Brussels, March 25, 2010
Ladies and gentlemen,
The agreement we found in Europe on a support mechanism in the event of a crisis is a success for the Euro Area States. It was made possible by the active efforts of France and Germany who this afternoon concluded an agreement which we presented to President Van Rompuy and other Euro Area States, who agreed to it at a special Eurogroup meeting at head-of-State-and-government level.
This agreement includes four essential points:
Firstly, a mechanism allowing bilateral loans from Euro Area States, coordinated by the European Commission, which could be implemented as a last resort. If market financing is insufficient, Euro Area Member States will decide on the activation of this mechanism in the Eurogroup framework.
Secondly, these loans will be supplemented by the International Monetary Fund. But we agree on the major part of the funding being European.
Thirdly, Euro Area States agree to enhance coordination of their economic policies. The European Council must become a veritable European economic government. This idea, championed time and again by France, is today becoming a reality.
Finally, we decided to ask President Van Rompuy to set up a working group with the Member States, Commission and ECB to present before the end of the year the measures necessary to strengthen the instruments for the prevention and surveillance of economic and budgetary risks.
So, with your permission, after presenting to you the broad outlines of this agreement, I’d like to make three brief observations.
The first observation is that the agreement we’ve found is clearly of a preventive nature. The goal is quite obviously not to use it. We expect it to result in normalization of the market situation with respect to Greece.
Secondly, although this agreement is preventive, that doesn’t mean it’s any less operational. Clearly, if need be, it can be activated as a last resort. It’s an insurance policy for Greece enabling her to bring in the courageous reforms she has set in train without being penalized by speculation and irrational market behaviour.
Thirdly, the Euro Area is taking control of its destiny. We have agreed to put a mechanism in place to manage crises in the Euro Area. This is a major step which is also compelling us to rethink our economic and budgetary surveillance mechanisms so that such crises do not reoccur. (…)
Q. – On the IMF intervention. The International Monetary Fund intervenes precisely when there’s a monetary problem. In this case, Greece’s problem, according to the latest information, is actually of a budgetary nature. So what mechanism would allow the IMF to intervene to help a country which hasn’t got a monetary problem but solely a budgetary problem?
THE PRESIDENT – We had to come up with a compromise in order to find a good operational agreement. Europe’s all about compromise. There were three main opposing positions. There were those taking the view that a problem of imbalance in the Euro Area ought to be an issue, a problem solely for the Euro Area States. There were those who thought that since the IMF existed we might just as well use it. We had in fact used it: I was the first to do so, when I held the presidency – the Council’s rotating presidency – for Hungary, which didn’t need to go and request help from the European States. Then there were others for whom it wasn’t an ideological problem, who considered that, after all, we could get everyone on board once, symbolically, the Euro Area had taken responsibility for the major part of the problem and we were asking the IMF to do something as well.
Really, that’s honestly how we managed to find an agreement. I’d like nevertheless to remind you that we had to go on working hard this afternoon to get a good agreement.
You know very well that this has been the story of Europe for 50 years. Who can say he/she’s coming [to an EU meeting] not prepared to make a single compromise? Moreover, compromises serve the cause of peace, prosperity and building Europe. We had to find the happy medium. The ECB President had a pretty set position, as did the President of the Commission, and other States… France tried to be a unifying force in order to bring the points of view closer together, yes, clearly. I think that this way we’ve really got an operational position. (…)
Q. – What was the reaction of the other 14 Eurogroup countries when you presented the Franco-German agreement?
THE PRESIDENT – I didn’t present it, nor did Mrs Merkel. We had a meeting with Herman Van Rompuy, the Greek Prime Minister and the rotating presidency, and I believe that everyone was extremely relieved that there was a negotiated agreement. You know, just think! Let’s think about the opposite course. Imagine there hadn’t been an agreement between France and Germany. Imagine the consequences. So I think that, as always in Europe, countries are relieved when Germany and France publicly display their determination to collaborate and work together.
Q. – Is the planned economic government something for the 27 countries or just for the Euro Area. How is it going to work? What’s the job of this economic government?
THE PRESIDENT – It’s a Euro Area decision, so a decision of the 16, since here too we have to be exact. The decision we have taken is a Euro Area decision committing the 16. What I think will happen is that the working group’s proposal will be adopted in the text of tomorrow’s European Council, since what the working group will be doing can concern the 27. On the economic government, the Euro Area 16 clearly wish to strengthen their coordination and their economic policy. It’s a debate which is going to flourish at the level of the 27.
France’s position is the following: the Commission implements the economic policy determined by the European Council. This is clear. The European Council ensures the coordination and decides on the guidelines of the economic policy in line with developments in the European and global economic situation. The Commission implements.
Clearly, Europe’s economic government is the European Council, at any rate that’s the position I defended and the Euro Area has adopted. You know perfectly well that this position is still a matter of debate in the 27, since our British friends aren’t quite with us on this. That’s a fact, but things are progressing. A few months ago, it was even difficult to use the expression “economic government” inside the Euro Area, now the Euro Area has adopted it. (…)./.