplus of over 4% for at least four years, so it is not impossible. It is certainly very challenging, but it has been done before and it is doable also for Greece if there is the political will and unity in the country. This is the only way for Greece to avoid much worse alternatives.
We really are at a critical juncture concerning the future of Europe. This debate is about the sovereign debt crisis. It has implications for the euro, for the future of Europe. You know this very well. I must say that I am extremely concerned about the divergence in the national political debates we have heard recently, which have also been reflected in this House. There is political fatigue in central and northern Europe about supporting the countries in trouble; there is reform fatigue in southern Europe about carrying out the necessary reforms. We need to find the energy together to beat this fatigue. We need to build bridges over these divergences in order to save Europe, and we need to make the necessary decisions to avoid another, even worse crisis, and to enable the whole of Europe to recover from this extremely serious financial crisis that we have experienced in the last years.
Mr President, honourable Members, I would like to reflect briefly on two trains of thought. Although, undoubtedly, the crisis of the banking system contributed considerably to our current economic problems, it would be a mistake to conceal that most of the problems arose prior to the crisis from a lack of fiscal discipline in numerous countries, from economic policy that did not strengthen competitiveness, and from the absence of coordination in European economic policy.
It is therefore clear that a comprehensive European answer is needed and two important elements of this, which are also top priorities for the Hungarian Presidency, are the European semester and implementing the reform of economic governance.
Implementing both priorities has reached an important, critical stage. As regards the European semester, we are committed to successfully concluding this on time. The Member States' stability and convergence programmes, as well as the national reform programmes, are planned to be discussed at the Ecofin meeting in June, and I hope that at last, these programmes will mean a real breakthrough in each Member State's fiscal and economic policy.
Intensive work on the package of six proposals is going on in the trialogue. In connection with this, the Hungarian Presidency will announce the most important points of Parliament's proposals at next week's meeting of finance ministers, and at this discussion we will ask for a mandate from the Council to reach a successful and speediest possible agreement still in June regarding the six legislative proposals.
A responsible and flexible attitude is required of both the Council and Parliament, and I firmly believe that in today's situation, the agreement would send a remarkably positive message to the markets as well. Furthermore, it would reflect the ability of the European institutions to cooperate responsibly and without delay when Europe is in huge need of this.
Concerning the Portuguese programme and the three adjustment programmes in general, first, I would like to welcome the parliamentary agreement on financial policy. We all know that this is extremely important from the aspect of the functioning of the European Financial Stability Facility. At the same time, I wish to point out that it is also clear in the economic policy programme compiled by the Troika in relation to Portugal that the programmes devised for Greece, Ireland and Portugal alike adapt to the characteristics of each country and are not formulaic in any way.
For Greece, the stress is on putting the budget in order. For Ireland, the consolidation of the banking system can be regarded as the key element. Now for Portugal, the most crucial parts are perhaps structural reforms, and labour market and commodity market reforms. As we are all aware, in the case of Portugal, it is extremely important to put the economy on a higher growth path in the medium term and to strengthen competitiveness.
I believe that, although implementing economic policy programmes related to credit agreements means serious efforts for the Member States, at the same time, this is also an opportunity to face up to long-standing structural problems and to find solutions and answers to these within a short period, which, in the medium term, could lead to sustainable and higher growth in these countries.
The debate is closed.
Written statements (Rule 149)
The euro is experiencing depreciation at a time when there is talk about Greece needing to receive a second loan from the European Union. We must ask ourselves whether the situation in Greece and in other European states in difficulty is not a result of the actions taken by financial speculators, based on the tactics of 'divide and conquer'. Just recently, Portugal became the third state which needed to ask the European Union for loans. The financial speculators have forgotten the problem of the banks which were difficult to save and are focusing their attention on European states in difficulty. The low public debt credit rating has made it impossible, therefore, to obtain loans to pay back the debt. I think that a European credit rating agency is required, which will move away from financial speculation. On the other hand, it is imperative that Eurobonds are issued to demonstrate the willingness to save the euro.
Owing to its scale and the associated constraints, the debt issue is more than just a real problem for countries like Portugal: it constitutes a central element of the violent social, economic, political and ideological offensive under way, the true causes of which are obscured. The most recent expression of this offensive is the unlawful intervention in Portugal by the 'troika' of the International Monetary Fund, the European Commission and the European Central Bank. This is an intolerable extortion of national resources from the Portuguese workers and people into the pockets of financial capital. The EU - thereby revealing its nature and true objectives - mediates this extortion process, whilst creating the institutional conditions for it to be implemented and deepened. The process of foreign intervention under way is very revealing of this. It incorporates the fundamentals of the antisocial measures implemented in other countries, like Greece and Ireland, as well as those included in the 'Euro Plus Pact' imposed by the European powers. When it comes into effect, it will exacerbate the national situation, worsening the economic recession, unemployment, poverty, social inequality and national dependence. When it is implemented, this veritable submission programme will, as demonstrated by the situation in other countries, exacerbate the conditions that supposedly motivated this intervention: in other words, the difficulties in tackling the unbearable and growing costs of the public debt.
The cause of the sovereign debt crisis is speculation on the indebtedness of Member States that have come to the rescue of the banking sector, which is directly responsible for the profound crisis we are experiencing. The banking sector has shirked all its responsibilities, especially its financial responsibilities, and is making record profits, while European taxpayers and workers are being asked to tighten their belts. As for the sacrosanct markets, they are now setting the tone. Commission and governments have just one obsession: to reassure them. The whole of last weekend was filled with misinformation on debt restructuring and Greece's exit from the euro: rumours spread by those who have wagered billions on a default they are trying to create in the first place. Debt restructuring would, it appear, be a catastrophe - for private investors. At the same time, it was announced that the Banque Nationale de Paris (BNP), for example, would lose much less than the EUR 6 billion in profits expected this year and that, without the exorbitant rates of interest, Greece's deficit would be 1.5% of GDP and not 8%. The speculators are stuffing themselves on taxpayers' money and are clearly set to bleed them dry. It is time we stopped this unhealthy circus.
One thing is clear to all of us. The effects of the economic and financial crisis can still be felt everywhere and it involves numerous issues. It goes without saying that the EU must respond to the crisis. I have a few thoughts on the stress tests which were carried out on the banks. A total of 91 major European banks were tested and 7 failed. I have one major criticism in this area, which is that the consequences of a country going bankrupt were not evaluated and this remains a possibility when we look at Greece, Ireland and Portugal. The most recent stress tests focused on the hard capital ratios, but the liquidity criteria should also have been included. It is obvious that these results must be published in order to achieve the required level of transparency.