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José Manuel Durão Barroso
President of the European Commission
Statement by President Barroso on the Blueprint for a deep and genuine Economic and Monetary Union
28 November 2012
Good afternoon ladies and gentlemen,
Today the European Commission took very important decisions regarding the main economic challenges. We have approved this Blueprint for a deep and genuine economic and monetary union and we have also adopted the Annual Growth Survey for next year and some documents that complement this Annual Growth Survey.
And the reason for this is, of course, to get the economy in Europe back on track. We are still fighting a crisis that has many facets. It is a debt crisis, which we are combatting mainly through fiscal consolidation. It is a financial crisis, which we are fighting with a banking union and financial supervision. It is an economic crisis, which we are solving also by fundamentally overhauling the governance in the euro area and in the European Union. And also other more concrete measures.
The Annual Growth Survey 2013 leads us down the road to recovery by focusing on the five priorities designed to revive growth and create jobs. These are not new priorities because what we need to do now more than ever is to implement the reforms to which all the Member States have already committed. This year we have focused, not only in the implementation of these reforms but also on the need to do them in a true spirit of equity and social justice. We are aware of the concerns and you will see this Annual Growth Survey keeping the line but addressing some of the more urgent needs of equity and cohesion. Vice President Rehn will lead the next press conference and will give you more details on this strategy, immediately after this press conference.
But as you know, there are now still important challenges to the success of the European Union, to the success of the Single Market and to the very existence of the economic and monetary union itself.
We must counter this crisis of confidence by showing that we are ready to move ahead and strengthen cooperation and integration in the financial, fiscal, economic and also in the political field. That is what the Blueprint on a Deep and Genuine EMU seeks to achieve. And I think it is important that we are now announcing this Blueprint. Of course this is a document for the future, the short, the medium and the longer term, but it should be also in parallel with other measures that have been taken. Here let me highlight a very important decision of the Eurogroup, last Monday and early morning of Tuesday, regarding Greece. It is an additional proof that we mean business, we are serious when we speak about the irreversibility of the euro area. Against many that were betting on the contrary, we will do whatever is necessary to keep Greece in the euro area.
And the Blueprint we are presenting today is the European Commission contribution, is our vision of the EMU, also for the debate that we are going to have in the European Council in December and also as part of the exercise in which I'm also involved as one of the so called "four presidents". The report that has been prepared by the President of the European Council, together with me, and the Presidents of the Central Bank and the Eurogroup. But as I said in my State of the Union address, and as I said in the European Council and in the European Parliament several times, the European Commission as such wants to give its contribution, what is its vision regarding the steps for a truly economic and monetary union. And this is what we have adopted today in a very open, interesting and deep debate in the College.
The Blueprint starts by identifying the weaknesses in the functioning of the EMU and afterwards it maps out the measures needed to underpin it in future.
Of course we know that there will be some that will be calling for more discipline. Some will be calling for more solidarity. The main message of the Blueprint is that we need both. We need a process in the economic and monetary union of combining this increased solidarity with this increased discipline, so to make the EMU really credible, and to deepen it, to become a genuine economic and monetary union.
Is it true that our report, our Blueprint, is ambitious, but if the Commission does not set out this ambitious vision, who will? I also believe it is a realistic vision because of the sequencing it proposes.
It combines high level of ambition with a proper realistic sequencing. It is I think also the broadest and most balanced vision that has yet been tabled regarding the future of the EMU.
This is a vision rooted in the Community method, allowing the Euro Area to integrate further and quicker while preserving the integrity of the European Union at large, as we have always stated. It is important, it is indeed indispensable for the future of the euro that there is a deeper integration in the euro area, but at the same time we want to do it through the Community method, in respect of the Treaties, with the European institutions and be inclusive as possible – open to all Member States, including those that are not yet in the euro area.
It is also, as I said, a realistic proposal, setting out incremental steps to this deep and genuine EMU. We are showing what we can still do using secondary legislation. We can do it immediately and we are also presenting what will require Treaty change. And this is the basic distinction between the short term – what we can do without any further Treaty change – and what we will do after today's agreement on Treaty changes. In the short term – in the next 6 to 18 months – we are putting forward an ambitious work programme including the start of the fiscal capacity for the Euro Area. We propose to root this fiscal capacity initially in a Convergence and Competitiveness Instrument. It would be created under the framework of the EU economic governance and within the EU budget, but would be distinct from and outside the MFF. It would combine the strong commitment to concrete structural reforms with financial support for them, set out in contractual arrangements between Member States and the Commission. It would be granted for reform packages that are important both for the Member States concerned and for the good functioning of EMU. By doing so, this instrument would help overcome various constraints where they currently hamper implementation of these reforms. It would therefore be a central tool to effectively address imbalances in the Euro Area. This would not require Treaty change. This can be done in the short term.
Another thing we can do without Treaty change in the short term would be to set up a single resolution mechanism for banks.
And we also propose that a strengthening and consolidation of the Euro Area's external representation should be pursued. It would aim at streamlining and, where possible, unifying the external representation in international economic and financial organisations, which can be fully achieved on the basis of the current Treaties. For example, our objective is to have a single seat for the euro area in the IMF, because indeed the euro area Member States are, together, the biggest contributor to the IMF.
In the medium term, which is in the next 18 months to 5 years, we would further strengthen the collective conduct of budgetary policy and go further in coordination of economic policies, especially in the field of tax policy issues as well as labour markets, given the significance of labour mobility for adjustment capacity and growth within the euro area. We would also further enhance the fiscal capacity. In this timeframe, a clearly reinforced economic and fiscal governance framework would also allow us to envisage setting up a debt redemption fund linked to strict conditionality, as well as the issuance of short-term eurobills, requiring of course a closer coordination and supervision of Member States' debt management. These steps would require a new legal basis in the Treaties.
Beyond five years, the blueprint proposes a full banking, fiscal and economic union equipped with a true stabilization and shock-absorbing function. This would require a more comprehensive overhaul of the Treaties.
The Blueprint anchors the EMU within the Treaties, preserving the link between current and future Euro Area Members. The deepening of the EMU should fully exploit the potential of EU-wide instruments and, wherever legally possible, should be open to the participation of future Euro Area members.
In parallel, we should attempt to integrate the ESM and the Fiscal Treaty into the EU framework.
As we move towards deep and genuine EMU, it is crucial that we ensure commensurate democratic legitimacy and appropriate accountability. In the short term, we will focus on taking practical measures to foster parliamentary debate during the European Semester. This will involve the European Parliament in discussions on the Annual Growth Survey. Beyond the short-term horizon, we will propose institutional adaptations to strengthen European Parliament decision-making powers in the context of Treaty reform and we are also mentioning the possibility of deepening the cooperation between the European level of democracy, namely the European Parliament and the national parliaments that also have a role in these matters, namely on budgetary issues.
So we are also, even if this is not a central point of the document, it is very preliminary what we are now suggesting, but we are also addressing some of the political issues that have to be seen when we speak about the deep and genuine EMU – important issues in terms of legitimacy and political accountability. These are some aspects of what we believe will be a future political union in Europe, but of course this is in our step by step approach for the longer term. But I think it is important when we take decisions in the short term to know what is our vision for the future and this is precisely what our Blueprint now proposes.
I now hand over to Vice-President Olli Rehn and also to Commissioner Michel Barnier, who will explain the Blueprint to you in more detail.