The EU Commission President José Manuel Barroso just spoke to the European parliament in Brussels in hope of addressing the on-going economic problems of the 17 common currency nations. Below is the full text of the speech. Eurobonds and tighter integration are being re-visited, it will be interesting to see how the leaders of the individual nations react to this given that they are very obviously the targets of the speech.
I welcome this opportunity to debate the measures that are urgently needed to respond to the turmoil in the euro area and on the global markets.
We are confronted with the most serious challenge of a generation. This is a fight for the jobs and prosperity of families in all our member states. This is a fight for the economic and political future of Europe. This is a fight for what Europe represents in the world. This is a fight for European integration itself.
We must acknowledge the reality – our citizens, the markets, and our partners in the world have not yet been convinced that we are capable of taking on that fight and winning it decisively.
In the cacophony of criticisms, counter-criticisms, magic bullets and miracle panaceas that are proposed on a daily basis, the truth has been drowned out – that solid, feasible and concrete proposals have been made. That they have been agreed upon. But they have taken too long and have not yet been fully delivered. So my first concern is implementation – implementation of what we have agreed.
That is why it is now imperative that we demonstrate our joint resolve to act upon our decisions without delay. Now is the time to prove our full commitment to the principles of solidarity and responsibility.
All Euro area member states have made commitments and are making efforts to put in order their public finances and to implement the economic reforms that are a pre-condition for growth. All of these member states must now demonstrate in a convincing way that they are serious. It is not enough to make plans. It is action that counts.
And those Euro area member states that are providing the assistance so crucial for the survival and the stability of the euro, must show even more clearly that they are determined to deliver support to countries that implement their programmes, as they have agreed.
They must acknowledge that this is also to their advantage. Supporting the euro is not just an act of solidarity towards others. It is an act of self-interest. None of this is easy and we in the European institutions must recognise that. We must make the case and persuade our citizens why they should give their support.
National politicians need to do much more to explain the benefits that the euro brings. And we in the European institutions have a special role to play: we must do more together to make the case, and I count on you to do so in your countries.
Reassurance for our citizens, for investors and for our world partners can only come from the conviction that a comprehensive approach is being delivered in the short term, the medium term and the long term.
So what is needed now, in the short term?
First of all, the implementation of the package agreed on 21 July by all Euro area Heads of State and Government, the President of the European Commission and the President of the European Central Bank, in the presence of the IMF.
It is an important package which includes measures to increase the flexibility and effectiveness of the EFSF that will help to ensure financial stability.
It foresees lowering the lending rates, extending the maturities and allowing the facility to do more than it can today: in particular to intervene also in a precautionary way and to intervene on the secondary markets. So these decisions are important, they were important, but they are not yet implemented and the obstacles raised by some in implementing the crucial decisions already in the days and weeks following the meeting exacerbated the extraordinary developments in the sovereign bond markets during August. And of course, the fact that there were also difficult moments on the other side of the Atlantic creating doubts regarding the situation of the United States of America, was also a major factor aggravating the general very negative investor sentiment.
These reflected also an unabated concern among investors that the Euro area is incapable of responding effectively to its own crises because it takes too long to enact its own decisions. So we have to recognise that sometimes there is a real problem between the speed of the markets and the time we take for democratic decisions. Markets are impatient and democracies are usually slower.
The Commission works tirelessly throughout the summer to support the work necessary to implement the decisions. Both Commissioner Rehn and myself came to Brussels to drive forward this work. Therefore I expect all Euro area Member States to make good on their promises and urge them to ratify the 21 July agreement by the end of September.
Last weekend the Greek government has taken significant steps to deliver on their commitments. I urge Greece to finalise these efforts together with the Troika. The perspective of recovery and growth should be made a national cause.
Another urgent priority is the 6-pack on reinforced economic governance. I talked about the delivery gap. It is now almost one year since the Commission put forward ambitious proposals to strengthen governance of Euro area economies.
After all the talk, we are now very close to what the Commission originally put on the table. You, the European Parliament, have played a decisive role in keeping the level of ambition of these proposals. I salute you for that. I would now ask the co-legislators to adopt this package as a matter of urgency.
Part of the leadership we must provide means being honest with our citizens that we are addressing also the structural problems Europe faces. The crisis that we are facing is the result of competitiveness problems.
Within the European Union and also in the euro area, some member states have been lagging behind others, which has led to greater imbalances. The same type of imbalances have also built up worldwide. This has resulted in an accumulation of debts and deficits that are simply not sustainable and have been further aggravated by the financial crisis.
So to tackle the crisis, we must correct the excessive deficits and debts in a determined and sustainable way. This is the only way to create a Union of stability and growth and it can only be done convincingly through the Community method.
We have a duty to learn the lessons of the crisis and to focus on the creation of growth and jobs.
At the top of the agenda are the need to build a strong economy and not use fiscal or monetary stimulus to live beyond our means. We must look at the reforms needed to correct these imbalances so as to create growth and jobs for the future. Growth is key and we must use all instruments available to promote growth and in the European Union we have some instruments from the agenda 2020 to the single market act to promote sustainable growth.
Europe needs to reform to deliver the good jobs, the better healthcare and the comfortable retirement that all Europeans aspire to. The purpose of reform is to strengthen our social market economy; to deliver a fair society where everyone has a chance in life and nobody is left behind; and to equip all Europeans with the skills, talents and opportunities to prosper in the global economy. Our impulse for reform must go hand-in-hand with our sense for fairness and social equity.
A sound economy means also we need sound financial markets. They have to return to their original function of a service industry for the real economy.
The development of their profits must reflect the real economy. We have presented a whole series of proposals to this end, including on short-selling and over-the-counter derivatives. In the next weeks we will go further with proposals to tackle insider trading and market manipulation among others, as well as measures to address concerns over Credit Rating Agencies. As I promised, the European Commission will very soon propose a Financial Transaction Tax.
When it comes to the governance of the Euro area, I am convinced we need deeper and more results-driven integration. And let me be clear: this has to be within the Community system.
A system based purely on intergovernmental cooperation has not worked in the past and will not work in the future. After all, this is why the Community method and the European Union institutions were created by the member states in the first place.
The Economic and Monetary Union cannot function properly only on the basis of decisions taken by unanimity. Because if a eurosceptic fringe can determine the position of one Member State and one Member State can block decisions, the result is that we are not credible. This is not about institutional positioning or power. It is about efficiency and delivery. Markets and investors will trust us only when we will be able to show that we are able to deliver on our commitments in a real determined way.
Moreover, the independent work of the European institutions further strengthens the credibility of our economic and budgetary policies. It is only through the European institutions that the European interest of all Euro area member states can be counted. It is only through the European institutions that we will avoid a fragmentation of the Single Market and a disconnect between the 17 members of the Euro area and the European project of the 27 members that are our European Union. We must keep the Euro united and we must keep the Euro open.
If we want to ensure democratic legitimacy for decisions taken at European level, full unequivocal respect for the role of this House is crucial. If we want European citizens to take ownership of European integration, renationalising Euro area decisions is not the way to do it.
We, the European Commission and the European Parliament, are the community institutions par excellence. And it is our duty to defend the collective European interest jointly.
We must show that the Community actors are strong, united and able to deliver. Delivering also means that we need a better spirit of partnership and confidence between us the European institutions and the Member States, their governments and national parliaments.
The signal I receive time and time again from our global partners, including in the G20 is that the world expects more integrated Europe. In the age of the globalisation everybody expects Europe to be stronger and united.
We are a valued partner in global fora and debates and we have a significant influence on global issues such as trade and climate change because in those matters we are able to act together, united.
But the fact is that our way of taking and implementing decisions in the economic and monetary union is consigning us to punching below our weight. Only by acting together and maximising the benefits of our interdependence will Europe reach its true potential and be able to act as more than the sum of its parts.
The conclusion I draw is crystal clear – The only right way to stop the negative cycle and to strengthen the euro is to deepen integration, namely within the Euro area, based on the Community method.
This is the way to go. It is also the only way for the Euro area to really play the role that investors and global partners expect it to play.
What we need now is a new, unifying impulse – “un nouveau moment fédérateur”, let’s not be afraid of the word, moment fédérateur is indispensable.
The road to recovery is long and it is painful for millions of our citizens and businesses.
But it will not be made less painful by continued procrastination or by presenting as quick fixes ideas that will necessarily take time.
It has become clear that we need an even greater integration of our economic and budgetary policies.
There has been much debate on the need for Eurobonds. Today I want to confirm that the Commission will soon present options for the introduction of Eurobonds. Some of these options could be implemented within the terms of the current Treaty, and others would require Treaty change.
But we must be honest: this will not bring an immediate solution for all the problems we face and it will come as an element of a comprehensive approach to further economic and political integration.
Let us not confuse these projects of deeper integration with immediate necessities. Ideas that would require substantial Treaty change are not going to be a substitute for Greece doing its homework or for Euro area countries strengthening their fiscal surveillance. We must avoid compounding the dissatisfaction in public opinion by being seen as failing to deliver overnight what we already know takes time.
What we need now is Greece to fully carry out its reform programme, is the 6-pack to be adopted and is member states to ratify the July 21st agreements. What is our credibility on deeper integration if we cannot deliver the 6-pack and the 21 July agreement? Only by proving ourselves in this way can we regain the market and public confidence necessary to even aspire to longer-term goals to a more ambitious Euro area and to a stronger Europe.
The Commission will continue to play its role to the full, putting the key proposals on the table that shape both the immediate and the long term response. Proposals that are ambitious and should reflect the interest of all.
What both the citizens and the investors want is political determination and economic discipline. To deliver this, we need more, not less Europe.
Deeper integration is part of the solution. It will happen – not overnight – but in a solid, democratic process with a participation of this Parliament.
I believe that, with courage and wisdom, the European Union will – as was the case in the past – come out of the crisis stronger. It is certainly our duty to work for that.