Local view for "http://purl.org/linkedpolitics/eu/plenary/2005-02-22-Speech-2-051"
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"en.20050222.4.2-051"2
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"Mr President, Mr Rasmussen said that reforms are not possible without economic growth. The reverse is also true: economic growth in Europe is not possible without reforms. Particularly in Germany and France, which are major states with an excessively high government activity rate, high taxes and overly complex social systems, reforms are a prerequisite for economic growth.
We are today discussing the Goebbels and Karas reports, in which the difficulties we face with a common monetary policy combined with decentralised budgetary and finance policies become apparent. The Stability and Growth Pact was created as a linking mechanism and as a prerequisite. The political intention to reform the Stability and Growth Pact will shake the very foundations of the Maastricht Treaty and of European monetary union. The budget policy rules are among the cornerstones of Economic and Monetary Union. The citizens of Europe were given an undertaking that state borrowing would be reduced, an undertaking that after just six years is being reneged upon. The objective of these rules is to maintain credibility and trust regardless of the government in power at any given time. There is, however, a serious design flaw in the Stability and Growth Pact, one on which you, Commissioner, have repeatedly failed to comment.
Where the monitoring procedure is concerned, the Commission has too few powers and responsibilities. The guilty parties are sitting in judgment on themselves, which does not bode well. If the ECOFIN Council does not apply the rules to itself, the Commission is powerless. If there is no will to apply budgetary discipline, reforms will not help either. This is not just a question of rules, but also of political will. The Commission wants to introduce new rules for economically good times. There may be some justification for that, but it is naïve. If the existing means of bringing pressure to bear do not work, how can we expect this to work voluntarily when the economic situation is favourable?
The Social Democrats and the Communists have failed to understand the changes that the euro has brought about. Before the euro existed, the market punished highly indebted states in an open and easily understandable way, by means of high interest rates for government borrowing, high inflation rates and devaluation. As recently as 1992 there were differences of six percentage points.
Just listen, please! You know I am right. Six percentage points! That difference no longer exists. There are no longer market forces that compel states to adhere to financial discipline. Unless the ECB tackles this problem by means of a system of differentiated assessment of state loans, the euro will not remain stable in the long run."@en1
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