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European Council

Published on June 21, 2010
Press conference given by Nicolas Sarkozy, President of the Republic (excerpts)

Brussels, June 17, 2010

THE PRESIDENT – Ladies and gentlemen, with your permission, I’ll make this press conference short because we’re running late, thank you for your cooperation; and, moreover, I’m in London tomorrow, St Petersburg the day after – I’d be only too happy if I could return to Paris where other matters await me.

This was a European Council to report and discuss progress, where we talked about a number of issues.

The first issue, which is progressing well, is the determination of the whole Council to adopt a bank tax; this will be expressly stated in the Council Conclusions.

Secondly, and even more important, at the G20 its European members will propose the introduction of a financial transactions tax in some form or other. We want to make headway on both these issues.

Thirdly, we all pledged that we’d work simultaneously on the decisions on both strengthening financial stability and increasing the capacity for growth in Europe. At lunchtime today, we talked in some detail about the working group headed by Mr Van Rompuy. Things are moving forward.

There’s a fairly broad consensus on the need to strengthen the Stability Pact, a fairly broad consensus on the need to strengthen sanctions for those who, preventively or subsequently, don’t honour their commitments. Basically, there’s a fairly broad consensus on narrowing the competitiveness gaps between the different European economies.
We had a fairly detailed discussion on all these issues. The idea is also gaining ground that all these competitiveness issues can’t be solely within the finance ministers’ remit since, for example, social policy and university policy aren’t just in the finance ministers’ portfolios. And so the idea that the 27-member European Council can define an economic strategy is progressing well.

Finally, the idea is also gaining ground that the sanctions and obligations for Euro Area member countries are more important than those relating to countries outside the Euro Area, which, moreover, is logical. This doesn’t mean that the euro’s problems don’t impact on countries outside the Euro Area, but that when you’re in the Euro Area, you must have tougher sanctions and monitoring rules than when you’re simply a member of the 27. We had quite a detailed, fairly wide-ranging debate. I believe that all this is heading in the right direction, even though it’s just a discussion, just a progress report.
We also agreed that the sooner the Van Rompuy group presents its report the better, and we’re looking at October for this.
That’s what I can tell you.

ECONOMIC GOVERNANCE

Q. – We slightly get the feeling that economic governance in fact comes down to making a “bogeyman”, who’s going to content himself with whipping the bad pupils. We find it hard to see the actual governance measures as such. There’s talk about competitiveness in the European Council, that’s fine, but the European Council decides by consensus, it isn’t really, genuinely, governance. Shouldn’t a further step be taken, including, for example, going further in the “Communitization” of budgetary resources, creating a slightly bigger, slightly higher European budget?

THE PRESIDENT – (…) As you know, Europe has to progress stage by stage. What do I see? The words “economic government” are no longer taboo. You know perfectly well this wasn’t the case even a few months ago. Yes or no? People didn’t accept, didn’t tolerate anyone mentioning the idea of economic governance. You aren’t too keen on woolliness and economic governance was the height of woolliness. From now on, the words “economic government” are no longer taboo, on the contrary. Everyone can see this.

Secondly, what is the economic government going to deal with?

Precisely, not just budgetary and financial issues, but also strategies for growth, tax and competitiveness. In short, everything which makes for and creates the conditions for strong, sustainable growth in Europe. I am very happy to accept the idea that this needs fleshing out. Of course, we’re at the beginning when it comes to this concept. The whole thing in a European Council which is run on inter-governmental not federal principles, where the practice is unanimity decision-making. So it isn’t very simple to take all this forward. But I think there’s progress.

Now, admittedly this idea is making more progress in the 27 than the 16, because some European countries – and you are all well aware who they are – still fear, which I understand, being thrown back into a Europe without the same rules, which would be scandalous, or which didn’t move at the same speed, which no one can accept (…).

I am so keen on the economic government idea that I’m ready, and I’m doing this, to agree that a 27-member economic government is something far more positive than the vague economic governance which was being talked about.

The idea is also gaining ground that this issue of economic strategy must be promoted by the Heads of State and Government who, alone, have the interministerial overview enabling them to take the decisions – even though this was the subject of a very friendly exchange with Jean-Claude Junker – although I would see only benefits in, for example, the finance ministers analyzing the differences in competitiveness, between the 27 or the 16. There’s no need for the Heads of State and Government to analyse the problems of competitiveness.

Similarly, as we discussed with President Barroso, the interministerial component is the European Council: the Commission proposes legislative texts and initiates sanctions, but the Heads of Government take the national decisions for the European Community.

EU/SANCTIONS

Finally, I’m trying to take another idea forward: sanctions must be stronger, more immediate and the surveillance more severe when you are a member of the Euro Area than when you aren’t. There’s even a second difference: when you haven’t got an opt-out clause and when you’ve got one, since, as you know, there are in fact three categories of countries: Euro Area countries, the 27 EU countries and, within the 27, the countries with an opt-out clause, I’m thinking of the United Kingdom and Denmark. The level of sanctions and surveillance can’t be the same.
All this is making headway and should lead to proposals from the Van Rompuy group in October. But you are all specialists, you know very well that the European process at the level of the 27 is capable of evolving; to my mind it’s always too slow, but let’s say it: since the onset of the crisis, it has nevertheless speeded up.

I think that saying this, I’m trying to be the most honest possible. I’m not going to lie.

SPAIN

Q. – There are some pretty persistent rumours about the need for a financial aid plan for Spain. Should we be concerned today about the Spanish situation?

THE PRESIDENT – No. (…) We have confidence in the Spanish authorities, complete confidence in the Spanish authorities. (…) No. We take the view that there isn’t a problem. This is an analysis the 27 of us are making, very clearly. It’s one shared by the European Central Bank and the Commission. (…)

STRESS TESTS

Q. – (…) Did you talk about stress tests…?

THE PRESIDENT – Yes.

Q. – Stress tests on the banks, how… (…) Are you going to do stress tests on the public banks…?

THE PRESIDENT – Yes.

Q. …or the results bank by bank…

THE PRESIDENT – Yes.

Q. – Throughout the European Union? Will all the countries do them?

THE PRESIDENT – Yes

Q. – We’re learning lots of things. Are you going to present your pension reform, as your partners have said?

THE PRESIDENT – No. (…)

On the stress tests, yes, there’s a decision to implement them in every country of course. To make things clearer, institution by institution, not globally, because we need to ensure transparency to reassure all the observers and not go on having to manage a succession of psychodramas.

Q. – What do the stress tests consist of? Will you make all the questions public?

THE PRESIDENT – That’s another matter. But on the stress tests, here’s the answer: roughly speaking, before the end of July, I think in fact that the governor had announced it and I’m very happy to confirm it to you. Before the end of July, which doesn’t mean, perhaps that some won’t take place before.

STRENGTHENING FINANCIAL STABILITY/STABILITY PACT/SANCTIONS/PUBLIC DEBT

Q. – You talked about strengthening financial stability, the Stability Pact too. For you, does that have to mean bringing in a number of sanctions and, above all, which ones? Is for example the “public debt” criterion important? (…) Has all this been minuted?

THE PRESIDENT – No nothing has been definitively minuted. So that things are clear, this is a progress report; we’re putting out a communiqué, a number of ideas have been adopted, but a formal decision will be made on it in October. Everything is still on the table. On the sanctions, Mrs Merkel and I said what we think. Seeing a country running an excessive deficit and fining it several million euros or more doesn’t seem to us the best way of reducing its deficit and improving its accounts. So we have both proposed a suspension of voting rights. A number of countries highlighted the need for the sanctions to be the same regardless of a country’s category and for one policy not to be more specifically targeted than the others. The support, development, cohesion funds….

Q. – At the end of the day does public debt have to be more important than just one criterion?

THE PRESIDENT – Public debt is extremely important since the progression is the following order: too much spending, not enough income, too high a deficit and, in the end, too much debt. Sorry to explain it very simply, but that’s nevertheless how it is. Deficit and debt aren’t two different things. The debt is always the sum of the deficits. So it’s a priority. Of course, there was a debate in which France didn’t take part on whether to consider only public debt, or whether to take account of private debt, of household debt as well, or of all these criteria on which, at the end of the day, sustainability depends, to use the jargon. We haven’t yet decided exactly what’s going to be done, but these are issues we’re talking about together and taking up.

PENSION PLAN

Now you ask me: “are you going to present the French pension plan?”

I remind you that pension plans are, of course, a matter for national and not Community decisions – although, of course, every government in Europe is facing an imbalance in its pension system and every government in Europe has provided a demographic response to a demographic problem and all, left- and right-wing, governments in Europe have proposed an extension of working life. Of course, we discuss this, but not strictly as a Community responsibility.

EUROPEAN ECONOMIC GOVERNMENT/COMMISSION/EUROPEAN COUNCIL

Q. – As regards the European economic government, José Manuel Barroso said that the European Commission in fact existed to do this job of economic government and that this was part of its prerogatives. At the European Parliament, MEPs have also emphasized the necessity to honour the co-decision principle and we get an impression from what you’re saying – or at any rate what seems to be in your mind – that economic government is primarily the task of the heads of State. So can you clarify all this for us?

THE PRESIDENT – The Commission has a distinguished role and I set great store by everything Mr Barroso says, but I’m sorry, the Commission isn’t responsible for the competitiveness of the different European Community Member States. I think that when I say this, I’m saying something pretty reasonable. The Commission looks into decisions to do with the competitiveness of each of the European economies, but doesn’t take the decisions. The Commission ensures free competition in the European market; the Commission ensures the the sanctions are implemented; the Commission can send a signal to say “watch out, you’re not following the policy, you aren’t on the right trajectory”. But the Commission can’t take decisions in the place of the member States on the economic policies which each of us has to conduct. That seems a pretty reasonable thing to say and I think President Barroso totally concurs because he’s well aware of the Commission’s function. If you say “the Commission is Europe’s economic government” then you’re saying that in every country the Commission can decide on modernizing research, modifying social law and on whether or not the universities are autonomous. You can clearly see that isn’t possible.

Now what is true – President Barroso is right – is that we must all work together, moving in the same direction, that’s absolutely right. But decisions on competitiveness, for example, we were talking about pension reforms, who takes those decisions if not the governments? The Commission doesn’t take the decisions. Who takes the decision to present national budgets before national parliaments? The governments, not the Commission. For me this goes without saying, there are no grounds for argument here.

As for the European Parliament, it has a very strong institutional role, democratically that matters. You know that, personally, it has been a great pleasure for me to go and discuss with the European Parliament, and when France takes on the G20 presidency, I shall be very happy to go and present the objectives to the European Parliament. I think this is very important. But everyone must do their own jobs.

G20/BANK TAXES

Q. – What message are you taking to the G20, because things aren’t very clear on bank taxes?

THE PRESIDENT – Yes you’re right: first of all, you’re perfectly right when you say things aren’t very clear, but all the same it’s pretty complicated.

There are two different issues. Firstly, the tax on the banks which will provide money for a fund to assure taxpayers and savers that what happened will never happen again and, in the case of the countries where the plan has cost money, reimburse to taxpayers the money mobilized to rescue financial institutions. These are the two cases in which the bank tax proceeds would be used. In actual fact, for France, the bank plan not only didn’t cost any money, but brought in €2.4 billion, so it’s a tax on banks. France is determined to introduce a bank tax and create an insurance-related fund, at least in some form or other. That’s the first issue there’s consensus on, I think it’s point 16 in the Council Conclusions.

And then, there’s a second issue: the tax on financial transactions or financial markets, no final decision has been taken here. Is it a tax on transactions? Is it a tax on markets? Germany and France have made this tax a major issue because for this tax to be totally effective it must, of course, be global. We told our European partners and others in fact, I mean in the Council, that if Europe wants to have a chance of being heeded, it has to be a standard-bearer for this tax on financial transactions. Some countries in the Council aren’t wholly enthusiastic, fearing that the financial transactions will be outsourced from Europe, which would have this tax, to other places which wouldn’t.

So we have decided that we’d take this debate to the G20 to try and get it accepted and that the decision taken would depend on the reaction of the major operators, the major G20 players. But as far as Germany and France are concerned, we’re calling for this tax on financial transactions and even ready – Mrs Merkel and I said this in Berlin – to envisage establishing it even if a major player didn’t want to. There isn’t a total consensus on this in Europe; some of the most liberal governments see a number of problems with it.

STABILITY PACT BREACHES/SANCTIONS

Q. – (on potential sanctions…)

THE PRESIDENT – On the sanctions, I refer you to the text of the document which Mr Van Rompuy is going to present; it would be discourteous of me to say anything before he does…

IRAN

Q. – (on Ira n)

THE PRESIDENT – (…) On the Iran issue, things are progressing since there’s been the Security Council decision which, I readily agree, took time to get, and we’d said that once the Security Council decision had been taken, Europe would strengthen the sanctions process, which didn’t prevent us from paying tribute in the Council Conclusions [Declaration on Iran] to the Brazilian initiative to try and maintain a dialogue with Tehran. I’ve seen, moreover, Mr Ahmadinejad’s latest statements. Now that we have got sanctions we absolutely must have sanctions and dialogue. It’s precisely because there are the sanctions that we need to strengthen the dialogue. And we all said that the sanctions must be used to get a dialogue. It isn’t sanctions and no dialogue, it’s sanctions to increase the chances of dialogue.

Thank you everyone./.

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