Saturday, 22 May 2010

Herman Van Rompuy on task force meeting to improve EU economic governance

The European Union (eurozone) and the International Monetary Fund have pledged €110 billion to rescue Greece and up to €750 billion for other contingencies with regard to euro stabilisation. Markets have continued to tumble.

It would have been astonishing if the EU finance ministers had approached the meeting of the task force on improved economic governance without a sense of urgency.

Initiated by the European Council and chaired by its president Herman Van Rompuy, the task force on crisis resolution and better budget discipline held its exploratory first meeting in Brussels yesterday, 21 May 2010.

Given the urgency and gravity of the issues, we have reasons to read the statement of Van Rompuy carefully and in full:

Remarks by Herman Van Rompuy, President of the European Council, following the first meeting of the Task force on economic governance (21 May 2010)

Today we had the first meeting of the Task Force on economic governance. It was a very useful meeting. I could feel a sense of urgency and a spirit of cooperation around the table. Everyone shares the will to go forward together.

As you probably know, the Task Force consists of representatives of all 27 Member States – mostly Ministers of Finance -, plus Commissioner Rehn from the Commission, President Trichet from the European Central Bank, Prime-minister Juncker from the Eurogroup and myself as chairman. All key actors are around the table.

Today was the start of a process. We did more than just identify the issues on the table. We have already found agreement on the four main objectives and also on the direction in which we will move forward for each of them.

I consider this as an important step upon which we can build in the forthcoming meetings.

Now, which are the four main objectives on which everybody agreed?

First objective: We should achieve greater budgetary discipline. In other words, we need to strengthen the Stability and Growth Pact and make it more effective.

Second objective: We need to find means to reduce the divergences in competitiveness between the Member States, at least when these divergences are too big. This is necessary to reach a more even economic development within the European Union, and in particular, in the euro area.

Third objective: We need to have an effective crisis mechanism in order to be able to deal with problems such as those we see today in the Eurozone.

The fourth objective is linked to the third: We need to strengthen economic governance, in institutional terms, in order to be able to act quicker and in a more coordinated and more efficient manner.

These are the four central priorities on which we will move forward.

The Commission contributed with an important Communication which contained a number of proposals. I, personally, have put some thinking points on the table as too have some Member States. Undoubtedly other Member States will follow suit with their proposals before the end of May. I welcome this active participation in our collective work very much.

On the basis of all this we will work on a comprehensive agreement. The Task Force we will meet twice more before the summer. Preparatory work will be done by a group of 'Sherpa's'. We will present a "Progress Report" to the European Council of 17 June. What do we aim for?

Our agreement should result in a stronger economic cohesion within the Union. This is vital for 27 countries with a common internal market and for a zone of 16 countries sharing a single currency.

Moreover, such cohesion is required in order to act in an effective and credible manner. The approach should be seen in the context of our considerable efforts to strengthen the structural economic growth within the Union, such as we are doing with the EU 2020 strategy.

A final point: we all want to draw the lessons from this difficult period. In the past, corrective measures were taken too late; the available legal instruments were not used sufficiently. That's why we need to act in a number of ways:

• in prevention and in correction;

• in the fields of the budget and of competitiveness;

• in the eurozone and in the European Union as a whole.

All Member States and all EU institutions need to work together on this.

I am deeply convinced that we can surmount this crisis. The measures we have taken for Greece (on 2 May) and in a broader framework (on 7 and 9 May) have proven that the European Union is able to act. We must now continue this work so we can avoid a repetition of these problems in the future.

Therefore, as I said previously, I am very glad that all members of the Task Force share the will to bring this about.

We are still planning to have our work ready before the European Council of October, instead of December.

Not a bad start for the Van Rompuy task force, but the challenges are huge for our economic security and future prosperity.

Ralf Grahn