Draghi calls for closer economic cooperation in Europe
FRANKFURT, Germany — The president of the European Central Bank, Mario Draghi, said Wednesday that countries in the eurozone should be compelled to take steps to improve the performance of their economies in the same way that they are already required to observe rules on government spending.
At a time when many voters and political leaders are complaining about what they see as the overbearing power of the European Union, Draghi called for more integration rather than less in a speech in London on Wednesday.
Countries that lag behind economically are a risk to their eurozone partners and should be required to change their policies, Draghi said.
“There is a case for some form of common governance over structural reforms,” Draghi said, according to a text of his remarks. “This is because the outcome of structural reforms — a continuously high level of productivity and competitiveness — is not merely in a country’s own interest. It is in the interest of the union as a whole.”
Draghi has frequently called for eurozone governments to take steps to improve growth, such as making it easier for companies to hire and fire workers, removing bureaucratic obstacles to starting a business, and rolling back regulations that limit competition.
But it was the first time that Draghi proposed that such changes become an obligation for eurozone members. Countries in the currency union are supposed to observe rules on government budget deficits and total debt, though the rules have often been flouted.
As an example, Draghi noted that the World Economic Forum ranked Finland third in the world in terms of global competitiveness while Greece ranked 91. “The persistence of such differences creates the risk of permanent imbalances,” Draghi said.
Draghi did not say exactly how common rules would be created or enforced. But he alluded to a “supranational body” like the International Monetary Fund that would push for economic reforms.
Benoît Coeuré, a member of the Executive Board of the central bank, delivered a similar message during a speech in Athens, Greece, earlier Wednesday. Eventually, Coeuré said, countries should transfer some responsibility over public spending to a European authority, part of what he referred to as a new social contract.
But Coeuré added that such a step would be possible only “after growth has resumed, unemployment and inequalities have receded, and economies have sufficiently converged.” [The Associated Press]