Facility providing mid-term financial assistance for Member States' balances of payments - Facility providing mid-term financial assistance for Member States' balances of payments (debate) 
President
The next item is the joint debate on:
the report by Mrs Pervenche Berès, on behalf of the Committee on Economic and Financial Affairs, on a facility providing medium-term financial assistance for Member States' balance of payments - C6-0134/2009 - and
the statements by the Council and the Commission on a facility providing medium-term financial assistance for Member States' balance of payments.
Pervenche Berès
Madam President, the European Council has decided to double the 'balance of payments' facility for countries outside the euro zone, and on 8 April the Commission introduced the concrete provisions designed to turn this proposal into a reality.
Here at the European Parliament we wish to accept our responsibilities and to enable the Ecofin Council to act promptly for, as we see it, this proposal contains a sign of solidarity towards non-member countries of the euro zone that is of vital importance for tackling the root of this crisis.
Back in November, we were already doubling this 'balance of payments' facility, since it rose from EUR 12 to 25 billion, and, today, to take account not only of the reality, the severity of the crisis that we are in and that is having a particular impact on countries outside the euro zone, but also, without doubt, of the European Parliament's timetable, we propose to you that this facility be doubled, to bring it up to EUR 50 billion. This is in light of the fact that what we decided in November has already enabled support to be given to Hungary, to Latvia and, yesterday, to Romania.
We feel that this is necessary, and we have held a debate among ourselves, which I will not hide from you, to learn whether this assessment of countries outside the euro zone should be done exclusively on a case-by-case basis, or whether, in reality, there was basically a more global situation that was that of countries outside the euro zone.
That is why, in our resolution, we propose that the issue of enlargement conditions be considered and the extent to which membership of the zone can be a protective factor be confirmed.
We are also very insistent in calling for the European Parliament to be informed of the substance of the analyses of the crisis situations these countries are facing. This is because, when the Commission grants its loans to countries outside the euro zone, there is a certain transparency and substance to the information on the behaviour of private banks and on the behaviour of operators which has led to this crisis, that the European Parliament must be informed of.
Lastly, we believe that all possible mechanisms for tackling this crisis should be used and implemented by the Commission. This is particularly the case as regards Article 100 of the Treaty, which would also permit the implementation of special mechanisms for countries within the euro zone. We believe it is essential to explore these given the severity of the crisis.
There are two final elements. Firstly, as we see it, the conditionality of these loans is an element for discussion; we understand that. Generally speaking, the Commission carries out this work in harmony with the IMF. What we want is the creation of a working group to look at how these memorandums are drawn up and how they take account of the actual situation of the country in question, but also of the European Union's overall strategy, particularly as regards arbitrage between investments, purchasing power support and conditionality in terms of a strategy on environmental growth and sustainable development.
Lastly, we identify in this mechanism evidence of the ability of the European Union and of the Commission to borrow on the international markets, and we therefore believe that we have here a useful foundation on which to base a debate that we are also conducting on European borrowing and on the capacity of the European Union to finance future strategies and investments through such borrowing.
To conclude, the Commission has implemented a new mechanism to ensure that repayments will enable the European Union's budget to cope with these demands. We support this amendment to the regulation and we hope that this Parliament will give its full support to this worthwhile proposal.
Charlie McCreevy
Member of the Commission. - I am taking this debate on behalf of my colleague, Mr Almunia.
The proposal on the table today concerns one of the core values of the Union, namely solidarity. Against the backdrop of the international financial crisis, the Commission proposes further reinforced solidarity with the Member States that do not yet benefit from the protective umbrella of the euro. The facility for supporting Member States' balances of payments is, by definition, foreseen for exceptional circumstances and was only used on a few occasions in the past. We do, however, live in exceptional times.
As you know, the Commission proposed last year an increase in the ceiling of outstanding loans that the Community can provide to support Member States' balances of payments. The ceiling was raised from EUR 12 billion to EUR 25 billion, but a substantial part of this amount has already been earmarked. At the request of the countries concerned, the ECOFIN Council decided to provide balance of payments support to Hungary of up to EUR 6.5 billion in November. On 20 January it decided to grant up to EUR 3.1 billion to Latvia, and the decision to provide up to EUR 5 billion to Romania is in the pipeline.
Already earmarked financial assistance under the regulation thus adds up to around EUR 15 billion. There is, moreover, no immediate end in sight to either the financial crisis or global deleveraging, and ongoing financial stress in other Member States could result in further needs for financial assistance.
The European Council of 19 and 20 March therefore welcomed the announcement by President Barroso that the Commission intended to make a proposal for increasing the ceiling of the Community's balance of payments support to EUR 50 billion. The doubling of the ceiling will provide an important signal to financial markets of the European Union's strong commitment to helping Member States under financial stress. The extension of the total possible credit line to EUR 50 billion will provide a large buffer to cater for further possible needs for financial support.
Such strong signs of solidarity among Member States should also help to calm financial investors' fear of further financial market deterioration in the Member States outside the euro area. By reducing the incentive for capital withdrawal, it would decrease the probability of balance of payments problems in the concerned countries.
In this context I would like to express my gratitude and respect for the excellent spirit of cooperation at the European Parliament and, in particular, the Committee on Economic and Monetary Affairs. The Commission adopted this proposal just before the Easter holidays on 8 April and only two weeks later you are now about to vote your legislative resolution and motion for resolution in plenary.
Thanks to your swift and efficient work, the ECOFIN Council will be able to adopt the amended regulation on 5 May. The European Union will thus be well equipped to react rapidly should the need for further balance of payments support arise. This is a powerful signal to Member States that the European Union is willing and ready to help and should be turned to in the first instance in case of balance of payments problems.
This obviously does not exclude that a Member State would also ask for assistance from other international organisations such as the IMF, with which the Commission has been closely cooperating on the latest financial support packages.
I would like to conclude by saying that I agree with the statement in your draft motion for a resolution that the current international situation proves the relevance of the euro and that all Member States outside the euro area should be encouraged to fulfil the Maastricht criteria in order to join it.
President
The Council has announced that it will not be making a statement. The debate will therefore continue with speakers from the political groups.
Zsolt László Becsey
I would like to begin by thanking the rapporteur for compiling this report so quickly and, if Mrs Berès is listening to me, for also being sensitive to this issue, which is, in any case, a positive thing. However, this does not solve the problem of my not understanding why we should deal with this matter in such a panic-stricken manner, ignoring the views of the average MEP. After all, the EUR 25 billion available so far could comfortably cover the cost of the urgent assistance given to Romania.
This topic is being tabled for discussion for a second time within a short period. In the speech I made in November, I actually stated that the raised ceiling was inadequate, and I was right. The reason for this was not only because new Member States have presented new claims, but also because, maintaining the view I had at that time, I still think that this is a political issue. In fact, it is a disgrace that it is not the EU which is dealing with the balance of payment credits for Member States outside the euro zone which are in dire straits, but that we are handling this jointly with the IMF, somewhere between the credits for Turkey and Pakistan. This is a disgrace for Member States.
Until now, we thought that, when we joined, we would serve one god, but we now must serve several gods. On the other hand, we should also examine carefully - as we already requested the Commission to do in November, but without any success - what has led to this situation. It would have emerged then that the irresponsible economic policy pursued by the governments of the Member States affected, as in the case of Hungary, was the primary cause, which the Commission also contributed to due to the shared responsibility for economic policy or rather the lack of it. But it would also have been clear that solidarity, regarded as one of the EU's basic values, failed when it came to prevention. In actual fact, a lack of euro liquidity is also lurking behind Member States' payment problems and devaluing currencies. This is partly due to the parent companies' caution underlying the vulnerable subsidiary network at local level and partly because they did not receive any specific, practical help from the euro zone, mainly the Central Bank, unlike their fellow Member States in the euro zone which had their liquidity topped up as much as possible. But another factor making it difficult to be competitively neutral is that, because of the currencies' vulnerability, these countries outside the zone cannot benefit during the crisis from the budget incentives provided by the rest either.
I am pleased that our report raised the issue of the European Parliament's involvement. The attention of my fellow Members might mainly be drawn to the specific conditions for partial assistance agreed with the countries outside the euro zone which are in dire straits. How could it happen that, according to the agreement signed with the Hungarian Government, while completely ignoring the basic problem of European demographic trends, a drastic reduction in childcare fees was prescribed? I find it particularly disgusting that in the supplementary agreement signed in March of this year, Hungary is being forced to reduce its national top-up for direct agricultural payments. After all, this is not a social issue, but it was included in the accession treaty in order to alleviate our existing major competitive disadvantage. How did such an immoral action occur to you, together with the spineless Hungarian Government? Do you have any idea how much damage this is causing to Hungarian farmers and to the EU's reputation? We will, of course, vote for the proposal as it is a step forward, but it only marks a partial degree of solidarity. What we need to achieve is full solidarity.
Elisa Ferreira
Madam President, among other aspects, the crisis has not only revealed the huge gaps between countries in the euro area, which was perhaps the main conclusion of the EMU@10 report, but in particular the extreme vulnerability of those countries which, while belonging to the European Union, are not part of the euro area.
That is why boosting the EU resources available to assist with balance of payments crises is absolutely vital. That is also why we welcomed the financial assistance ceiling being raised from EUR 12 billion to EUR 25 billion, and now to EUR 50 billion.
However, it is more important to tackle the root causes of the problems, and not just their most obvious manifestations.
The enlarged Europe and the euro area must now reinterpret the sense of European solidarity and the objectives of cohesion and real convergence. In this respect we not only need to understand the capacity of Europe's cross-sectoral policies, but also revisit new financing instruments, such as Eurobonds.
Financial assistance for balances of payments is essential, but is in no way enough to guarantee the sustainability of the European project and the European single currency.
Guntars Krasts
(LV) Thank you, Madam President. The increase in the European Union medium-term financial assistance mechanism to EUR 50 billion is the response that is needed to the current situation. It is an important signal to European Union Member States which are not in the euro zone, and particularly to those Member States that have joined the European Union comparatively recently. The effect of the world financial crisis on the financial and economic situation in this group of states has differed, but in all of them local and international confidence in those states' financial systems has diminished significantly. Therefore, the reinforcing of the Community assistance mechanism is a demonstration of solidarity between Member States; it will have a stabilising role on the financial markets and will serve to reduce the risk of instability in the European Union's economy as a whole. The strengthening of the medium-term assistance mechanism will also make it easier for Member States to obtain the funding they need from international financial institutions. I support the proposal by the relevant committee to instruct the Commission to inform the European Parliament about memoranda of understanding with Member States in receipt of assistance, as well as the need to carry out a check in two years' time on the conditions providing the basis for assistance. Thank you.
Alain Lipietz
Mr President, Commissioner, this is the second time that we have had to increase the guarantee provided by the European Union to overcome the difficulties of its members, non-members of the euro zone. This is the second time: we already increased it in December.
Mr McCreevy has congratulated us on the promptness of our action. We already acted promptly in December, and we should like to say to Mr McCreevy, as Mrs Berès did a moment ago, that the lift ...
Yes, Mr McCreevy, please? Please? Commissioner ...
... We should like reciprocity to be applied, by which I mean that, when Parliament asks you to submit a draft on the regulation of hedge funds, you respond to us immediately, and in the same timeframe that we apply when you ask us to increase aid for the protection of the balances of payments.
We are indeed in a crisis; we may not need to sit every day, but at least let us not have to wait six months from the European Parliament's requesting a directive on hedge funds to the Commission complying!
Clearly, then, as far as this aid is concerned, we fully agree on the need to increase this credit line, and I am slightly surprised by Mr Becsey's remarks. We had exactly the same discussion in December. Commissioner Almunia explained to Mr Becsey that it was the Hungarian Government itself that had requested aid from the IMF, but not from the European Union, and that it was the European Union that said: 'But we too can help you'.
It is quite clear that the European Union has a duty to show solidarity towards countries outside the euro zone, but there is also no reason why IMF aid, to which each of us, Hungary and Romania included, contribute, should be turned down.
Thus, in the Berès report - which we shall, in any case, vote for - there are two things that bother us. Firstly, what is the point of saying in paragraph 4 that we must commit ourselves to inter-country solidarity only to then point out in paragraph 11 that under no circumstances are we bound by a country's commitments? It is true that we are not bound by a country's commitments, but there is no use in pointing this out when we say that we will show solidarity with one another.
The second problem is the assertion that there is no legal basis to increase this solidarity, but it is precisely the responsibility of the Commission to provide this legal basis. We are in a crisis, and it is high time we were given a legal basis.
Werner Langen
(DE) Mr President, I should like to start by thanking Mrs Berès for the speed with which she produced a draft report. As you know, the procedure comprises two stages. The first is the consultation; the opinion on the Council regulation. This is not a codecision procedure. At this stage, we in the committee were unanimous in our view that the increase from EUR 12 to 25 to 50 billion was the right step to take. Three Member States have already availed themselves of funds: Hungary - whose situation Mr Becsey has just discussed along with its domestic responsibility - Latvia and Romania. These European funds enable us to provide effective assistance and thus to actively support countries that have run into payment difficulties.
Yet we should not forget that, at the same time, the international institutions have decided to increase funding from the international financial institutions - the International Monetary Fund (IMF), the World Bank and development banks - by USD 1 100 billion. This means we have a dual instrument. Europe has contributed to increasing this funding whilst also assuming its own responsibility. Against this background, the draft resolution on which we in the Committee on Economic and Monetary Affairs voted yesterday evening on the basis of compromise proposals is also suited to the adoption of Parliament's requests, requirements and demands of the Commission and of the competent Council in this regard for future legislation.
In this connection, there is a legal issue with regard to the Eurobonds and Article 100, which is binding on only the euro area. If we consider that there is no legal basis for Eurobonds in the Treaties at present, we are on the right track. On the other hand, however, the Commission must be given the task of examining the conditions required to make such measures possible in the first place. I regard this as a responsible course of action.
Therefore, our group will be supporting the proposal as a whole - both the proposal for a regulation and the motion for a resolution. We hope that this does not mean Europe embarking on some sort of additional financing responsibility that would shoot any budget to pieces. Therefore, the limit of EUR 50 billion is completely justifiable at present. If new challenges should present themselves, we shall not be able to close our eyes to them.
Dariusz Rosati
(PL) Mr President, I would like to express emphatic support for the Commission's proposal to double the amount of financial aid permissible for new Member States which are not in the euro zone. I would like to congratulate the Commission on its quick reaction, and also to thank our rapporteur, Mrs Berès.
The present crisis has shown beyond all doubt that new Member States which do not belong to the euro zone can be very vulnerable to fluctuations in financial markets, often through no fault of their own. It has been said here that European Union aid should originate from the principle of solidarity. I agree entirely with this, but I would like to add that it is also required by the fact that the crisis did not arise in the new Member States and they are not responsible for the turbulence in the financial markets, and so giving them aid is fully justified.
At the same time I would like to add that irrespective of whether the proposal is appreciated and supported or not, the most effective method to eliminate similar threats in the future is to allow these countries to enter the euro zone as quickly as possible. This will be less expensive and will give the European Union greater stability.
Edit Herczog
(HU) Mr President, Commissioner, Mrs Berès. We are unable to predict the duration and magnitude of the crisis, but we are constantly monitoring it. Even if we are unable to tackle the crisis ex ante, we must try to keep the response time to a minimum and achieve the maximum degree of transparency, democracy and efficiency. On the subject of time, we are dealing with the crisis like the Greek god, Cronos: the time spent handling the crisis is swallowing up its own children. We will become victims of the crisis if we are unable to take quick, effective action. The European institutional system must assume the role of Rhea, Cronos's wife, which means we have to get the better of Cronos, in other words, make the most of the time for dealing with the crisis. I would like to thank the European Parliament, the European Commission and the European Council for their joint decision in favour of boosting solidarity and efficiency. However, since Mr Becsey has brought up domestic political matters, I would also like, if I may, to draw attention to the fact that while tackling this crisis, it is the duty of MEPs to work together in national parliaments. What we need is not division between the government party and the opposition, but help from every party involved in managing the crisis. This applies to my country, Hungary, and to every other country too.
Theodor Dumitru Stolojan
(RO) I would like to thank the European Commission, the Council and European Parliament for the efficiency with which they have devised this measure. Many Member States which are not part of the euro zone will benefit from this top-up to the intervention fund for balance of payment requirements, including Romania. Without this measure, the situation triggered by the economic and financial crisis would have been much more difficult in these Member States outside the euro zone. Given also that it has been shown once again that the Member States which use the euro have weathered the financial crisis better, I would suggest that in the memoranda of understanding which will be signed between the Commission and Member States to be able to use these funds, Member States should be reminded, especially the new ones, that they have an obligation to take every measure to join the euro zone.
Andrzej Wielowieyski
(FR) Mr President, Commissioner, I wholeheartedly support Mrs Berès's report, and I note that the very fact that we already have the G20 instead of the G8 is a considerable step forward.
I believe that the positions adopted in London, especially by the Europeans, are reasonable, but we must not stop there. It is not just a question of being able to monitor the markets and hedge funds better, or of supporting our balances of payments and the economy with billion-dollar cash injections.
The international monetary system is not working properly because we do not know exactly how much goods and services cost in the various countries. We therefore need to go further and to give thought to the idea of introducing an international currency or, at the very least, of creating a common political system bringing together a few main currencies.
China, Russia, many developing countries, but also the new members of the Union - we all need stability and ground rules.
However, Commissioner, that also depends on us, the Union.
Margarita Starkevičiūt
- (LT) I would like to draw attention to an unpleasant fact which is hiding behind fine words. In reality, Europe is now split in two: the euro zone and the non-euro zone. An hour ago we discussed the control of financial markets; it is obvious that the aim is to ensure the movement of capital and the activities of financial groups uniformly throughout the whole of Europe. This means macroeconomic management is left in national hands and if there are problems, countries are left to solve those problems themselves. This is not the sort of attitude that will help us strengthen the common market. We need common macroeconomic management and this will be achieved if we support the proposal of the de Larosière Group. However, we need this macroeconomic management on a European scale, not just within the euro zone, and we need it now. I think that one of the European Parliament's proposals for the ECOFIN meeting should be to discuss macroeconomic management not just on the basis of the euro zone, but at European Union level.
Charlie McCreevy
Member of the Commission. - Mr President, Mr Becsey raised the question of the conditionality attaching to loans. Let me just say that conditions are discussed with governments and with all Member States within the Council, so they are not imposed unilaterally.
A number of speakers raised the question of the legal base on which this particular provision has been made. The use of Article 100 as the basis for a new instrument on EU balance of payment assistance has been considered by the Commission. However, due to the urgency of the matter and to ensure continuity, it has been fair to stick to the current legal instruments and limit the revision of Regulation (EC) No 332/2002, establishing a facility providing medium-term financial assistance for non-euro-area Member States to a minimum, i.e. to the increase in the ceiling as agreed by the European Council, and to some necessary technical improvements that appear necessary on the basis of the experience gained with the implementation of the balance of payments facility since last autumn. A number of speakers raised that particular point.
Let me once again thank the European Parliament for the efficient way that it has dealt with this particular file.
Pervenche Berès
Mr President, it is true that we would at times like the Commission to show the same sense of responsibility and effectiveness as the European Parliament.
I would say to Mr Becsey that, in my view, the resolution on which we are going to vote in this House clearly underlines the issues involved in membership of the euro zone, as well as the importance of bringing the concept of solidarity to life within the European Union, and that is one of the reasons why we strongly support this proposal.
Commissioner, on the matter of Article 100, the problem is not one of knowing whether Article 100 is going to be used here, but of knowing whether we in the European Union are finally providing ourselves with all the tools to tackle the reality of this crisis and its potential future developments.
We believe that the Commission must implement the secondary legislation so that, in future, it may be able to use Article 100 in order to tackle problems within the euro zone for which the EUR 50 billion to be voted on today could not be used.
That is the spirit of the European Parliament's position, and I hope that the Commission will hear this message, whether it be on the arrangements, on the complete set of tools required to tackle this crisis, or on the conditions for drafting the memorandums and on the conditionality of these loans in the negotiations with the Member States concerned.
President
I have received a motion for a resolution pursuant to Rule 103(2) of the Rules of Procedure.
The debate is closed.
The vote will take place on Friday 24 April.
(The sitting was suspended at 11.20 a.m. and resumed at 12 noon)
