Local view for "http://purl.org/linkedpolitics/eu/plenary/2011-10-12-Speech-3-034-000"
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"Mr President, the European Council of 23 October will be held against a backdrop of urgency over the threat of systemic crisis now unfolding. There are many issues on the European agenda: the Minister of the Polish Presidency mentioned most of them. I will not speak in detail about many of the important challenges, from the conference in Durban to very important external items. I will focus today on the most urgent response to the financial and economic crisis.
At the European Council, I will strongly urge the Heads of State or Government of the euro area to complete and complement the measures they agreed on 21 July. This is crucial, to give a much-needed injection of confidence to market participants.
It means making operational the agreements taken to increase the flexibility and effectiveness of the EFSF and the future ESM, to allow for precautionary programmes based on conditionality, on which the Commission and the ECB should be consulted in advance. Stronger monitoring and surveillance could be included as part of the Stability and Growth Pact. But the EFSF must be more than just a firewall. It should have real firepower. We should maximise its capacity.
To further consolidate the expression of unity and responsibility inherent in these crisis resolution mechanisms, we must accelerate the adoption and entry into force of the permanent ESM – preferably to mid-2012. We must trust that the European Central Bank will continue to provide the background of financial stability needed for all this to be done.
The strengthened and more flexible EFSF is in the interest of all euro countries, including, I am sure, the Slovak people. Our common currency plays a crucial role in investment decisions, in growth, in jobs all over Europe. I commend those in Slovakia who have risen above partisan attitudes and voted in favour of what is important for all Slovak citizens, for the euro area and for the European Union as a whole. And I call upon all parties in the Slovak Parliament to rise above the positioning of short-term politics and to seize the next opportunity to ensure a swift adoption of the new agreement.
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The third element of the road map is the need for a coordinated approach to strengthen the banking system. Let us be clear – over the last three years, huge efforts have been deployed to this end; billions of euro in aid and guarantees; an overhaul of banking supervision, boosting capital requirements and protecting citizens’ deposits.
However, all this has not yet been sufficient to lift the weight of uncertainty hanging over the banking system, or to halt the volatility and pressure on European banks. While these doubts persist and spread, sufficient confidence cannot be restored to allow liquidity to flow again and to oil the growth that our economies so badly need. For confidence to return, we need to fix the sovereign debt problem, which can only be done through a coherent package.
We must therefore urgently strengthen the banks because, in fact, those two issues – the sovereign contagion and the banks – are now, whether we like it or not, linked. This must be coordinated through the Member States, the European Banking Authority, the ECB and the Commission. The strategy should comprise five key steps. It should include all potentially systemic banks identified by the European Banking Authority across all Member States. It should take account of all sovereign debt exposure in full transparency; it should involve a temporarily higher capital ratio after accounting for exposure. Banks that do not have the required capital should present and then implement plans to have it in place as swiftly as possible and, until they have done so, they should be prevented from paying out dividends and bonuses by the national supervisors.
Banks should use private sources of capital first. If necessary, the national governments should provide support as a next step, as a last resort, drawing on a loan granted from the EFSF. Any public support should be compatible with the State aid rules. The Commission intends to extend the existing State aid framework for bank support beyond the end of 2011.
To break the vicious cycle of uncertainty over sovereign debt sustainability and over growth prospects, we need comprehensive solutions now. In my State of the Union address to this Parliament two weeks ago, I promised responses. Today we are delivering: I can announce that the Commission has just adopted a road map for stability and growth. And we have set out concrete terms and timelines for its implementation.
Naturally, details on capital ratios and evaluation methods should be proposed by the EBA with national supervisors, who are best placed to judge on this. At the same time, the ongoing work on a new financial regulation system should be completed as swiftly as possible. To that end, the Commission will present its remaining proposals to implement the full G20 commitments by the end of this year. We also urge rapid adoption of the financial transaction tax I presented to you two weeks ago.
The fourth element is to frontload policies that consolidate stability and boost growth. We all know that most Member States do not have much room for fiscal stimulus. Those who do should use it. However, all Member States have at their disposal the means to implement structural reforms, to focus spending on priority areas, and to remove obstacles to growth.
As I said to you in my State of the Union address, growth is within our reach if we can break down the barriers that stop money, services and people from flowing through our Union as they should.
This means firstly: getting more out of what has already been agreed at EU level.
I am talking about implementing, for instance, the Services Directive. I am talking about delivering on the digital agenda. I am talking about maximising our trade agreements. These are measures that we can take today, that do not require significant additional investment or budgetary effort, but which can have an immediate and significant benefit for our companies, for our citizens and for our economy.
This means secondly: accelerating adoption of what is on the table. There are many proposals on the table that we can fast-track for adoption. I am talking about unitary patent protection. I am talking about the Energy Savings Directive. I am talking about concluding ongoing trade agreements.
This means thirdly: fast-tracking the most urgent growth boosting proposals. I am talking about the Single Market Act. I am talking about forthcoming proposals to facilitate access to venture capital because, today, there is a lack of venture capital in Europe and this is especially felt by SMEs. I am talking about the Young Opportunities initiative to increase youth employment.
Where agreement on fast-tracking proves difficult, we should be able to use enhanced cooperation so that those who want to move forward are not held back. Frankly, dear Members of this Parliament, it is time to say that the speed of the European Union should not always be the speed of its slowest member. We need sometimes to use reinforced cooperation.
You are the first to whom I have communicated the main elements of this road map. I am sending the President of Parliament the document that we have just adopted.
All this should be done in conjunction with targeted investment at European Union level, such as through the Europe 2020 Agenda, where we propose also our project bond initiative. The Commission will propose it next week, and will maximise the resources of the European Investment Bank so that it can lend to the real economy.
So, reforms, implementation of everything that we have agreed, as well as trying to fund some of this effort through new sources of investment, using the appropriate instruments we have and some we can create, such as the project bonds.
The fifth and final element of the Commission’s proposed road map is the pursuit of sound economic policies by Member States, especially those in the euro area, reinforced by stronger Community governance.
We now have the six-pack – and once again I thank you for your support in getting these ambitious proposals approved. We have the European Semester and all that it entails in strengthening governance. But we must go further to match the ambitions of our monetary policy with those of our economic policies. As we have said, we must complete the monetary union with a real economic union. The future of the single currency depends upon it.
In its road map, the Commission is proposing a much stronger euro area dimension in planning, implementing and assessing national policies. This dimension will be backed up by strict constraints enforceable at euro area level and is based on an enhancement of the Community approach, which will reinforce also Parliament’s role in economic governance. We will further reinforce the role of the Commissioner for Economic and Monetary Affairs in full respect of the Treaty.
There are other actions we can take very quickly without changing the Treaty.
We must improve working methods and crisis management between the Commission, the European Council and the Euro Group. Proposals to this end will be made soon, in line with the agreements of 21 July, by the President of the European Council, the Commission President and the President of the Euro Group, and the aim is to have a more streamlined process between the euro area summit, the Euro Group and the euro area working group.
Secondly, we should streamline and reinforce the instruments we have, not only by rapidly implementing the six-pack, but also by strengthening the European Semester by intensifying surveillance and integrating the Euro Plus Pact into the Semester – hence reinforcing the Community method.
We must also go further than the measures set out in the six-pack, by setting out provisions for strengthening the economic and budgetary surveillance of euro area Member States requesting or receiving financial assistance from the EFSF, the ESM or other institutions. The Commission will make a proposal to the Council and to the Parliament under Article 136.
We must monitor the national budgetary policies of Member States in excessive deficit procedure or countries under programmes through a Commission-Council procedure which would enable the European Union to intervene.
Over the last three years, the European Union has come out with specific responses to different aspects of the crisis. Now it is time to bring them all together, to once and for all meet the depth of the crisis with a full, comprehensive, credible response.
For example, in serious cases, a second reading of draft budgets could be requested to suggest amendments in the course of the year and to monitor budgetary execution. The Commission will make a proposal to the Council and Parliament under Article 136 setting out the graduated steps and conditions that should apply in such cases. You see that we are really speaking seriously when we mention the need for more discipline, more integration. It means more euro, more Europe. That I think should be the goal of all of us.
All this is in addition to the proposals on a more unified external representation for the euro area and options for ‘stability bonds’ that the Commission will bring forward by the end of this year.
One final point on governance: in the State of the Union address, I said that the Commission would present a single, coherent framework for better economic governance based on the Community method. We are developing that right now.
The proposal will ensure compatibility between the euro area and the Union as a whole. It will be done in a way that aims to integrate the Euro Plus Pact, because coordination and integration must be carried out at a single, Community level. How can we talk about coordination and integration in a disintegrated manner? It is obvious that we need a Community approach to do that. Yes, we need stronger governance. Yes, we need the euro area Heads of Government to meet more frequently. But no, we do not need to create yet more institutions or yet more titles, when we already have the structures in place to do the job.
It is essential that we do not create a division between the 17 members of the euro area and the 27 Members of the European Union, most of whom wish to join the euro.
Such a division could deeply harm the European Union as a whole. It could call into question the single market or be an invitation to renationalisation of Community policies. That is why we need to have stronger governance for the countries that are in the euro area, but to have it in full compatibility with the rules and the
for the European Union as a whole. This is why it is essential to keep the Community institutions – Parliament, the Commission – at the very core of the process of coordination and integration.
The role of these institutions is also to guarantee this link, to guarantee that no Member State is jeopardised, to guarantee that Europe remains strong and united.
The solutions to Europe’s crisis are, I believe, known to most of us, but it requires courage and political will to grasp them. To do so is to fully acknowledge our interdependence and to take a bold leap towards further integration. The problem of Europe is not too much integration; it is, in fact, the lack of a European approach.
The elements in this road map are interdependent. They must be implemented simultaneously. They must be implemented immediately. This is the only way that the European Union can, convincingly: first, give a decisive clear response to the problems of Greece; second, enhance the euro area’s backstops against the crisis; third, make a coordinated effort to strengthen the banking system, including through recapitalisation; fourth, frontload stability and growth-enhancing policies; and finally, build a more robust and integrated economic governance.
Such changes to the nature of our Union may need to be enshrined in changes to the Treaty; changes that must keep the Community method at their core.
But one thing is for sure – as the crisis narrows in on us, I see no other option than to act now. So the fact that we are considering more ambitious changes for the future should not be an excuse not to take the decisions now and this is why we need to act together in a unified and coherent way.
The crisis is not partial. The response cannot be partial. Our responses cannot be piecemeal. That is why this road map is a single, comprehensive approach and all its elements must be implemented in parallel.
This is the message I intend to take to the European Council on 23 October and for which I would like to have your support, the support for a united and stronger Union.
These are the five points of our road map, the road map I put before this House today, and that I will take to the European Council on 23 October as a coherent and comprehensive plan for Europe that embodies a Community approach.
This is how.
First, on Greece, we need a decisive solution. Doubts and uncertainties over Greece’s future jeopardise stability in the entire euro area and beyond. The time has come to definitively remove these doubts. This means three immediate and sustained actions. First, paying the sixth tranche of the loans to Greece. The result of the Troika mission has sent a positive signal in this respect. Second, deciding a sustainable solution for Greece within the euro area. This should be through an effective second adjustment programme, based on adequate financing through public and private sector involvement, backed up with robust implementation and monitoring mechanisms. Third, we also understand that Greece must fully carry out its programme in a timely manner, with continued support from the Commission’s Task Force and maximised disbursement of Structural Funds focused on growth.
But there is a more general problem in the euro area. Despite the assurance given by Heads of State or Government on 21 July to support countries under programmes, and despite their assurances that private sector involvement would be strictly limited to Greece, contagion risks have not been contained. To decisively put a stop to this threat that is hampering all our efforts, we must strengthen the euro’s firewalls. We must have credible, stronger instruments."@en1
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