NEWS

Are too many voices putting European unity and the euro at risk?

On a global level, there are those who say there is a cacophony of too many voices of leadership in the EU on financial matters. Basically, everyone has an opinion. Is this a problem? And, if so, how do you solve it? First of all this latest step of the financial crisis has become increasingly systemic by nature, which calls for a comprehensive and systemic response by the EU and especially by the eurozone. That is a work in progress and the Commission is working together with member states to this effect. There is freedom of speech in Europe and it is valid also in relation to political leaders. Of course, it is up to each and every leading politician to decide how he/she uses that freedom. In my view it is very important that we reinforce verbal discipline in Europe in economic policymaking and this can only happen with clear-sighted leadership and inclusive consultation of all the key players who have an impact on economic policymaking in Europe. Do you think the Eurobond idea is dead? No. I find it intellectually attractive and, more than that, I signed a proposal in May for the Commission, which became a Commission proposal on May 9 to create a European financial and stability mechanism, based on the Union. The Commission’s proposal was rejected mainly because, for some member states, it [was too similar to] Eurobonds. We are ready to review all ideas from member states and in this context one has to review all the options in order to reinforce the financial backstops in Europe and in order to reinforce the systemic response to the systemic crisis. Are you concerned about the power struggle in the markets and in the EU bond markets and by the fact that Europe is sometimes too small or too slow to react to it? I think, first of all, and even though we speak of the systemic nature of the current episode of the financial crisis, it is a matter of both the fiscal fundamentals of some member states and the systematic speculative attacks on the other hand. Therefore, if it has this kind of dual nature it is important to tackle both programs, which means those member states that have been in the market need to take very concrete action in order to ensure fiscal stability and financial sustainability. And that’s what Spain and especially Portugal are doing for the moment. At the same time you need to have a systemic response to this systemic challenge in the markets and that’s why we created the European Financial Stability Mechanism, the Greek loan and then the mechanism facility for up to 500 billion euros in May, and that’s why we are currently reflecting on our next steps to reinforce our arsenal in order to contain future speculative attacks. And you don’t see German public opinion loosing patience with us in the South and not supporting these kind of mechanism and even going to a dual euro system? In my view, the idea of two euros should be killed before it sees the light of day. It will not benefit anybody, it will be detrimental both to the surplus countries and deficit countries, besides being very detrimental to the very idea of European unity. We have much better alternatives in reinforcing our comprehensive and systemic response. I’m certain that the German public can be convinced of the necessity of taking the necessary action as long as we have some policies and we can convincingly make the cases for these policies. It’s a matter of insuring financial stability. In the euro area, we are fundamentally in the same boat and we need to ensure financial stability in Europe in order to protect the foundations of sustainable growth and job creation. Are you afraid that havoc may erupt at the upcoming summit? No. I have full trust in the sense of responsibility of the leaders of the EU member states. Could the pain of Greek citizens as a result of the program ultimately endanger the program? I know that there is anxiety, which is understandable. There are major changes. On the other hand, it’s essential that all the policymakers and the people who have influence in the public debate argue about the best alternative about Greece. To my mind, the economic reform program is clearly necessary. It will be difficult for a time, but Greece will shortly see better economic times and there is already light at the end of the tunnel. As I said, economic growth will [begin] in the middle of next year and lead then to growth in the coming years. You said that Greece should be able to borrow by mid-2012. Greece is protected and out of the markets until May 2012, completely out of the markets until 2012. Then the idea is that Greece could partly and gradually return to the markets in the coming year by May 2013 and of course our macroeconomic scenario and Greek program are based on the assumption that growth will return. As growth returns, confidence will be reinforced and it will be possible for Greece to return to the markets.