State of Europe conference organised by Friends of Europe: comments from Karel De Gucht and Conny Reuter, Secretary General of Solidar
Type: Complete speech
End production: 11/10/2012 First transmission: 12/10/2012
On 11 October 2012, Karel De Gucht, Member of the EC in charge of Trade, and Conny Reuter, Secretary General of Solidar, participated in the Friends of Europe debate entitled "The State of Europe – Escaping the Doldrums" at the Egmont Palace in Brussels.
On this occasion, they gave some comments following the speech of Mario Monti, Italian Prime Minister and Minister for Economy and Finance, on the challenges the European Union and the euro area are facing.
Only the original language version is authentic and it prevails in the event of its differing from the translated versions.
||Soundbite by Karel De Gucht, Member of the EC in charge of Trade, (in ENGLISH): I have been asked to give some comments. Normally, when you give comments, it is quite easy to do so when you do not agree with what has been said. So, I am now a bit in a difficulty because I largely agree with the analysis that the Italian Prime Minister has been making. Let me start by saying that I am very pleased to be again in this room because when I was a Minister for Foreign Affairs, this used to be my official residence and when I compare this with the clinical environment in the European Commission, which is much more like a hospital I must say, it is very difficult for me to convince myself that I made any promotion. The first thing I would like to say is about what Mario Monti said about the balance between the demand and the supply approach between fiscal consolidation and Keynesian economics. Looking at the Belgian budget, I must say that I see no problem that they would go together and, in fact, it would not make any sense to have a Keynesian approach in Belgium without having quite a structural surgery of the budget and my former colleague will certainly agree to do that; there is quite a lot to do about that. I must say when I look at what the task of the European Commission is, that within the European semester, it seems to me that it is very important to focus on structural reforms in the national budgets. Now, we are focused on figures. Nominal values with, of course, a structural component that should obligatory be 0.75 percent on a yearly basis but I think we should really focus ourselves on what is structural and in fact not accept anything that is not structural. Certainly not when you are focusing on, as Prime Minister said, structural balance. If you need a budget that structurally is in balance, you should only look at structural measures to have an idea about whether or not you reach it. Let me give a very recent example in my own country - not because it would not happen in the rest of Europe but I am not always aware of-; they have now decided that it could be a problem for 2012 and that they are going to cash in taxes that are due on the so-called third pillar of pension schemes. Normally you are taxed when you take your pension at 60 or 65. They are now going to let the citizens pay part of it already now. That is obviously not a structural measure. It is not even annual. It doesn't even obey to that criterion and it certainly exists in lot of Member States so I think we should be very rigid in the European Commission on what is structural and what is not. And if we do that, then, we can, I believe, reverse to a structural approach of the balance of budgets and that would certainly help us to have a more growth orientated approach of our economies. So, sound public finances are to my mind very important. It also tells something about the origin of this crisis. It is very popular to say that it is due to the Americans, it ended up in Europe and now we are stuck with it. It is not very fair either. There has certainly been a problem with the so-called very ingenious products that the banking community has produced out of greed, let's be clear about that but we should also recognise for at least one decade we have been spending too much and that has been reflected, of course, in the financial situation of the countries and the big lending position we all have. So, it is too easy to say that it is the Americans. It is not only the Americans, certainly not. It is also merely because we have been spending too much for too long times. A further remark I would like to make, and that is maybe a little dangerous because I have to talk about the European Council, is that I have a fear. Mario Monti, Italian Prime Minister and Minister for Economy and Finance, referred to the decisions of the June European Council which are in fact very important but I have a fear that, in practice, it will be not so easy to deliver on that. For example, on the banking union, which is essential. And without going into the details of that, it seems obvious to me that it will be difficult in the European Council but what you also see is that in the ECOFIN Council, some Ministers are saying exactly the opposite of what the Heads of States and Governments have been saying in the European Council. That is a very dangerous situation, I believe, because it could lead to a new loss of confidence in the whole make-up of the European Monetary Union and that is, by far, the most essential thing. Are we ready, not only in verbs but also in deeds, to make it clear to the financial markets that the European Monetary Union, that the Euro, is here to stay whatever happens. It is only then that we will be in a position to start building up the whole structure of confidence again. So, this upcoming European Council is important for what it will decide but it is also important for what it will stick to and whether they will really be in a position to make sure that the first pillar of the banking union, being the European supervision, will be decided before the end of the year and that is the question that the financial markets are now asking. How are you going to decide this before the end of the year? I think we can, provided that the European Council is as unanimous in the answer as in the demands that they have formulated towards the European Commission and that, by the way, the European Commission has been delivering on. We have been proposing a very good scheme for the European supervision of the banks. A last remark because probably I am already speaking too long. A last remark on the doldrums; it also exists in real life. It is in fact a region very close to the Equateur where the winds are so still that they cannot carry any ships. So, you are stuck there. That is where the word comes from. Now, when you leave that region, you manage to leave it, which is itself evidently very difficult, then, you enter in the region that is called the region of the trade winds also in practice it is real. It is called like that. It is the region of the trade winds and it has been given that name by the Portuguese sailors because they had to pass there to go to their trading post a little bit all over the place. So, I am very grateful to you Mister President that you choose this title for the discussions tonight about the doldrums because it is obvious that the only way we can get out of the doldrums it is by the trade winds. Thank you.
||Soundbite by Giles Merritt, Secretary General of Friends of Europe, (in ENGLISH) thanking Karel De Gucht, giving comments on his speech and introducing the next speaker.
||Soundbite by Conny Reuter, Secretary General of Solidar, (in ENGLISH) on the need of social policies, concerted actions, investments, and the need on solidarity