23 October 2010
2010 is not over yet. But it’s already clear this has been the most difficult year for the European Union since integration began. There must be no repeat of the kind of crisis we had in the spring. Otherwise I fear our nations will become increasingly disenchanted with Europe. But this crisis can also be seen as an opportunity. What we need to do now is learn the right lessons and set Europe on the right track for 2011, which will be a year of decision for the European Union.
The deficit procedure as we know it has been shown to be ineffective. The Commission has initiated such procedures on twenty-two occasions, no sanctions have ever been imposed.
Europe needs better rules to ensure our currency remains strong. Anyone now making tough demands on Europe is making Europe stronger. That’s why we Europeans need a Stability Pact which has authority, which functions effectively. For without strong rules there can be no strong euro.Here two elements seem to me of fundamental importance.
Firstly, if a country is unable or unwilling to maintain the necessary budgetary discipline, we need a sanctions mechanism that – as far as possible – is immune to considerations of what may be politically opportune. That is the only way we can remain credible. I agree with Angela Merkel that the proposals presented this week by the euro finance ministers in the Van Rompuy Task Force provide us with a sound basis for achieving this goal. These proposals incorporate many elements of the nine-point plan we as the Federal Government put forward in the early summer. Now we need to press for the European Council to take up these proposals next week.
Secondly, the crisis resolution mechanism we created in the spring cannot be extended. For clearly the private sector needs to be involved when countries are on the brink of default. Otherwise there’s a danger we’ll end up as a transfer union – which is not what we want. We need a new mechanism and we need all the treaty amendments required to put it in place. On this, too, the European Council has to take a decision next week. That’s the stated negotiating goal of the whole Federal Government. I know it’s always a difficult business, amending European treaties. However, the pressure caused by the problems we’re facing right now makes for a greater readiness all over Europe to back the necessary treaty amendments.
Our experience teaches that we must act while the memory of crisis is still fresh in our minds. Today we have the momentum to take the tough steps required. We must now work with our European partners to use this momentum to good effect.