SPEECH/09/160
José Manuel
Durão Barroso
President of the European Commission
"The G 20 –
a unique opportunity"
Pre G 20 press conference
Brussels, 31 March
2009
- The G20 will not end this crisis overnight. But it can, it must, it will, make a difference.
- For the first time ever in an economic crisis, the world is working together – and not against each other. The European Union is leading by example.
- There is convergence around the EU's common position. We have a unique opportunity to re-shape globalisation.
- We are building on our long experience in Europe of cross-border cooperation, transnational and indeed sometimes supra-national rules. We are also making full use of our social market model.
- The key to recovery is boosting global demand. Demand means jobs. And jobs are our first priority.
- I believe this summit will be judged on five main aspects. First, the world-wide coordination of fiscal stimulus . Second, to create lasting demand, we need a confidence stimulus. This requires a very ambitious reform of financial markets. Third, we need a global governance stimulus, to reflect the 21st century world. Fourth, we need a trade stimulus. Fifth, we need a development and climate change stimulus. There can be no recovery without fairness vis-à-vis the developing countries and coherence with our fight against climate change.
- So when we speak about stimulus I believe it is important to have this idea – it is a stimulus in terms of demand, a stimulus of confidence, a stimulus of global governance, a stimulus to trade and a stimulus to development aid.
- In Europe our fiscal effort is over €400 billion. It will rise to nearer €500 billion. The priority is now to implement the discretionary part of it quickly, and in full. We must focus on implementation, focus on coordination.
- Comparing the size of new spending programmes and tax cuts is not the way to measure the response to the crisis.
- We have to judge the effectiveness of the stimulus on outputs, not inputs. What matters is results. What matters in the medium term will be jobs saved and jobs created. This is our first concern now. And our actions must leave us better placed for the future, through smart investment in greening and new technologies, smart green growth.
- We saved millions of jobs in the EU through rescuing banks. That action was not designed to help bankers, but to prevent a chain reaction of bankruptcies and redundancies many times worse than what we have seen.
- Every economy is different. In Europe as well, we have some differences and we are different from our major partners. So we have to adapt the instruments to the different national circumstances.
- I believe we need to invest now, that is why we need to spend, but we need to be able to pay the money back.
- Taking on unsustainable debt would damage all our futures. The G20 conclusions must also reflect the consensus on the need for fiscal sustainability.
- I think in a time of crisis we must be responsible and not forget the most important medium and long term challenges. The problems will not disappear. Climate change has not disappeared because of this crisis, and the needs of the developing world indeed are increasing.
- So I think we need a strong commitment from the G20 for success to a global deal in Copenhagen, and also to keep our commitments regarding the Millennium Development Goals.
- I also believe that this crisis offers us an opportunity for investment in smart green growth. The world should also target its investment on the low carbon sectors of the future, as we are doing in Europe.
- The fiscal stimulus can only work if we get banks lending again. The EU and the US are both moving forward on removing so-called "impaired assets" from banks' balance sheets. The London summit will endorse the global framework and global action agreed by Finance Ministers of the G20. That agreement to large extent reflects proposals put forward here in the European Union, proposals made by the European Commission.
- But supply of credit is only part of the story. We need demand for credit. From companies who want to create jobs and keep jobs. Families who want to buy homes. Sustaining demand requires this fiscal stimulus. But equally important, it requires trust in the financial system.
- That is why more regulation, effective sensible regulation, is essential. Not to suffocate financial markets, but to resurrect financial markets. Because we know there is a problem of confidence in those markets.
- We must put ethics back into the system. Markets only work if rewards are based on long-term success.
- The EU was the first to act. For example on credit rating agencies, on capital requirements, on deposit guarantees. The Commission will very soon take action on hedge funds, private equity and remuneration.
- I am pleased that last week our American partners and friends also announced their intention to come with with proposals on capital requirements and hedge funds.
- The challenge for the G20 is swift, coherent and global implementation of financial market reform.
- That is why I believe the G20 should make specific commitments on capital requirements, hedge funds, credit ratings agencies, accounting standards and on remuneration.
- We also want action on tackling tax havens and uncooperative jurisdictions. I welcome recent positive moves by several countries. We also need sanctions with teeth, to protect not only EU taxpayers but also developing countries - who are deprived of crucial tax revenue.
- International financial institutions must be more effective, more representative and better resourced. We must massively increase IMF resources to help economies in difficulty. The EU will, as was agreed at the European Council, provide 75 billion euros more – 100 billion dollars.
- The G20 must give the Financial Stability Forum and the IMF stronger mandates.
- The FSF must include all G20 members, including of course the Commission, as was already agreed. It must work with the IMF to provide early warnings of emerging macroeconomic and financial risks. And take early action to tackle those risks.
- We need colleges of supervisors for major cross-border financial firms. Swift decisions in Europe, based on the conclusions of the report which I asked the de Larosière group to present, can help us drive the global effort on supervision. The Commission will make detailed proposals to the June European Council. I am happy with the good overall reaction that was given to the de Larosière report.
- The question of representation – and responsibilities – in the IMF is important. Representation in international institutions must reflect reality, not history. Emerging economies must have an equitable stake. EU Member States will have to be flexible on how this is achieved.
- There can be no recovery without free and fair trade. The G20 must again say three important words loud and clear: no to protectionism.
- We must move ahead with the Doha talks, which could boost the global economy by at least 150 billion dollars per year.
- Of course, developing countries must not pay the price of a crisis created in the developed world. The London summit must pledge to meet the Millennium Development Goals. As you know, the EU is proposing a global instrument for trade finance. We must provide additional support to help the poorest countries through the crisis.
- I believe the best way to respond to this crisis is not to go for "de-globalisation" On the contrary, what we need is "re-globalisation" We need better globalisation, based on values. Globalisation that is able to follow developments in the economic, technological and financial sectors, with global rules, global principles.
- In Europe, we are well equipped to make proposals for this kind of globalisation.
- I am happy to tell you that EU has defined a common message for this G 20 summit. That is what we did at the latest European Council. It is a message that can and will engage our partners, for the sake of citizens' jobs and prosperity, here in Europe, but also
