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Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro
Speaking points by Vice-President Rehn on the European Parliament draft report on the role and operations of the Troika with regard to the euro area programme countries
European Parliament plenary session
Strasbourg, 12 March 2014
President, Honourable Members,
Our debate today represents an important input into the debate on the workings of the Troika. I want to thank both rapporteurs and welcome the work of both committees. I hope you have found our contributions to the reports useful.
In the reports, there is much common ground and a balanced recognition of achievements and challenges. I know these reports have been intensively debated in the committees.
They rightly recognise that when facing a sudden, even existential crisis, decisions had to be taken under extreme circumstances which necessarily involved difficult choices. We agree that the macroeconomic imbalances that made these decisions necessary were built up in the decade before the crisis in the countries that faced this situation.
When the current Commission took office, and I started as Commissioner responsible for economic and monetary affairs over four years ago, the debt crisis had just hit Europe and especially the Greek economy was in freefall. The risks suddenly became aggravated and created extreme pressure to bring the economies back onto a credible path, without any existing functioning eurozone mechanisms to do this necessary job.
Let's not forget that the aim of the economic adjustment programme was to avert a default by the countries on their social and economic obligations - which include the welfare benefits of their citizens and the wages of their public employees.
In other words, the programmes did not mark the beginning of the crises, but the start of their resolution.
In combatting the crisis, Europe's strategy has been based on extending solidarity in return for solidity.
It is only fair that the reports recognise the emergency in which Europe had to suddenly create - from scratch - the stability mechanisms through which solidarity could be extended.
They reflect the financial and political realities: for granting financial assistance, the Finance Ministers of the other euro area Member States have had to assume responsibility before their own parliaments, in the name of legitimacy and democratic accountability.
The Troika was created to bring together strong economic policy expertise and multiple sources of funding in order to prevent an economic meltdown in Europe.
Each institution has its own independence and respective mandate, which we of course have to respect. Their role has been legally codified in the ESM Treaty.
For the Commission's part, you have codified this in the "2-pack" legislation, which sets out the rules on transparency and accountability of the Commission in its role as a member of the Troika.
As you are aware, in this plenary, as well as in the committees, we have regularly debated the situation in programme countries.
Yes, it has been a difficult journey and the painful process of adjustment is behind us in many countries; but the economic turnaround is now tangible and visible. The European economy did not collapse, nor did the euro break up. The economic recovery is now gaining ground and firming up.
Growth has resumed in Ireland and Portugal; unemployment has started to decrease; Ireland successfully completed its programme in December as planned; so did Spain its financial sector programme in January.
For Portugal, the economic outlook was just revised upwards, and the country remains on track to exit its programme successfully in May.
We all know about the difficulties of getting the Greek programme on track in the first years of the programme, especially because of the lack of national unity and the strong vested interests in the country. But there are now realistic signs of the Greek economy recovering as the current account is in surplus for the first time in decades, and there is an apparent primary surplus in the country's public finances for last year.
President, Honourable Members,
It is self-evident that the Troika is a complex arrangement, which carries out its tasks within the specific mandate it has been given by the ESM Treaty and the Member States. This is, of course, always in co-operation with governments, parliaments, stakeholders and social partners of the countries that faced a possible default and requested financial assistance themselves in the first place.
Looking ahead, your reports raise issues on the future governance of financial assistance mechanisms, such as a European Monetary Fund, which can well be pursued in the wider institutional discussions on deepening the EMU towards a genuine stability union possibly with elements of a fiscal union. This, in our view, should be done in line with the Community method.
We are all aware that a deeper fiscal union will not be realistically achieved overnight: for the Commission, the guiding principle is that stronger solidarity can only be pursued in return for stronger responsibility, which obviously raises issues on sovereignty – and thus, such deepening can only emerge in a profoundly democratic process.
The European Parliament is at the core of this democratic debate. I look forward to continue to participate in this important debate.