Eurozone special meeting, time to pull together to defy crisis

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Eurozone special meeting, time to pull together to defy crisisTwo key messages emerged from Monday’s discussion with leading Eurozone figures organised by the EP’s Economics committee just a couple weeks after some of the stormiest times in the Euro’s history. Firstly, the ECB has remarkably stood up to fill the void left by Member States’ inability at tackling the current crisis. Secondly, the economic governance ‘six pack’ remains the base on which to build long term economic stability.

During a special meeting hurriedly called after EU banks and bond markets took a battering throughout most of August, MEPs from the economics committee discussed the current situation and ways out with ECB President Jean-Claude Trichet, Eurogroup President Jean-Claude Juncker, Economic and Monetary affairs Commissioner Olli Rehn, and ECOFIN President Jacek Rostowski.

Opening the four hour discussion the Chair of the committee, Sharon Bowles, said that it was time to begin to seriously consider ambitious ideas which had been discounted for their improbability. “When you eliminate the impossibility of the fragmentation of the Euro you are left with the improbable, no matter how unlikely that seems,” she said.

ECB to the rescue

MEPs from across the political spectrum were nearly unanimous in congratulating the ECB for stepping into the role which national politicians proved incapable of filling by taking actions which helped quiet the Summer crisis. “It is thanks to the ECB that we have not fallen victim to the big problems which have hit us recently” Werner Langen said. “Do you envisage yourself as an adviser to national politicians once you retire?” Kay Swinburne asked Mr Trichet, alluding to the inadequate response to the crisis by Member States.

Sylvie Goulard however raised the point that it would not be possible for the ECB to constantly make up for the weaknesses of national politicians and that the real answer lay in having a “non-intergovernmental objective.”. Elisa Ferreira (S&D, PT) echoed this: “We need to think wider and deeper. We need a vision” Others signalled the general lack of effective leadership in EU capitals. For his part Mr Trichet reiterated that, “the ECB must always be cautious not to overstep its role”, adding that the true solution lay in agreeing the ‘six pack’ and even “going further at a later stage.”

On the classic role for the ECB regarding interest rates, Marta Andreasen (EFD, UK) asked whether it was not opportune to cut interest rates by a full 1% to get the EU’s economies going again.

Long-term economic governance

Commissioner Olli Rehn did not mince his words. “The adoption of the ‘six pack’ will be a crucial step forwards. This is the necessary foundation on which we can build further. We need to use the Community method for the future structures of Eurozone governance,” he told MEPs in his opening remarks.

Addressing fears raised by MEPs regarding competing plans for long term economic governance, Minister Rostowski declared that the conclusion of the ‘six pack’ would be a Polish Presidency priority. “The Sarkozy-Merkel economic government is not a replacement to the ‘six pack'”, Corien Wortmann-Kool (EPP, NL) said. Mr Juncker was on the same lines, “Let us not think even for an instant that a Eurozone government which holds two summits per year is credible.”

Left of centre groups regularly reminded of the need for a stronger growth dimension in any future model of economic governance. “Is this furious austerity still of actuality in the current context of slowing growth,” asked Socialist Liem Hoang Ngoc. “We only talk about inflation and austerity, never about jobs and relaunching the economy,” Miguel Portas (GUE, PT) said. Meanwhile, Greens MEP Sven Giegold (DE) told Mr Rehn that the time for studying Eurobond feasibility was over and it was now the moment to propose them.

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