Economic governance in the EU and the eurozone, and surveillance of national budgets (debate)
The next item is the statement by the President of the Commission on economic governance in the EU and the eurozone, and surveillance of national budgets.
Mr President, ladies and gentlemen, economic governance constitutes a crucial challenge for the future of our Union. When, in 1993, President Delors made clear the need for a deeper coordination of economic policies, many Member States rejected this.
Furthermore, when the first Commission - which I had the honour of presiding over - brought up this question in its report on the tenth anniversary of economic and monetary union, in 2008, not many people listened. I nevertheless emphasised the need to provide an adequate response to the question of economic governance in my guidelines for the present term, which we discussed together about a year ago.
Commissioner Olli Rehn then discussed this with you during his hearing. By that time, the Commission had already announced its intention to put forward proposals to strengthen economic governance in the European Union, particularly in the euro area. Unfortunately, the crisis has shown that we were right. However, the urgency of this debate is now recognised, and I can only welcome the fact that the conditions have finally come together for advancing towards a true European economic governance.
As a result, the Commission provided detailed proposals on 12 May. These proposals have kept the debate alive, including with the European Parliament, and particularly the work of the task force presided over by the President of the European Council. The Commission is pleased with the progress of this work and with the consensus achieved up to now, which was shown very clearly during the European Council.
In order to maintain this dynamic, last Wednesday, the Commission again adopted a range of proposals which, once converted into legislative initiatives, will be able to be implemented from 2011 if they are adopted in good time. These proposals do not involve changing the treaty. We must act now, within the legal context that we have today. This is not a limitation. The new possibilities that the Treaty of Lisbon offers us can and must be fully utilised, because we no longer have the time to wait. Our citizens, our businesses and our economy are demanding that we take initiatives. It is our responsibility to decide and to act now.
Because of the economic crisis, the European Union has been faced with a series of serious tests. The reinforcement of economic governance is, of course, just one aspect of the European Union response to the crisis.
The response has also included other dimensions: the comprehensive reform of the regulation of financial markets and proposals for a new European supervisory architecture. As I said this morning, a deal is within reach in the coming days. I call on all parties to maintain the positive dynamic, to ensure that new authorities can start their work in early 2011. This will also keep Europe in the lead in implementing our G20 commitments in this area: the measures to secure financial stability, first through the Greece Programme and then through the mechanisms for the euro area as a whole and, last but not least, a programme for growth and jobs through structural reforms included in the Europe 2020 strategy.
Our response to the crisis is a holistic one. We stabilise, we consolidate and we modernise. We prepare our social market economy to ensure a better future for our citizens. But for now, let me focus on governance.
The challenge of the past few months has centred on whether our economic governance is equal to the new pressures placed on our economic and fiscal stability. We have the treaty provisions in place which allow us to act. We have the institutions. We need to make it work.
We faced a real risk and we successfully resisted it. Now we are filling in the gaps we have identified to pre-empt such risks for the future. I first announced to Parliament the ideas we fleshed out in the Commission communication of 12 May. Our debates since then are reflected in the Commission communication of 30 June. Now we are moving on to the operational phase, with the Commission ready to submit legislative proposals as early as September.
Before explaining the issues in detail, I would like to emphasise how much this process has benefited from the work with the European Council, the task force chaired by the President of the European Council, and indeed the deliberations of Parliament. This work has helped to build a real European momentum. I hope that this will translate later into a swift consideration and swift adoption of legislative proposals.
Our approach to economic governance is to have rules that are more comprehensive and more efficient. The current treaty gives us plenty of scope to do this and I am convinced that the Community method will once again give us the right answer.
We need a stronger surveillance regime. That means one that is stricter and broader, covering budgetary, macro-economic and structural policies, a regime that acknowledges the reality that every Member State has its own particularities but a regime that also reflects the interdependence we all know is central to the European economy.
What does this mean in detail? First, we need more coordination. Key to this is the 'European semester'. It will enhance economic transparency and encourage peer reviews, ex ante, among Member States. If Member States submit their stability and convergence programmes and their national reform programmes simultaneously, we will have a truly joined-up approach. This European perspective will be an asset for Member States as they plan, discuss and adopt their national budgets according to their national constitutional procedures.
Second, we need the credibility that comes with better enforcement. This means a refined incentives and sanctions toolbox, a more effective mix of both preventive and corrective action. We need a Stability and Growth Pact that is targeted, not only regarding the deficit criterion but also on debt: a pact that has real teeth and is respected. Of course, the most effective sanctions are those that do not need to be used because they create the incentive to comply - but, in order to achieve this, the rules need to be strong enough to command this respect.
I want to be very clear on this. Without a more stringent system of incentives and sanctions, we will not reinforce economic governance in a credible way. If a Member State does not respect the commonly agreed rules, then it must be prepared to suffer the consequences. This means also that sanctions must be designed so as to apply to all Member States on an equal basis. Parliament can be reassured that the Commission will do its utmost to ensure that this will be the case.
As regards financial sanctions, we proposed to base them on a broader range of expenditure from the EU budget than before. In a nutshell, all Member States should, in future, face the risk of losing money from the EU budget in the event of persistent failure to comply with the fiscal rules. The application of these rules should also be quasi-automatic as regards the corrective arm of the Stability and Growth Pact.
The timing of measures is also key. We must not fall into the trap of waiting too long before sanctions kick in. Incentives and sanctions must be brought upstream so that action is deployed before the situation gets out of hand. Preventive action can be much more effective than corrective action - but it requires discipline and political will.
One of the weakest points of our current rules is the absence of mechanisms to deal with problems appearing in so-called 'good times'. We are addressing this in our proposals, in particular, as regards the euro area.
Third, our surveillance needs to capture all the key elements. It must not be restricted to fiscal policy alone. We have seen that such a narrow perspective does not work. We must have tools to detect macro-economic imbalances among Member States.
Such imbalances weaken the cohesion of the EU and, in particular, of the euro area. A comprehensive scoreboard of indicators will give us what we need to identify increasing divergences and to propose remedies. They need, of course, to be complemented by appropriate enforcement mechanisms for such remedies.
Fourth, as well as stricter fiscal rules, we also need to push the structural reforms, innovation and trade that will put Europe back on track in terms of growth and create jobs for the future. That is what our Europe 2020 strategy is all about. The European Council endorsed it a fortnight ago. Now we need to put it into practice to ensure that national and European policies are fully in tune, creating the virtuous cycle where growth in one part of Europe helps drive growth in another.
Fifth, let me repeat the utmost importance of transparent and robust financial market regulation, and call on all actors in the process to adopt the necessary reforms as quickly as possible.
I would like to underline the historic dimension of the reforms we are putting forward. They constitute an answer to the challenges that our single currency is facing in Europe, but they also have an important impact in the global financial markets.
The time has come to give the Economic and Monetary Union the tools it needs to fully function, in order to ensure its credibility. What is at stake is not just some technical rules. What is at stake is the future of the euro and we can say, to some extent, it is the future of our European project.
To make all this possible, we have to show without any possible doubts that the world has changed and that our proposals on economic governance are not more of the same, but the real breakthrough. Today, the conditions have been met to bring together the Stability and Growth Pact, economic governance and the structural reforms in a consistent system within the Economic and Monetary Union.
This system should harness all our tools for the common objective: the Structural Funds, budget surveillance and the reforms provided for in the Europe 2020 strategy.
This is a strategy for the whole Union. This is not just an addition of different strategies. It is a real economic strategy for Europe, but we can only have a European economic strategy if we have a truly economic system of governance. However, the system of incentives and sanctions should reflect the special responsibilities of Member States that have already adopted the single currency, in strict compliance with the legal framework. Those Member States share a common good called the euro and it would not be acceptable for the misbehaviour of some members to put all the others at risk.
I am convinced that these proposals will mean a step change in the economic consistency of the Union, while at the same time preserving the inevitable specificities between those Member States who are members of the euro area and, of course, respecting those who are not yet.
The current situation requires ambition and boldness: the proposals of the Commission will send out a strong message, both inside the EU and worldwide, that the European Union is equal to the task. It is therefore paramount that our three institutions work consistently and in a spirit of close cooperation to finalise and approve these proposals with mutual confidence and belief in our common future.
It is important that all our partners worldwide understand that we are ready to do whatever it takes to defend the euro and the stability of our common currency. The Commission's task is to use its right of initiative to further the common interest of Europe and its citizens. It is determined to fulfil this task and is convinced that these proposals are the right way forward for Europe.
(Applause)
President Barroso, Commissioner Rehn, your proposals are an important step towards strengthening economic governance in Europe. I should like to pay tribute to you for actively exercising your right of initiative rather than waiting to see what the Council's task force comes up with. Our group, the Group of the European People's Party (Christian Democrats), welcomes the proposals and wishes to cooperate closely and energetically with you and the Council to accomplish them. It also wishes to cooperate on taking the next step towards the Community method. What is needed is not new institutions but instead a strong, independent role for the European Commission, and a European Council that commits itself to a common approach and democratic control by the European Parliament. As far as the PPE Group is concerned, these are the ingredients for the legislative proposals you are to present to us in early September.
We have great expectations of the European Semester and the coordination of national action programmes. Important reforms and painful measures in the Member States are necessary in order to strengthen their competitiveness. This will create jobs and prosperity for our citizens. We also have great expectations of the measures to strengthen the Stability and Growth Pact using a big stick: sanctions, that is. You called the series of measures a 'toolbox'. A great deal will depend on the specific contents of this toolbox.
One of our Dutch football teams has the motto 'deeds not words'. Deeds not words is exactly what Parliament wants when it comes to strengthening economic governance, and also when it comes to the legislation on European supervision of the financial institutions. The Council embraced the report by Jacques de Larosière, but this must now be put into practice, transposed into legislation - supervisory authorities with real powers that can start work on 1 January - and so the Council now needs to actually do this. Parliament will be voting tomorrow, but we shall leave the door open for the Council to conclude an agreement during the meeting of the Economic and Financial Affairs Council this month. This means endorsing Parliament's position on the powers for this new supervisory authority, as Parliament will stand firm - not in its own interests but in those of the public - in order to restore calm to the financial markets, so that we can once more look to the future with confidence.
on behalf of the S&D Group. - Mr President, we worry that President Barroso and Commissioner Rehn's proposals lack balance. Fiscal stability cannot exist in isolation from strong economic growth and high levels of employment. Current and further planned austerity measures will lead to a sustained period of low growth, increasing unemployment and further social exclusion.
President Barroso, I know that you do not believe that millions more unemployed and more social exclusion are an acceptable price to pay for rapid fiscal consolidation, but that seems to be the path you are treading. In your proposals of last week, I think you are missing the point. There is a need for a qualitative leap in European economic policy and in its governance, but that should lead to a balanced policy agenda combining fiscal responsibility with economic effectiveness and social fairness. You have left out several highly relevant options that would really mean a qualitative leap in this field. Real economic policy coordination should provide for a more differentiated consolidation plan for Europe, instead of the short-sighted 'one size fits all' austerity agenda that makes no economic sense.
Second, you must come forward with an economic policy agenda for jobs and fiscal consolidation. Today, we only have an agenda for cutting deficits at the expense of jobs.
Third, we need strong proposals on how to safeguard proper public financing for the recently agreed Europe 2020 strategy, including new tax revenues from financial transaction taxes and other sources. We also urgently need operational proposals from you, the Commission, on how to shift the tax burden away from labour as rapidly as possible. Taxation on labour is far too high in a number of Member States.
Last but not least, you have stopped short of positive incentives, rather than negative sanctions, in a renewed Stability and Growth Pact, although that could be a very promising path to tread. I hope you will reconsider and come forward with a more balanced set of proposals in the autumn.
Mr President, I am satisfied with the presentation of the package by the President of the Commission and, if I may give my opinion, I would suggest that you bring it in as soon as possible on the basis of your right of initiative. Put it on the table of the Council and put it to the European Parliament, because that is the mechanism by which the Union operates. The Commission has the initiative here.
I would thus like to wish the newly-introduced working group much success, but ultimately, the Commission will have to abide by its responsibilities and put a proposal to the various institutions.
Nevertheless, Mr President, some questions remain concerning this package.
The first question, which is fundamental, is: who will manage this economic governance? Will it be the Member States, the Council or the Community institutions - that is, the European Central Bank and the European Commission? For the European Parliament, it is very clear: it has to be the Community authorities, because I have never seen the Member States demonstrate an ability to exercise this control themselves. This does not work: it has never worked in the past, and it will not work in the future either.
Secondly, I agree that penalties should be envisaged, but not only concerning the Stability Pact, because, as you have said, this is only one aspect of the policy. We must also do this, for example, with regard to competitiveness, structural reforms and the European economy. There must be penalties, and on this point, I would ask certain Member States to show more consistency. They defend - even demand - penalties relating to the Stability Pact, but when we talk of penalties with regard to Europe 2020, from the competitiveness perspective, they are much more reticent. It must be one thing or the other. If we want penalties, they must be applied across the board.
My third comment is that we must also think, President of the Commission, of a strategy for economic growth. We cannot just say that we will reduce the deficits. It is necessary to make this reduction - and as a former budget minister, I want to reduce deficits - but apart from that, we also need an economic growth policy, and the only authority that can provide that is the European Union. The Union has borrowing capacity, and it has projects for the pan-European infrastructure that we need, as Mr Monti's report emphasises, and the Commission must therefore make proposals in this direction too. It must do this not only with a view to reducing the deficits - which is necessary because the Stability Pact requires it - but also with a view to developing a credible economic growth strategy so that we do not fall into the trap of economic stagnation of the Japanese type, such as the one that we experienced for more than ten years.
The fourth element is the 'stress tests'. I am satisfied with the fact that the decision has been taken to publish these. We already needed to do this a year ago, as the Americans did, because it is the only way of reopening the supply of credit in the private sector.
Finally - and I will stop there, Mr President - as regards financial supervision, let us be very clear on this point: there will not be any agreement with Parliament if the Council and the Member States do not respect the fact that in case of conflict, it is the European authority that has the last word. This is a crucial point. Furthermore, this element is repeated in the Commission's proposals. This is the point of departure for the Larosière exercise. The Member States have not yet understood. It is time, Mr President, that the Member States accepted this, otherwise there will be no agreement on financial supervision.
Mr President, many thanks for making this statement. I feel that we ought to be very careful not to continue falling back into old ways in a very difficult situation. What I mean by 'old ways' is the right-wing political groups stressing budget deficits and competitiveness problems, while the left-wing groups go on about the risks of austerity measures.
As far as I see it, we will not make any progress this way. On the other hand, if you take a fair look at this proposal, you have to admit that it contains signs of significant progress, for instance, with regard to budget coordination. It also specifically mentions imbalances. Until recently, it was still almost impossible to talk about imbalances seriously. The fact that sanctions should be applied if Member States fail to do their homework is also a sign of progress.
However, this proposal also has blind spots, which is something that we can no longer expect ourselves and our citizens to accept. This obviously means economic governance and also talking about tax issues. The fact is that we have tax havens, large areas of the economy which go untaxed, not to mention excessive tax competition. These must stop being taboo subjects and obviously have a place in such a statement.
Secondly, it is not enough to coordinate budget policy only in the way it was described. We must ensure that budget policy is anti-cyclical, enabling it therefore to counteract crises. Unfortunately, this does not feature in the text. Furthermore, it is evidently still taboo to say that in the case of imbalances, there are countries in deficit and those in surplus, with both sides making their specific contributions. Unfortunately, you are still lacking the courage to explain things as clearly as is necessary.
We have problems with asset prices and bubbles. This is not mentioned explicitly either. The point I am making is that we should at least be honest and put aside our ideological differences after this crisis for a time and take a look at all the causes of the crisis, instead of looking for these problems from a one-sided perspective. It is no longer enough now to make progress in this crisis. Our citizens are expecting holistic, comprehensive solutions, which is no more than they deserve.
on behalf of the ECR Group. - Mr President, economic governance, supervisory architecture, cross-border crisis-management tools: these are all very important areas post financial crisis. For all these areas, we need to ensure that a strong and resilient structure is put in place as soon as possible in order to ensure that we can deliver a common set of rules, whether for Member States accounts and their behaviour in economic governance, or for our financial services reform. We need to arrive at consensus. The outcome needs to be fully implemented by all 27 Member States and be fully complied with. Any new institutions need to be apolitical, and recruitment of staff should be based, above all else, on merit and ability to do the task at hand. We need to send a clear signal that these new procedures and supervisory authorities, especially the proposed European Systemic Risk Board, are necessary and can work for the benefit of our constituents and our collective economies.
The recent financial and economic crisis has necessitated bold measures. In Europe, we have identified areas in which regulatory gaps can be bridged and will hopefully also improve the transparency of our markets and financial services as a whole. The recent agreement on the US finance bill has been hailed by many as putting the US regulatory reform ahead of the EU. I do not agree with this conclusion. If we can find agreement on the supervisory architecture over the coming days and weeks, we will have a robust EU framework centred on a new European Systemic Risk Board and the three Lamfalussy committees transformed into European authorities. Once this framework has been established, it should aid the safety of the financial system and may even prove to be a vehicle to improve the functioning of the single market in financial services.
In following this agenda, we do, however, need to ensure that any new authorities established work effectively with national supervisory bodies and that, at all times, these discussions and negotiations strive for the best structure, the best supervision and the best outcome, rather than whether it is 'more' or 'less Europe'. I commend the Commission's focus in addressing the key issues of concern and believe that although by very different methods, we will soon end up with a global financial system which is safer and better serves our economy.
Mr President, in the wake of the measures proposed by the Commission in recent weeks for averting imminent crises, involving the euro rescue package and the Europe 2020 strategy, which entail rescuing the banks, on the one hand, and cuts in social security, salaries and pensions, on the other, we now have proposals on the table for reforming the Stability and Growth Pact. In our view, these proposals from the Commission on reforming the Stability and Growth Pact are taking the wrong tack.
The Commission, following in the footsteps of the working group headed by President Van Rompuy, does not want to modify the Pact's content, but instead wants to tighten the sanctions and enforce compliance. Both the Commission and Council are calling for further controls and penalties for Member States in deficit. This has not worked in the past and will not work in the future. However, we in the European Parliament's Confederal Group of the European United Left - Nordic Green Left are pleased, at any rate, that the harshest penalties proposed by the Commission for countries in deficit were not applied.
Regulation of the financial markets is a matter of urgency. We will do our part to resolve the situation. Europe's citizens already have to pay; the Council now ought finally to swing into action as well.
The problems with the Stability and Growth Packet are not down to lack of compliance or the rapid reduction of the annual deficit to the Maastricht target of 3% of new debt. This may stall growth in the euro area, which is still feeble and at risk.
The current economic imbalances in the EU must be eliminated, as this is what speculators are making their living from. One of the ways to do this is for the countries with strong economies to drop their aggressive export strategies which have devastating consequences for the other countries. These countries must make greater efforts to strengthen their domestic markets and boost demand instead. Criteria such as the unemployment rate and the prevalence of poverty must be included in the Stability and Growth Pact. What is needed is to carry out a fundamental overhaul rather than tighten its conditions.
on behalf of the EFD Group. - Mr President, Commissioners - the three amigos if I may call you such - last session, Mr President, you had to scamper away. I think you had an urgent appointment. You missed my words of wisdom and I am glad to see that you are here to receive them today because I feel I have some wisdom to offer.
You are in such a pickle actually, are you not? One could almost feel sorry for you but of course, you know, you bring some of this on yourselves. The common currency experiment - which is an experiment that was doomed to failure; I remember lecturing at Cambridge University back in the 1990s, explaining why it was deeply flawed and could not work and I gave it about 10 years and I am afraid it looks as though I was right - was flawed even by your own rule book. What in fact happened when you introduced it was that you actually tore up your own rule book. You threw it away! You welcomed every fiscal dysfunctional economy into the eurozone, including Greece - which was going to hasten the demise of the eurozone, and it thus comes as no surprise. I am not a johnny-come-lately to the demise of the euro. It was always written in the runes, as it were. To suggest now that we have only just found out that Greece was broke is intellectually dishonest. I was in the City at the time and we were buying Greek bonds at 10% coupons, they fell to five and it was a one-way bet - a bit like having the winner of the horse before the race had even started!
Our commercial banks have got themselves into a terrible problem because they buy junk debt. They redistributed junk debt repackaged at triple A ratings. What are our central banks doing now? The very same thing. They are buying in the secondary market and buying junk bonds, repackaging them as triple A. This is just how we got into this pickle to start with. If you want to get out of this mess, you need to get rid of the political-establishment support for commercial banks and get rid of central banks, which are actually part of the problem, not the solution.
(FR) Mr President, the Europe of the euro area is experiencing an economic decline without precedent in its history, the weakest growth in the world, the highest unemployment, and a continuing decline in competitiveness. This total failure was made manifest to everyone during the recent sovereign debt crisis which affected Greece, and which will continue to affect Spain, Portugal, Italy and France, resulting in the general impoverishment of the populations of these countries.
You had promised the convergence and the harmonisation of the European countries. Today, you are rushing us towards a social and political explosion. You alone bear the responsibility for this current tragedy, because by imposing a policy of a single, uniform and totalitarian monetary policy on economies which are so divergent, you have encouraged frenzied speculation among some people and economic sluggishness among others.
How can we explain the fact that Spain, which had a budget surplus of 2% in 2007, is today experiencing a deficit of 12%, if it is not because the single and uniform interest rates of the ECB have encouraged unprecedented real estate speculation in this country, which today is covered with empty houses? The entirety of the European banking sector is effectively contaminated by this new sub-prime crisis, the consequences of which are causing great fear.
Your only response is to propose that we persevere in this error, though you have been wrong on everything, by continuing the takeover by the European Union and increasing its powers through upstream control of the national budgets, and by imposing on the European people an unprecedented austerity policy. Errare humanum est, perseverare diabolicum - to err is human, to persist is of the Devil.
President of the Commission. - Mr President, I will try to respond to some of the concrete questions. First of all, to Corien Wortmann-Kool, thank you for your support. In fact, we believe this will enhance the credibility of our Stability and Growth Pact, but also of the euro and of the European project as a whole, and we believe that Parliament should be closely associated with all these efforts.
At the last European Council, when President Buzek was there, I made a point that Parliament should be kept fully informed of progress in the discussions on the future economic governance of Europe.
I think that some of the concerns expressed by Mr Hughes and Mr Bisky should be considered, but in fact, I believe that our proposal does consider your concerns because in this proposal, we are saying something new: that the Stability and Growth Pact is not everything, that we are linking analysis of the implementation of the measures in the framework of the Stability and Growth Pact with macro-economic imbalances, with the problems of divergences in competitiveness. So, in fact, what we are proposing is a holistic approach that does not look only to the macro-economic aspects but also to growth, as Guy Verhofstadt was suggesting, that looks also to innovation, to the reforms. That is precisely our goal with Youth 2020. And yes, Mr Verhofstadt, as you rightly mention, we are concerned now with the internal market and we are working on this taking the report presented by Mario Monti - a report I have asked him to present - as a basis and Commissioner Barnier will come in the Fall with some very important proposals, a Single Market Act in fact to address this issue.
So our proposal is not only about prudence in macro-economic aspects. Today we are discussing economic governance, so it is natural that we look at what did not go well, but I want to underline this point - this is not just about macro-economic prudence: it is also about growth and about our reform agenda. What is new here is that now, for the first time - if, of course, this plan can in the end be agreed - we have this comprehensive approach, trying to look at all the aspects. You will remember that, when I presented the Europe 2020 strategy some months ago, in some quarters in Europe some people were saying 'No, you cannot link it to the Stability and Growth Pact because it may weaken the Stability and Growth Pact'. I think that everybody agrees now that discussing the macro-economic constraints without discussing structural reform, and without considering competitiveness, makes no sense.
That is why I also do not agree with the idea that our approach is not balanced. In Youth 2020, we were fighting for targets such as reduction of poverty, education, and employment to be included. So it is, in fact, a very balanced approach, one in which we try to combine all the economic policy instruments, to have a European dimension and a national dimension and to have, at the same time, objectives related to competitiveness and objectives related to social inclusion and to education.
You are right, Mr Verhofstadt; it is up to the Commission to make the proposals, and that is what we are doing. We will come with formal proposals. What is going on is a very important reform. That is why Olli Rehn is also giving his very important input on behalf of the Commission to the task force. We believe it is important to bring some consensus, because these are very important changes, but of course, when the time comes to present the legislative proposals to the Commission, we will do so, and that is exactly the best way to have your Parliament associated.
But we also want to include in this holistic approach macro-economic surveillance with TIF. It is not only about sanctions for those who do not fulfil the criteria of depth and the deficit. We will also try to reinforce coordination in terms of the macro-economic imbalances.
Some of you also mentioned supervision, and, once again, I would like to remind you that our aim remains to have the new authority in place at the start of 2011. We need this since our whole reform is based on this new architecture. In the last few days, a new Belgian Presidency has renewed momentum towards a deal. There is a predominant sense of constructive pragmatism on both sides. I am grateful for the ambition Parliament has been demonstrating. I am grateful for your strong support. At the same time, I would like to ask you to continue your efforts to reach a satisfactory deal in the next few days. I believe it now appears within grasp. The Commission has contributed through various compromise texts and is very pleased that progress is being made. We now call on both colegislators to maintain the positive dynamic. As Mrs Swinburne said, and she is right, the Americans have announced the political agreement but they have not yet legislated. Sometimes when you read the press, it appears that the Americans are much more advanced than we are. It is not true. President Obama said in the G20 that he got a bipartisan agreement. Great, and we welcome that. But in reality, we should be able to conclude our legislative work long before our American partners and I believe we should do that to show also our leadership in terms of the financial regulation and supervision at the global level. That could only enhance the role of Europe in this matter.
Finally, some of you spoke about stress testing. As you know, the Commission is playing an important role in promoting transparency and communicating the results of the ongoing stress testing of banks. At the last European Council, I made a strong plea to make the results public. As you know, this is a national competence, but I am indeed extremely pleased with the European Council agreement to do so. This decision should reassure investors by either lifting unfounded suspicion or by dealing with the remaining problems that may exist. I am very confident about the overall resilience of the EU banking industry, but we must identify possible pockets of vulnerability and deal with them. A fully transparent stress test provides the opportunity to do so. Backstop mechanisms must be designed for activation in case of need and this is, once again, a national responsibility. If state intervention is needed, this will be examined by the Commission in a timely manner under the Community State aid rules. The European decision to publish individual results of bank stress tests was indeed very well received by the G20 leaders in Toronto last weekend and we believe this is the way to restore confidence in our overall system.
So, as you see, we are acting on several fronts. Today, I have presented to you the proposals made more recently in terms of economic governance, but we should not separate those proposals from the other efforts that we are pursuing to give more coherence to our economic policy, to understand that a monetary union without some kind of economic coordination does not make sense. I believe that the stability of the euro is in the interest of all our citizens. It is in the interest, certainly, of the euro area, but it is also in the interest of all the European Union and of all those who want open markets, open economies and open societies.
(Applause)
President Barroso, thank you for your approach and for your cooperation with the European Parliament.
The debate is closed.
Written statements (Rule 149)
in writing. - I welcome the proposals made by the Commission. I can give an assurance that we, in the EPP and EP, are ready to work with you and the Council on this. Europe is about mutual and close interdependency. The current crisis demonstrates how important it is to know more about the challenges and worries the other members experience and to be prepared for common actions. The proposed coordination and control mechanisms are needed, taking into account both the European dimension and specific realities of each Member State. However, control mechanisms are not a solution but just a means. They should not be overestimated. The solution is in more efficient work, entrepreneurship and innovation. The key to the solution is prevention. Special attention should be paid to budgetary frameworks and the state debts. Instead of breaking financial control into smaller clusters, monitoring of the macro-economic situation as a whole is needed. The new dual system of incentives and sanctions deserves support. I also encourage making better use of Eurostat. Reliable and timely data is a crucial component to making the right decisions. I encourage the Council to show political will on the measures proposed, so that we can proceed to the practical implementation phase.
I should like to draw fellow Members' attention to the problem of national budgeting. The tax system cannot serve solely as a means of collecting revenue; it must also regulate and optimise economic development and guarantee the social protection of the population. The tax system in Latvia is targeted at one result only - how to collect revenue today by any means possible. It seems that the Ministry of Finance of the Republic of Latvia has no care for what will happen tomorrow. The programme being followed by the Latvian Government could, in a year's time, lead to a situation in which the number of taxpayers will be drastically reduced and the level of unemployment will significantly increase, resulting in enormous social costs. This is all the result of illogical and unclear tax legislation. In individual cases, tax authority personnel can apply this 'turbid' legislation in any way they choose. This has led to the bankruptcy of many businesses and commercial structures. We must urgently set up a committee, a group of experts, charged with an evaluation of the Latvian tax system. What is happening in the tax sphere in Latvia today can be described in one word - illegality! In essence, the state is depriving entrepreneurs of their liquid funds.


2. Conditions for access to the network for cross-border exchanges in electricity (
- Before the vote on Article 2e:
rapporteur. - (ES) Mr President, I wish to add the following to Article 2e. I will read it out in English:
'The European Network of Transmission System Operators for Electricity shall collect all relevant information regarding the implementation of the network codes and submit it to the Agency for evaluation;'.
(Parliament agreed to accept the oral amendment)