Euro Area summit/Greece/Euro Area
Brussels, May 7, 2010
EURO AREA SUMMIT
THE PRESIDENT – Ladies and gentlemen, good evening.
The Euro Area is today going through what is very probably the most serious crisis since its creation. Our duty, my duty, was to do the utmost to help unite Euro Area heads of State and government on strong measures commensurate with this exceptional situation. This is what brought me to Brussels a few hours before the beginning of the Eurogroup summit. I’ve had meetings with Mr Van Rompuy, President of the European Council, Mr Barroso, President of the Commission, M. Trichet, President of the ECB, Mr Berlusconi, Mr Socrates, Mr Zapatero and, of course, a long meeting with Mrs Merkel. This evening the Euro Area heads of State and government have taken very important decisions.
The three priorities we had set in the Franco-German letter have been adopted. We, all the European institutions and all the Euro Area member States, are determined to do the utmost to ensure the Euro Area’s stability and unity. We are determined to strengthen its governance and fight speculation ruthlessly by regulating the financial markets.
We have taken two immediate decisions. The first is to confirm our support for the Greek government which, I want to say, has acted courageously. The programme the Greek government has adopted is commensurate with the stakes: it will allow the Greek economy to get moving again on a sounder basis. We will be providing Greece with €80 billion out of a total package with the IMF of €110. Greece will receive a first payment in the coming days before the 19 May deadline. As for France, tomorrow I shall be promulgating the amending Finance Act authorizing the loans to Greece adopted by the French Parliament.
Second decision. We have decided to put in place a European intervention mechanism to safeguard financial stability in Europe. On Sunday, 9 May, the Spanish presidency will convene a meeting of the 27 EU Member States’ finance ministers to finalize in the course of the day the technical arrangements for this Community mechanism. From now on, speculators must know that they will pay the price.
We have decided to go further and learn all the lessons of this crisis by giving ourselves the means to prevent its reoccurrence. So we have decided to give the Euro Area a genuine economic government. The group chaired by President Van Rompuy is therefore going to speed up its discussions and we have already agreed on some key principles; strengthening of economic surveillance and economic policy coordination in the Euro Area; revision of the Stability and Growth Pact to increase sanctions in the event of repeated failure to observe the rules; establishment of a crisis-management mechanism for the future. I have proposed that this in particular means strengthening Europe’s management.
Straightaway, we have decided to take all the measures necessary for achieving our budgetary objectives in accordance with our commitments. Every country will take the measures required by its own situation.
Finally, we’re absolutely determined to fight speculation by strengthening the regulation of the financial markets. We’re going to regulate derivatives and raise the rating agencies’ ethical standards.
We also agreed to step up work on managing crises in the financial sector. We’re going to work at national and international level on an initiative to ensure that the financial sector contributes significantly to the cost of crises. The Commission will adopt the proposals Mrs Merkel and I made. The Europeans are determined to put these issues on the agenda of the G20 meeting in Toronto in a month’s time.
Today was the hour of truth for the Euro Area: either we let the markets decide the euro’s future in our place, or we took the necessary measures to put an end to speculation and emerge from this crisis stronger and more united. This is what we have decided this evening. I refer you, of course, to the extremely clear communiqué which the Euro Area Council has decided to make public.
1 MAY RESCUE PACKAGE/COMMUNITY MECHANISMS/EURO AREA STABILITY
Q. – How, despite this – admittedly very substantial – package, which was launched on Sunday, do you explain why the markets reacted as they did in the following five days? At the end of the day, it didn’t seem to discourage the speculators either.
THE PRESIDENT – That package was intended to address Greece’s situation. Today the whole Euro Area and not just Greece is under attack. So we’ve decided on a very important package designed to address today’s and not last week’s situation. This is why we’re activating community mechanisms. For Greece we activated bilateral mechanisms. We’re now working on Community mechanisms, so it’s the whole Euro Area which has decided to defend itself. (…)
Q. – Can you clarify something about the Community mechanism, which, after all, was decided on this evening. What made the German government, Mrs Merkel, who has for one and a half years, ever since the discussions aimed at trying to find a mechanism began, has always held things up, actually move today, if she has? Why is it necessary to convene an Ecofin meeting? Is unanimous agreement of the 27 necessary? And, if so, are you certain that the other governments outside the Euro Area are going to give their approval to the solution you’ve come up with this evening?
THE PRESIDENT – You’re perfectly familiar with how things are done. To my knowledge a Community mechanism can be put in place only by the 27 and not the 16. Do I have to explain to you that the decisions are taken by qualified majority? (…)
What I can tell you is that we’ve defined a strategy, that we all know what stage we’re at and what we’re determined to do. This means us keeping to the letter and spirit of the treaties and respecting everyone’s independence, but moving in the same direction. We won’t allow the Euro Area to be destabilized. Because we have to remember that this is about Europeans’ savings, jobs and the returning growth which we won’t allow to be destroyed by the greed of a few people: that’s clear. But I can’t go into any more detail here because it would be tantamount to explaining what our lines of defence are, when you know perfectly well how this kind of crisis is managed. I really believe that this evening there’s total Euro Area solidarity on the European response.
So why are we moving from the 16 to the 27? Because in the Treaty, Community mechanisms are activated by the 27. And decisions are taken – for those who didn’t know or had forgotten – by qualified majority, not unanimously. May I make so bold as to think that it’s in every country’s interest for us to stabilize the euro, including the countries which are outside the Euro Area but would be impacted by failures within it.
As far as France and Germany are concerned, we argued for a response commensurate with the situation; I think that the text we’ve put together is of a clarity which is – how can I put it? – rarely found on this subject and commensurate with the seriousness of the situation. I’m not dramatizing things, but I’m not underestimating them either: we have to be clear-headed. Moreover, if we don’t stabilize the situation, all the other financial centres in the world would be impacted too. This is a serious matter and we have decided on a response commensurate with its seriousness. (…)./.