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Brussels, 4 November 2011

Interview of President Barroso with BBC Today programme

BBC: What is going to happen if the Greek government collapses some time today or over the weekend. Will the money that is meant to be paid to Greece to tidy it over will be paid?

JMB: What we expect to happen is to have a government of national unity and that government will conclude the agreement with us for the new programme – an EU and IMF programme. So I believe that all the problems will be solved.

BBC: But you are assuming that there is going to be a government of national unity but that is very far from being a realistic possibility according to many people.

JMB: I think that this is what is going to happen, because what is the other option for the Greek people is to have default and to have real difficulties to pay their wages to the public servants, to the schools to the hospitals which will lead to paralysis of the country. I am sure that the majority of the Greek people are reasonable people that do not want this kind of chaos to come to their country.

BBC: Well, one option apart from the one that you've just spelled out is that there might have to be an election. The government will fall tonight and there will then have to be an election with a period of enormous uncertainty. During that period how will Europe react?

JMB: We have an agreement, including with the Greek government about the principles of a new EU – IMF programme. That was agreed. Afterwards, I agree, uncertainty was put in the programme because of the referendum idea. Apparently now they have rejected the idea of postponing that decision to a referendum and they are committed – both the government and the main opposition party are now saying that they want this programme with the EU and the IMF to be completed. So I hope that they will agree soon, because it is in their fundamental interest, and of course it is also in the interest of the euro area as a whole.

BBC: Many people would argue that Greece has never actually acted and in fact has many times not acted in its own interest, let alone the interest of the European Union. The fact is that there is a strong possibility that Greece will leave the eurozone?

JMB: This is up to them. When you are a member of the euro area it is like you are a member of any club – you have to respect the rules. And it is of course up to them to decide if they want or not to keep their position in the euro area. We believe that it is in their interest and we would like them to stay. We have been saying this very clearly, because I think the principle of a country leaving the euro is not a good one. But at the end, it depends on them being able to implement decisions taken together.

BBC: The fact is if I have asked you this question a few days, weeks, months ago, you would not even attain the prospect of Greece leaving the eurozone. Now it is being accepted.

JMB: I will not say accepted, I can say admitted. But the problem is in these current times we are seeing many things we have not expected years ago. That is the reality not only in Europe to be honest and not only in Greece.

BBC: And when you hear other European leaders, very important ones like Mr Sarkozy and Mrs Merkel, even hinting at the possibility that Greece might be thrown out of the EU, is that what is going to happen. What is your reaction?

JMB: I did not hear that from them. What I have heard from them and from others is in fact the possibility of a country that does not respect the commitments to leave the organisations to which it belongs, namely the euro. But this is a decision of the country itself, not a decision of the other countries.

BBC: So it is entirely possible that the Greece could leave the eurozone, stay in the European Union and everything will then carry on as before?

JMB: I am not going to speculate with scenarios I do not believe are credible, really. I think what is going to happen is that Greece will finalise the agreement with the European Union and also with the IMF because it is in their fundamental interest and I think there is too much speculation, I leave the speculations to the speculators.

BBC: All right.

JMB: What they now have to do is to focus on their crisis and they have a lot to do.

BBC: Let's leave speculations then and go to certainties. It is certain is it not that the Euro cannot carry on the way it has in the last 11 years. Something must change and that something is that you must develop a stronger financial system, in other words some sort of fiscal union within the Euro zone countries and that has to happen not in the distant future but very soon indeed.

JMB: Yes, that is right.

BBC: And what does that mean in practical terms?

JMB: In practical terms it means that we have the common currency with 17 countries and we have not yet created all the instruments that the common currency demands. And it is true that this is unfinished business. Until the financial crisis it was possible to live without those instruments but now we have been creating new instruments, for instance, the European Financial Stability Facility and in fact if you look at the work that was done in the last 2 years it is impressive, I mean everything that was created. We in the European Commission have been asking for it for some time. Finally the member states agreed on these principles some time ago and now we are creating those instruments for instance so called firewalls so that we have the financial capability to act in case there is a situation like the one we have seen in Greece or other countries. And this is an unprecedented challenge and we have to react in an unprecedented manner to be honest but that is fair to recognise. But at the same time I want to tell you that I have no real doubts about the determination of the Euro area countries to solve this problem because the level of interdependence in the Euro area is so huge that I believe – and I am now working on this day and night with all the Member States including Germany and France and the others that they will do whatever is necessary to protect the stability of the Euro.

BBC: And you say fiscal union must happen quickly, how quickly?

JMB: I think it was the former British Prime Minister who said that in politics you have to have targets and dates but not put them at the same time…

BBC: … well yeah but…

JMB: It is important to have this target but you know in the European Union as in any democracy sometimes decisions take more time than expected. We have seen during this crisis that governments and parliaments are slower than markets and one of the issues we have to address is this: how can we have a more effective way of responding to this situation and for that more integration and more discipline at the European level is needed. Now if you look at the debate in the Euro area nobody is speaking about dismantling. Everybody is discussing how we can proceed, how much powers should we now [let's say] delegate to some common…..

BBC: And would that require a new Treaty?

JMB: It may require. Some of the changes do not need a new Treaty. There is a Treaty article in the current Treaty that allows the euro area members to agree. But some more fundamental changes may require a Treaty change. That is why I am saying all the time let's not pretend that the response to this crisis is a revision of the Treaty, because it will take time. Some of the decisions we may take now. And when I say now, it is really now, next week that we need to take these decisions. But yes for more fundamental changes, like for instance some kind of a common issuance of bonds, a kind of common treasury, and rationalisation of debt – these require more time and Treaty change.

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