Europe 2010 – The European Union: Managing the Crisis

Europe 2010 – The European Union: Managing the Crisis


President Barroso, Van Rompuy, Prime
Minister Leterme, Professor Schwab, ladies and gentlemen good morning.
My name is Stephen Kinnock, I’m the Director of the Europe and
Central Asia Team in the World Economic Forum and I’m
honored to welcome you today to the World Economic Forum on Europe.
I would like to start by thanking the government of Belgium. Unfortunately,
Prime Minister Leterme is just being caught in Brussels traffic and
will be with us very shortly. But I’d like to thank him in his absence
for his great cooperation in co-hosting this meeting with us. In spite of the
somewhat turbulent times that the Belgium government is being going
through, they’ve been unfaltering in their support and we’re profoundly
grateful for that. Ladies and gentlemen we meet today at the critical juncture
for the future of Europe. The gentlemen on this stage and the
entire political leadership of EU are facing a range of challenges with
arguably more daunting than anything we’ve seen since the creation of the
European Community. The World Economic Forum is therefore
proud to have gathered you, Europe’s leaders to confront these
challenges together. Now, more than ever we must recall
the aspirations to drive the creation of the European project and it’s in that
spirit of punish upon dialogue that the World Economic Forum welcomes
you Brussels today. And that gives me great pleasure to wish
you every success for the coming days and to give the floor to Professor Schwab
who will chair this opening plenary session. Thank you. Thank you. Thank you very much Stephen.
It’s quite to historical moment we are here co-shaping history in some way and I
have to say someone who has been committed to see European ideas
since he is used. I feel very proud of what has been achieved last night.
I think it’s a great act of European solidarity.
And I would like express our deep appreciation on behalf of the European
and to globe economy, to all those who have negotiated so hot over the
last days and hours. And I’m particularly pleased that this
morning we have the two personalities and afterwards Prime Minister Leterme
with us who really represent Europe as the top level and its best way.
So, it gives me great pleasure to welcome Jose Manuel Barroso,
the president of the European Commission and also Herman Van Rompuy, the president
of European Council of the European Union. We will discuss doing the next hour of
course the outcome of the negotiations of this night but we will also look
at the more longer term issues and I’m sure we will have a very lively discussion.
I first — with beyond that — good morning, Prime Minister. I was just saying it’s
very encouraging to see how democratic Belgium it is when the prime minister
can still be striking in traffic. But let’s first hear from President
Barroso what or how he able to weigh the outcome of the negotiations
of the crisis package and how he feels what it means for Europe
and for several that launched? Thank you. Thank you Professor Schwab.
Good morning to all of you. It’s a pleasure to be here immediately
after such a historic decision was taken. In fact, after Friday’s Euro area summit,
this morning in less than 48 hours, the European Union took
a very historic decision. Based on a mandate we have received
from the Euro area summit, the commission yesterday made a proposal.
We had an extraordinary meeting in the afternoon and the EcoFin ministers
of Finance and Economic ministers of the European Union have agreed an
important package for the stability of Europe. We have stated that we will do whatever
is necessary to defend the stability of Euro and we have done just that. This morning’s
the early it was at 2:15 a.m. this morning’s deal is based on the
proposal commission made during its extraordinary session Sunday morning,
it creates a mechanism to assist Euro area members with loans guaranteed
by the European budget. In addition, it provides assistance
guaranteed by participating member states. The total amount of approximately
500 billion euros is unprecedented. In its scale this should also be seen
in conjunction with measures announced by DCB and also with
possible participation of the IMF. There is as you know the commitment
of the IMF to come to participation of around half of what
the member states contribute. So, we can say that in the space of
48 hours the European Union has completed an agreement that
enables us to respond in a coordinated, fast, effective manner to difficulties
in any Euro area member state. This morning’s agreement will ensure
that any attempt to weaken the stability of Europe will fail. It shows the
determination of the old of European Union who stand behind any
of its member states when they are seriously threatened with severe
difficulties caused by exceptional circumstances beyond their control.
But this deal is not only about assistance. It was also about further efforts of
consolidation. I’ve outcome to clear commitments made by some member
states to take additional measures of physical consolidation soon.
A combination of budgetary efforts by countries and the pressure and
assistance by the others is what I’ve been calling a consolidation
pact for the Euro area. You know that the commission has
long been making the gates for enforce the economic governance.
We have stated from many years now that at the end we cannot have a monetary
union without economic union. This is defined we need stronger
coordination, economic policy coordination and until now the response
of the member states has been in this direction understanding that the
solution for this problem is a more coordinated Europe, more clearance
economic policy coordination and that is why the commission will present this
Wednesday some proposals for a reinforced economic governance
and also for a reinforced compliance with stability and growth pact. We will propose to broaden surveillance
of microeconomic imbalances and reinforce our competitiveness and
we will also put on the table some ideas for a permanent crisis
management mechanism. This mechanism that was adapted
this morning was for this very exceptional circumstances we’re facing was based
on Article 122, it’s a specific article of our treaties. Moreover,
we will intensify our ongoing work on a more robust, more transparent
regulation of financial markets. We will push the agenda, this agenda
in the G20 as we know the European Union was also at the beginning
of this pro sets summit level of G20 and as you know that I’m sure our
President van Rompuy will speak about this. European Union also had asked
President Van Rompuy to share a taskforce
to get some of these experts. So, for me the lesson from
this crisis is clear. We need a stronger union in economic
policy, stronger compliance by member states with policies and rules agreed
at union level. This is now the way we will take and to take every efforts
to take it further, I think the lesson from this crisis is if you want the
monetary union you should promote also an economic union. That does not
mean every member state make exact the same at the same time but it
certainly means reinforced economic governance and respect of all the
obligations the member states have in the stability and growth pact. Thank you President Barroso.
You mentioned in a very encouraging ways that the European Union will
teach us lessons and if we look back to history, crisis always have been
the catalyst for improvements. President Van Rompuy you are chairing
this taskforce, could you tell us a little bit more about it and share with us
your views on surprising crisis and how it is mastered? Thank you professor. I think the
decisions of yesterday evening and even of tomorrow are indeed as
President Barroso said a historic decision. The European Union can act.
We overcame a financial crisis. We will overcome a crisis inside
the eurozone. The European Union can act if needed. That’s the most
important fact of these days. Second, we had a very important
meeting of the eurozone Friday evening and there’s one sentence, which
is crucial in our decision on Friday. All the institutions of the euro area,
the council, the commission, the European Central Bank as well as
all euro area member states agreed to use the full range of means available
to ensure the stability of the euro area. I think each of them took
their responsibilities. Yesterday, the EconFin council
on far reaching proposals of the commission very courageous far reaching
and the European Central Bank will announce his initiatives
I think in a few hours. So, all the institutions of the euro
area are collaborating in the same aim to save the stability of the eurozone,
the second biggest currency in the world. And in the last months we worked
on two parts, one of solidarity and one of responsibility.
Responsibility with the measures taken in Greece for instance,
also a far reaching and very courageous package of measures
to change not only the way into which the budget is managed
increased but change the culture and even society in Greece and
responsibility of course on the side of the European Union stronger
economic governance. I will just say a few words on this later on.
And then all the sides was on the other side was solidarity,
solidarity with Greece, a conditional package of 110 billion euros and now
those two new initiatives way to stabilization package of – stabilization
fund managed by the commission and an inter-governmental fund both
of them for huge amount of 500 billion euros, which half of them
where we added by the European the international monetary fund. So, solidarity and responsibility,
we had to do this. Now the other question of Professor
Schwab about the taskforce. The taskforce and also that we decided
in our meeting of Friday evening, first broaden and sanction economic
events and policy coordination in euro area including by paying close
attention to that levels and competitiveness developments.
Second, reinforce the rules and procedures for surveillance of euro area member
states including to strengthening of the stability and growth pact
and more effective sanctions. And third, create a robust framework
for crisis main event respecting the principle of member states on
budgetary responsibility. These are the three — the three targets,
the three objectives we will start our work on May 21st and end in October
for the European Council of October. We will accelerate our work.
We have a lot of ideas.
The commission will provide some new ideas this week on Wednesday.
I myself have also concrete proposals to make and I think that’s also others
will do it. So, we would put all this together and have a real and I hope
a radical package ready for the European Council of October.
Crisis is our challenges. We proved that we were ready
to be very courageous these last days and we have to be very courageous
also in the proposals. I will make on behalf of the
taskforce in a few of a stronger economic not only governance but
even government in some way so that the eurozone stabilized for
very, very long period. The eurozone was a major achievement,
a major achievement of the European Union. I think the biggest achievement since
the launching of the European community in ’58.
So, we have a huge responsibility in defending not also in the eurozone
but deepening the eurozone. We can’t have a monetary union at the
end without some form of economic of political union and that is our big
task for the coming weeks and the coming months. After having criticized for a two
teammate approach to handling the crisis, I see now a real
commitment for fast decisive and comprehensive action. Now, Prime
Minister Leterme, you as a Prime Minister of one of the member
countries, how do you react to it? How do you see it? Well, first of all I’m glad that the decision
was made finally as to the evening and tonight. So, I think like
was mentioned before crisis is our challenges are the most important
factors that there is a very impressive decision and I just heard that
at the news that the reaction of the market is going the right way.
This is very important. I remember when saving the private
banks in Belgium that’s the Monday morning when markets were opening
the reaction was much more timid. So, I think it’s a very important
positive effect of what has been decided. But like the president of the commission
and the president of the council already stated I think we really have to take also
to seize the momentum to draw the right lessons of what happens.
Yes, we acted quickly in… speech during the last two or three days,
no I think we were too much there was too much hesitation the
last three to four months and I think we lost some possibilities and
opportunities to act — to react on what was happening and I think in
the Greek case due to all kinds of reasons, most of the reasons have
related to the case itself. I think we were a little bit — we could
have been — we could have had more speech in their reactions. So, the lessons to draw I would
say well, it was already stated we have to have a real economic union
instead of a monetary union only. There is a monetary union. We have
a common euro and like Herman said is the most important achievements since
well, at least since the single market was launched is the most important
achievement is something all of citizens of the eurozone shares so we have to
defend but I don’t think we were always so consequence to know that when you
have a single currency you have to have a kind of economic policy.
To give one example since the launch of euro, the imbalances in competitiveness
between some parts of the eurozone have increased. And so the cohesion
policy should be announced without doubts but we have to acknowledge
and to see today that there are still very important imbalances
in competitiveness. So, economic governance concerning the public
finance but also concerning the competitiveness functioning
of the labor markets, the cost of labor, the productivity, I think accounts
have a single currency and a single euro and still have it within the
decades coming when you still have these kinds of differences in competitiveness.
So, we should work more on that. Secondly, I think that — it has already
been said during the last years but we have to act on this.
We really need industrial project, industrial vision, technological
common vision or maybe some emblematic projects. In fact,
we have them like… for instance is a tremendous success. We have
high speed trains but I think we need more industrial projects, common
projects that can let’s say have some where people can believe and our
economic operators can believe in. Thirdly, I think we should be more
present on the global level. In most of the global issues we
are discussing now — we are showing the right example but it’s — I think
as a matter of fact that we still have a lack of leverage for this moment.
I just have to repel the case of Copenhagen where we were gathering with the 27
countries and having a very offensive and good standpoint and position
but all their powers of the global market and global political system were deciding
apart from as another meeting room. So, this should not be repeated.
But to sum up I think it is a very good decision that was taken. It was taken
in just at the right moment. I think you lost some time. We have
to draw lessons of what’s happening what has been happening. We lost
some time during the last four to five months and the most important lesson
must be that your accounts have a single currency when you don’t
have of course common defense mechanism but moreover underlying
a common economic policy reducing the public debts, reducing the imbalances,
also the imbalances in competitiveness and Belgium is certainly prepared to
give more possibility, more room of maneuver for the European institutions
to act and to act representing our country. I mean the commission has the possibility
to make proposals and we have to decide on it to put in place the budgetary and other
measures means to accomplish the goals. Thank you Prime Minister.
President Barroso, the economic policy is very much pleased now on the Agenda
2020 and we need in Europe, we need growth, we need innovation,
we need jobs. So, actually the Agenda 2020 cannot be disassociated forms of
crisis management at this particular moment. Could you tell us a little bit more about
those longer term aspects and particularly Europe and so also those debts one
day have to be paid back? So, how do you see the longer term
the immediate longer term picture? Yes, precisely we have defended when
we made a proposal for what we call now year 2020 strategy, so strategy
for the economic growth, sustainable growth in Europe for the next years.
We have underlined what we call the holistic approach that’s why we cannot
separate that strategy from other aspects of the European Union namely
stability and growth pact. So, microeconomic stability,
public finances stability, the global agenda. We cannot today
look at Europe or any other part of the world in separation from the rest
of the world and also some of our key of our European process namely the
deepening of the single market. So, it is about holistic approaches.
We have suggested Professor Schwab it’s not only about the programs
or the concrete projects we have now in the year 2020 strategy. But what is the core of year 2020?
The core is growth. We need to restore growth.
The crisis, the global financial crisis has affected in Europe and in other
parts of the world the growth potential. We need more growths in Europe
but not any kind of growth. We are insisting on a more
sustainable, inclusive, smart growths. That’s why we are trying to insist
on these new sources of growth. It starts with good public finances.
Let’s put it clearly some of all member states have been living above their
means and this is not sustainable. So when we speak about sustainability,
we should also think about sustainability of public finances. That’s why things
are linked. So, even if from legal point of view we keep the stability and
growth pact separated from the year 2020 agenda, those things are in fact
linked and what we are asking these member states to look at these…
in a coordinated manner. Addressing the imbalances, we have
seen in the euro area some imbalances growing and at the same time making
investments right for the future, investment for the transition to a lower
carbon economy, make an act of investment at the European level in
some of the interconnections that will make us — make the most of the
internal market days and debt potential is still in the internal market.
The internal market this today I’m going to receive a report I’ve
commissioned Mario Monte about some ideas how to deepen the internal market.
In fact, when you look at the internal market in Europe we have it in terms
of goods but there is still there are still many missing links
in terms of services in other areas. That’s why we are also looking at energy,
some of the most important interconnections we have a real internal
market for energy and making investments of the future.
You know the investments in knowledge, the investments in everything
that can make Europe competitive relying on what are our advantages,
the human resources we have in Europe. In fact, we cannot for the growths
of Europe lower our standards. In Europe citizens want to keep what
we usually called the European social model or a social market economy.
That’s the name it is we have put in the Lisbon treaty social market economy.
So, the solution is not to lower our standards. The solution is be more competitive
and to invest in new sources of growths. This is what the European 2020 strategy
proposes of course based on reinforced economic policy coordination and seek,
which each member state can have a contribution to this agenda at the same
time what we can do in respect of the principle of solidarity.
What we can with European level? Some of these investments have to be done at
European level with community instruments. Others rely on a decisive committed
determined action by our member states. President Van Rompuy, all what we are
doing now on the European level requires European solidarity and we have seen just
last week and actually yesterday how some of your Europe’s main member,
lots of the member countries goes with internal difficulties to choose
a government or to have a government in place, which really can undertake act.
How do you see it from a political level? I mean is Europe as a European country
is capable to live up to also its expectations and to all the internal
pressures and I would add here I have heard this morning Christine Lagarde
who said some of the aspects will have to be ratified if I’m not
mistaken by European parliament. So, what does it mean for the
actionability of all those decisions? Of course it is only the result that counts.
We are judged not by our intentions, not by the way we took a decision
but by the outcome. The result is the most important thing. And for instance
in the case of Greece, we acted in solidarity and governments who faced
internal problems regarding this decision of helping Greece took their responsibility.
They took their responsibility even with the risk of electoral disadvantages.
I am very cautious in what I’m saying. They took their responsibility and it is the
outcome, which is the most important thing. Second, every country — I was prime
minister for 11 months but every government, every prime minister has
to act in a climate of rising population. So, we need more than ever, more than
ever political courage and a lot of countries are ready to take and I
reiterate their responsibilities. This is the moment for political
courage in different circumstances, in most of our countries but we are
ready and the most of them are ready to take those responsibilities. Solidarity
inside the eurozone but also solidarity inside the European Union but the
decisions of the EcoFin council we are not decision in the eurozone.
That were decisions taken by the 27 because all our economists are linked
not only on a global way but also in a European way. When there
is a crisis in the eurozone even for the 11 members who are not member of
the eurozone it has a lot of consequences. So we showed also that we have
common interests, common values and that there is solidarity. I repeat,
in circumstances in each of our countries, which are more difficult, more difficult
than ten years ago or 20 years ago. I think the eurozone had some
positive worth on all of these. The eurozone has fundamentals,
which are sound compared to other countries. Our budget deficit
is almost half of what is going on in other important countries
in the world’s economy. Second, we have a balance of
payments almost imbalance. So, when you have a budge deficit
compare to others who is half of their deficit and when you have
current benefits of payments in balance on the current account you have a
strong argument, a strong argument for having a strong euro.
Our problem is that inside the eurozone there are huge
divergences in economic development. And we have to tackle these
divergences having more convergence in economic policy and economic
development and that’s why we have to make huge efforts the coming years
to have more economic governments to tackle those divergences. When I took office, the 1st of January,
my main message was incomplete agreement with the commission.
But my main message was we need to double the economic growth potential,
which we now have. If we do nothing we have a structurally economic growth
of one percent. With one percent growth we can’t finance our
social model anymore. With one percent growth, structural
growth we can’t play a role in the world, in world economy.
We created the G20, it was the European Union who created G20
but in order to play an important role in the G20, we need more economic
strengths and more economic growths. So, when I took office it was in the
perspective of the famous word it’s the economy stupid but I prefer
the word of the account of… 200 years ago when he said to pull the industry,
to pull everything for the economy, in the industry that’s 200 years ago but
to pull the industry, to pull economy, to pull. That’s why I started this mandate with
that team and we hope that in the two years coming period of my mandate we can go
further, we can go further in economic governance to tackle those divergences
in the eurozone so that we have even stronger euro be in two years than we have today. It’s an important motto, which you just
said but Prime Minister when we want to stimulate growths and you have
that problem and I know Belgium in the past had especially experienced in
dealing with high debt problems. What is your recommendation?
I mean in Europe we will have an average that problem of close to 80
percent at the end of 2010. How can we combine the step…
the need to pay back one day? So, is that the stimulation
program we see EU 2020? Well, first of all maybe two elements
I would like to add to the public debt debate. First of all,
the yenzone in Japan has a public debt of almost 200 GDP points
and the public deficit in the United States is almost double as the
Belgium one and still there is confidence in the dollarzone
so everything is relative. I think we have to be very careful
especially for a member state like Belgium although now we are a little bit — well,
let me put it the other way, we are wondering where the European institutions
and where we all work when the situation of Greece during the last years and maybe
the last decade worsens because what we have seen now is — well, they say
it’s a lack of statistics and so on but anyway the fact is that during the
last maybe 10, 15 years, the situation, budgetary situation concerning deficits
since warning Greece went the wrong direction and there was no reaction
from the European institution. But to come back to your question
for a country like Belgium, we have been choosing for a mixed
on the one side keeping into place the policy of having some public finances
in the application of the stability program. On the other hand, giving stimulus to
the market and to the consumer and investors confidence and we stick very
well I think to the treaty program of treaty criteria, which we put forward
on a very… way by the European commission, the stimulus package have to be timed
retargeted and temporarily. I think we did that and that gives us now
the situation where Belgium seems to be reacting in a better way than the most
other member states to the economic crisis. The purchase in power has been stabilized.
The increase of unemployment in Belgium is only half of what was the increase
in the European Union and also concerning the growth where our achievement is
just above the European average. So, I think we have to continue this way
and given the fact that another countries the public deficit is much more
higher than in Belgium. The historic situation we have since
almost 30 years of a competitively higher public debt while the situation
is improving and we will — if this continues during two or three years we will
be in the bench with the other countries. So to sum up I think we have to continue
the policy we have now, a prudent mix of stimulus and on the other side keeping
in place this budgetary policy to have a sound budget and to stick to the
stability program. I would add a single word, the big challenge I think for society
like Belgium is whether the social partners, the economic and social partners that
negotiate wages and so that negotiate to salary cost or prepare to let’s say
to put some — to make some efforts, to pay some efforts to have lower wages
to put the competitiveness of our industry. Also from that point of view the number
one place in the targets they are pursuing. Thank you Prime Minister. I will ask the
co-chairs to raise some issues or to make some comments.
Any co-chairs? Okay. Unprepared but waited. The Prime Minister
raised and I think President Van Rompuy raised the issue of populism.
And one thing that strikes me regrettably is the unwillingness of governments and
the administrations to deal with the fundamental issue.
I mean I somewhat relieved this morning to read the details of the proposed package,
the trillion dollar package and the steps in the markets are obviously
extremely relieved this morning in a bouncing back recouping
much of what they lost on Friday. But it strikes me that there is still not
this fundamental determination to get ahead out of the curve in
dealing with deficit reduction. I mean I was in Washington last week
of the business council and the thing that struck me most was the gridlock that
you see in Washington and the unwillingness of the administration,
the Obama administration to deal with the fundamental issues of deficit
reduction until we get the sort of crisis that we see in Greece. And I just really
wondered some observations in each of the three participants as to why is it
I mean I supposed the answer is self-evident. Nobody is willing to do that because
politicians are in the business of being elected not necessarily doing the
best thing in terms of the long term strategic economic interest. But why is it
that we cannot get ahead of the curve on this? President Barroso? I think this is a very important point.
The Greek crisis and not only the Greek crisis as shown that we should not forget
about some fundamental imbalances and should address them and rightly
you point that the problem of deficits and the problem of debt is not an inclusive,
European exclusive or European partiality. It’s a very or let’s say wide problem.
That is one of the reasons why we for instance favor discussion in the
G20 of those imbalances. Just last week I was in China speaking
with President Hu and Prime Wen and suggesting this to all the Chinese partners.
They should not see that as a pressure. But we have to look at those fundamental
imbalances of the global economy namely the problems of debt at global level and
of course the relation with trade and the relation also with some monetary imbalances,
having said that member states at the European level should address
this issue as a matter of priority. It’s true that because of financial crisis
there was the need for some kind of stimulus to the economy to avoid
deep recession but we have already stated that we should not prepare
what we usually call the exit strategy. And the Greek and not only the
Greek problem remind — it was a very powerful reminder, if we cannot
forget about the needs for let’s say a fiscal rigor in macroeconomic stability.
That’s why I think government should now take advantage of this situation to
address the real problems of competitiveness. The reality is that namely in the
euro area because of Euro there was what I call illusion of prosperity. Since there
was no longer the evaluation possibility, some countries were indeed living
above their means and now the reality is back it was — there was an illusion
of that prosperity but now the reality is back and so this is the time not only
to reduce the deficits, not only to reduce the debt but also the time to make
some structure reform that sometimes have been postponed in terms of labor
markets, in terms of relation of the public sector with the rest of the economy. And
indeed there is a political challenge here. Do we have the political
courage to do it or not? Because sometimes these are not very
popular programs but I believe that’s the only way to do it and at least
from the European institutions that is the message that has been conveyed
from the commission, from the European Central Bank and from the
European institutions in general and I hope that this message is now really
understood and first of all that the lessons are drawn from this crisis. President Van Rompuy, would
you like to add and Prime Minister? Yeah, yes. I don’t completely
agree with the statements. Remember that not longer than a year
ago everyone was asking for fiscal stimulus deficit spending
Neo-Keynesian policies and so on. The deficit was even good. And we are
now a few months later I said oh that you don’t capable. Most governors aren’t
capable to tackle budget deficits. So, in one year the critic was you do
not enough or not take enough initiatives to tackle the economic crisis and you
have a unique more fiscal stimulus and now it is you are not courageous
enough and you have to decrease the budget deficit. I think the
European Union took initiatives. Most of the member countries are
in what we call a stability program so that year after year the deficits
are lesser and lesser. The most important thing is the direction.
Not so much the level but the direction going again not only to a deficit
of three percent and we have to go in each of our countries to a deficit
of three percent in 2012, 13 or 14 but going even to balance budget because
we face also the cost of the aging of the population. So, we are all
of us in some kind of exit strategy and the stability plans of each country
are proven that we are in that kind of exit strategy.
We can’t do. We can do it. I was myself Minister of the Budget
in the ‘90s. When I started we had the budget deficit of 7.5. Six years later
we had a balanced budget. We haven’t changed society.
We took measures, a lot of measures, someone unpopular although others going
more in the direction of more efficiency and productivity of the public sector.
We privatized a lot. We structured a lot. So, we don’t revolution. We managed to
have a balanced budget and we can do this again in each of our countries. We
haven’t to wait of course but we can do it again in a gradual way step by step.
I’m convinced the democracies even in a climate of popular can do it.
That’s my main message. Second we have not only budgetary imbalances.
We have also imbalances in the balance of payments inside the eurozone
and outside the eurozone. There is one lesson to be drawn inside
the eurozone from this crisis. We had to close look not close enough
but we had to close look to budgetary developments.
But the underlying structure problem, economic problem that we
neglect it to tackle this problem. When some countries have balance
of payments deficits of 10 percent, 10 percent or even 14 percent and
we do nothing or we haven’t done nothing or not enough then really
we missed an opportunity. And we haven’t to look, at a further look to the underlying
economic conditions in which a lot of countries are working and that’s
the main aim of economic governments to tackle that kind of problems of
competitiveness because competitiveness lay behind the deficits of balance
of payments for those. We have to work now on budgetary reforms
and economic reforms at the same time it’s a huge again agenda for most of our
countries but we can do it. I’m convinced that we can do it. We did it in the
past. We shall do it in the future. Prime Minister Leterme? I fully agree with that last point.
So, yes we can also in Europe but the crisis being one of the demand it was
very clear that we have to have put in place stimulus packages and once again
I would say that we — for instance, recovering from Belgium that we really
stick to the TTT, the time, the temporary and targeted criteria that were put
forward by the European commission. The other side of the meddle is that in
a country like Belgium for instance where most of the people still on
their jobs, still have their employment, most of the citizens didn’t experience
the crisis at all in their purchasing power. And so this gave us the opportunity
to have a consumer market. We are still functioning quite the right
way and have maybe an economic growth figure, which is a little bit above based
on this consumer, confidence a little bit above the European average.
The whole of the question is now if we will be able to strengthen like
Mr. Van Rompuy says the competitiveness and then of course the debate on the
salaries and wages is very important item besides the structural economic policy
where the European Union I think should be more active and given more room of
maneuver starting from the member states. Let’s take one last question Professor
Albashta [phonetic]? Yeah. Who? Thank you. Gentlemen, you have a plight,
a transformational shock, potentially transformational shock overnight to
the European Union. The question of course arises what will the test show, this
morning’s test from the market suggest that you are applaud. You have done well.
You have received applause. There is, however, not a test to come that
is in the eurozone parliaments and maybe in the European Union parliaments there
is going to be the needs to be a debate and understand that doesn’t need to be an
approval but there needs to be a debate about these measures, about euro package
and about your short and long term recipes. What is the — the upside potential is clear
that will lead to what you have painted what is the downside risk?
What if there is no unanimity? What if the populism that you
talked about before does creep up? Who would like to
Prime Minister? Well until now there was really no
problem in Belgium, Belgium being a very European — well, a very positive
attitude towards European integration. We passed a bill about the bilateral loan
to Greece some week ago and as far as I’m informed the package that was decided
upon last night will not need a parliamentary ratification.
Of course we will have to debate but I can say that’s almost a little bit
more than one month before parliamentary elections in this country.
This is not a matter of debate today. People I think have still have very positive
attitude towards European Union, the euro for a country that is one frontier I must
say which all other countries are also close from Brussels and from Belgium.
We only have 30,000 square kilometers. So, for the people it’s a very positive
element to be able to use the euro and I think they’re all prepared to take
to see the politicians take their responsibilities. I think until now but
maybe the president of the European Union as a citizen of Belgium
will say something different. I don’t think it’s an item
of public debate today. President Rompuy? In Belgium it is not an issue but Belgium
is one of the 16th member states of the eurozone and one of the 27 of the European
Union but again the most important thing is the result. Almost all
national parliaments voted for the financial support for Greece even if in some
countries there was quite a lot of discussion about all these and even
resistance in public opinion but they took their responsibility, they showed
political courage and they voted and that is the most important thing.
And the climate is not the most positive climate in most of the countries for
solidarity in general, in general. We live in a period of rising individualism
but again the outcome is the most important and I’m quite confident that
citizen are fully aware of the importance of the stability of their money the euro
and at the end they will agree what we took as measures in each of the member
states and also the measures of financial support because it is in their
own interest to convince them that it is in their own interest.
That is an argument, which can be the most important argument in a climate
of rising populism but at the end the result will be okay. And I’m quite
convinced to that this is a moment of courage, this is a moment of responsibility
and we will succeed. President Barroso? Since I’m here in this round table with
the Prime Minister of Belgium and the President of the European Council,
a very distinguished Belgium citizen let me tell you that I want to pay tribute
to Belgium for the constant support of Belgium to the European integration
and the way Belgium has always supported the European institutions.
But your question if I’m correct it was not just about Belgium, it was more in general
and for me the answer is leadership. Just one word leadership.
We need strong leadership. People are wise. Citizens are much more
wise than sometimes politicians. According to latest polls for instance,
in Greece, the majority of the Greek citizens, support austerity measures.
We should not be misled by the images of television of some of course protest.
The majority of the Greek people support austerity measures. But for this
we need leadership, we need courage of the political leaders to show that we
are indeed in a dramatic moment and for Europe, for our societies is indeed
a question of — I mean sustaining or not the kind of life we believe in.
So, I believe that in democracy it is possible to make the case for some
of those reforms but for this we need leadership. Leadership of course
at European level but also leadership at national level and if we achieve this
I think it is possible to encounter some trends that exist here and there
of populism sometimes narrow nationalism, sometimes even worse than that because
those trends exist at this moment in Europe as they exist elsewhere, the
protectionism as well, the idea of buy what you produce only in your country,
the idea of closing. This threat is there but with determined leadership I think we
can win this battle at least if we don’t trust in the majority of the citizens.
If you don’t believe in democracy we should change all business. Speaking about Belgium let me just say
how honored we are by the presence… Prince Philip among us. We are coming
to an end and I’m very pleased that our discussion took place showing the
whole complexity of the issue and not just let’s say, dealing with the
aftermath of a very dramatic night. If in order to finish this session,
if we had to — if you had to give a simple message to the number of the European
citizen who may listen to us today with let’s say explaining to him what his
position will be inside the European Union in the future. What would
you say to him? President Barroso? I would say if we want to keep our
European model of society with relatively eye levels of social
commission, social protection, environmental protection, we have to
understand one thing, we need more people to work longer and to work
more. It’s only with work. There are no miracles. Work more and work
better of course. So we are at the decisive moment for the survival of our European
social model and only if you are ready to make those efforts
we’ll be able to sustain it. Prime Minister what
would be your message? I would say that European Union
has shown and eurozone has shown leadership during the last days another fact of living
longer and there’s a consequence working longer and be more people
at work that is worthwhile that these efforts are all worthwhile because there
are leaders of the eurozone that defends the euro and then defend
the welfare of the people. Thank you. I would add to working longer
working more I would add working in a more entrepreneurial way also. Yeah. That’s the right sense. Yeah.
If you close the session President Rompuy? Close the session. We see your message. My message is that we have to focus on the
longer term. The longer term to keep our European way of life feasible and if
we want to keep our social model on which we are so proud, which can be
an example for the world we have to take a lot of message in the shorter term,
message which are not always as popular as we should wish but necessary measures
and necessary measures as President Barroso said more in the sense of common sense
because we can’t afford such a social model without sufficient economic growth
that need some sacrifices but is worthwhile on the longer term and I think if we keep
focused on the longer term I think we have to support of our citizens. On behalf of all of us I want to say thank
you for your presence this morning a very important morning and I think
very important statements. Thank you. To convince them that it is in their
own interest. That is an argument, which can be the most important
argument in a climate of rising populism but at the end the result will be okay.
And I’m quite convinced to that this is a moment of courage, this is a moment
of responsibility and we will succeed. President Barroso? Since I’m here in this round table with
the Prime Minister of Belgium and the President of the European Council,
a very distinguished Belgium citizen let me tell you that I want to pay tribute
to Belgium for the constant support of Belgium to the European integration
and the way Belgium has always supported the European institutions. But your question
if I’m correct it was not just about Belgium, it was more in general and for
me the answer is leadership. Just one word leadership.
We need strong leadership. People are wise. Citizens are much more
wise than sometimes politicians. According to latest polls for instance,
in Greece, the majority of the Greek citizens, support austerity measures. We should not be
misled by the images of television of some of course protest. The majority
of the Greek people support austerity measures. But for this we need leadership, we need
courage of the political leaders to show that we are indeed in a dramatic moment
and for Europe, for our societies is indeed a question of — I mean sustaining
or not the kind of life we believe in. So, I believe that in democracy it is possible
to make the case for some of those reforms but for this we need leadership.
Leadership of course at European level but also leadership at national level
and if we achieve this I think it is possible to encounter some trends that
exist here and there of populism sometimes narrow nationalism, sometimes
even worse than that because those trends exist at this moment in Europe as they exist
elsewhere, the protectionism as well, the idea of buy what you produce only
in your country, the idea of closing. This threat is there but with determined
leadership I think we can win this battle at least if we don’t trust in the majority
of the citizens. If you don’t believe in democracy we should change all business. Speaking about Belgium let me just say
how honored we are by the presence… Prince Philip among us. We are coming
to an end and I’m very pleased that our discussion took place showing the whole
complexity of the issue and not just let’s say, dealing with the
aftermath of a very dramatic night. If in order to finish this session,
if we had to — if you had to give a simple message to the number of the European
citizen who may listen to us today with let’s say explaining to him what his
position will be inside the European Union in the future. What would
you say to him? President Barroso? I would say if we want to keep our
European model of society with relatively eye levels of social commission,
social protection, environmental protection, we have to understand one thing, we need
more people to work longer and to work more. It’s only with work. There are no miracles.
Work more and work better of course. So we are at the decisive moment for the
survival of our European social model and only if you are ready to make
those efforts we’ll be able to sustain it. Prime Minister
what would be your message? I would say that European Union has shown
and eurozone has shown leadership during the last days another fact of living longer
and there’s a consequence working longer and be more people at work
that is worthwhile that these efforts are all worthwhile because there are leaders
of the eurozone that defends the euro and then defend the welfare of the people. Thank you. I would add to working
longer working more I would add working in a more entrepreneurial way also. Yeah. That’s the right sense. Yeah. If you close
the session President Rompuy? Close the session. We see your message. My message is that we have to focus
on the longer term. The longer term to keep our European way of life
feasible and if we want to keep our social model on which we are so proud,
which can be an example for the world we have to take a lot of message
in the shorter term, message which are not always as popular as we should
wish but necessary measures and necessary measures as President
Barroso said more in the sense of common sense because we can’t afford such
a social model without sufficient economic growth that need some sacrifices but is
worthwhile on the longer term and I think if we keep focused on the longer term
I think we have to support of our citizens. On behalf of all of us I want to say
thank you for your presence this morning a very important morning and I think
very important statements. Thank you.

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