Responses to relaunch the economy in the Member States of the European Union in Central and Eastern Europe
President
The next item is the Commission Statement on responses to relaunch the economy in the Member States of the European Union in Central and Eastern Europe.
Joaquín Almunia
Mr President, ladies and gentlemen, the economic crisis has affected the whole of Europe. It could be said that it has affected the whole world, but here in the European Union, it has probably particularly affected the countries of Central and Eastern Europe, the new Member States, for a series of reasons. Firstly, because they are obviously more fragile economies than the more mature, industrialised and consolidated economies of Western Europe, and also because they are economies which do not have a financial system in which the crisis has been generated, and have therefore been dependent on a high proportion of direct investment from outside in order to finance their growth. When the crisis erupted, and particularly when the crisis worsened in 2008, this investment came to a halt, and left these economies in need of funding in order to finance their growth, which they were unable to substitute using their savings and internal resources.
Having said this, it is also obvious that not all the economies of Central and Eastern European countries have been equally affected. Some economies were better prepared to withstand the blows of the crisis. Some economies had had the wisdom before the crisis to move forward political reforms that have given their model for growth a more solid foundation.
In any case, the European Union, and the Commission as part of the European institutions as a whole, reacted to the crisis, in particular, with a series of measures that responded to a specific concern which, in relative terms, were more beneficial to the countries of Central and Eastern Europe.
The European Economic Recovery Plan, which was adopted at the end of 2008, is a plan based on fiscal stimuli which have logically been more powerful in the large economies of the euro area in Western Europe. Nevertheless, by encouraging internal supply in Western European countries, these stimuli have enabled the market to continue to be a source of growth through external demand for Central and Eastern European countries.
In addition to the European Economic Recovery Plan, decisions adopted by the European institutions have increased lending by the European Investment Bank. The figures for 2009 have obviously not been closed, but I can forecast that lending by the European Investment Bank at the end of this year will probably be over 50% more than its lending in 2007, the year before the crisis.
The European Investment Bank has given specific priority to its financing operations in Central and Eastern European countries in a series of lines and activities. In order to do so, it has used instruments that the Bank had started before the crisis, like Jeremie, Jessica and Jaspers and other actions. Also, as it is not strictly a European Union institution, the European Bank for Reconstruction and Development (EBRD) has stepped up its action under the impetus of the European countries and the European Commission, who are shareholders in the bank.
The Structural Funds have also played a positive role, which they always do for countries that need to benefit from the cohesion policy, but when the crisis began, decisions were made, for example, to increase the resources that could be advanced from the Structural Funds for countries that benefit from them, in particular for Central and European countries.
Unfortunately, the Council did not support a Commission initiative for the European Social Fund to provide 100% of the funding during the crisis (2009 and 2010) for a series of activities to support workers and active policies in the labour market.
As you already know, the balance of payments facility was an instrument that had not been used since 1993. This instrument is used to provide finance for countries with difficulties securing external finance, due to their balance of payments, or for countries with difficulties financing their budgetary needs. Its ceiling has increased from EUR 12 billion to EUR 50 billion, which was at the initiative of the Commission and agreed by the Council, and out of those EUR 50 billion, around EUR 15 billion has been used in financial support operations for three Central and Eastern European countries that are Members of the European Union: Hungary, Latvia and Romania.
Finally I would like to mention the so-called Vienna Initiative, promoted and encouraged by the European institutions, along with international financial institutions. It has coordinated the action of the private financial system which, in many of these countries, is basically organised around Western European banks that have invested in Central and Eastern European countries and have subsidiaries and offices there.
The Vienna Initiative has meant that action could be coordinated, including maintaining the positions and risks taken by private banks in those countries. It has been possible to maintain a financial system at maximum level that helps to finance the consequences of the crisis and the investment needed to come out of the crisis. This is in the face of announcements of excessive risks taken by some Western European banks established in those countries. The truth is that so far, we have not had to mourn any 'victims' among those banks, but rather they have maintained a reasonable level of capitalisation and financial activity in the context of the difficult conditions that the system is operating under.
We are already seeing positive signs. We are, of course, also seeing significant challenges. This means that we have not finished. We need to continue paying specific attention to how best to use the instruments available to the European institutions in order to help these countries to set off on the path towards recovery and emerge from the crisis.
If you will allow me to give you a positive example, I will tell you about Poland, which is the only country in the European Union that is continuing to maintain positive growth and has not had negative growth at any time throughout the crisis. The only one in the whole of the European Union is a country of Central and Eastern Europe and one of the new Member States.
Finally, I would like to mention the importance of the euro as an anchor for the strategies for withstanding the blows of the crisis and emerging from it. The euro is a point of reference to guide the appropriate strategies for emerging from the crisis. There is a country in this region that joined the euro area in the middle of the crisis, Slovakia, and yesterday, the Slovakian authorities held a conference in Bratislava welcoming the way in which the euro has protected them from the worse consequences of the crisis and is helping them to get through it in much better conditions than they would have had to withstand if they did not belong to the euro area.
Another country in the region, Estonia, wants to join the euro area and integrate its currency into the euro in 2011. So far, the indicators and the degree of compliance with the criteria of the Maastricht Treaty, now the Treaty of Lisbon, indicate that this target is possible. We will not be able to guarantee this until the corresponding convergence report is published in the spring, but it is possible that Estonia will be in the euro area in 2011.
For the countries outside the European Union that are part of the region, candidate countries or potential candidate countries, joining the European Union is also a powerful anchor for ensuring that they have adequate strategies and policies.
It is therefore true that there are a great many difficulties. It is true that these countries have more fragile economies. It is true that the consequences of a crisis such as the one that we are going through are, for the citizens of those countries, infinitely more painful than the consequences for citizens of countries with social protection systems and with much more established, stronger and more consolidated welfare systems.
It must be said, however, that the instruments available to the European institutions and the very fact that they belong to the European Union and have the opportunity to be part of Economic and Monetary Union is a positive factor rather than an obstacle in terms of tackling a crisis such as the one that we are experiencing.
Arturs Krišjānis Kariņš
on behalf of the PPE Group. - (LV) Mr President, Mr Almunia, in order to help the economies of the Member States in Central and Eastern Europe to recover, there are two possible approaches: giving fish or giving a fishing-rod. Of course, what is best is to give a fishing-rod. The difficulty is to know what kind of fishing-rod it should really be. The cornerstone and gauge of recovery is the creation of new jobs. In order for this to happen, investment is needed. One of the main obstacles to investment in the region is a lack of clarity about the stability of the national exchange rate and the introduction of the euro. At the moment, the introduction of the euro in the new Member States is like a horse-race, with each state trying to break away from the pack and reach the euro area.
It may happen that in this crisis situation, some Member States do themselves harm; for instance, by rapidly reducing budget expenditure, they increase unemployment over the level that their economies can withstand. It may also happen that one Member State, in joining the euro area, may damage the economy of a neighbouring state outside the euro area, by attracting investment to itself and increasing the level of unemployment in the neighbouring state. The European Union is formed on the basis of the solidarity principle. When the EU increased the number of its Member States in 2004, a unified strategy for the reception of these Member States into Europe was developed and adopted. I believe that the European Commission should have a rethink on the process of introducing the euro and should prepare a clear strategy for its introduction which does not indirectly induce Member States to cause harm to themselves or their neighbours. It is not necessary to change the stability criteria, but a joint plan and timetable should be developed for the whole region, so that we can introduce a single currency in Europe using an established procedure that is clear to all. This would be the fishing-rod that would help the economies of that region to recover, by opening the door to investment and the creation of new jobs.
Sergio Gaetano Cofferati
Mr President, ladies and gentlemen, as you rightly pointed out, Commissioner Almunia, the consequences of this serious financial and economic crisis have been felt in countries worldwide and naturally in those in Europe. In the EU, it is the weakest countries, the ones we are discussing now, that have been hit the hardest.
These are countries which joined the Union only recently and which are outside the euro area. It is therefore important to remember them and identify the most effective actions so that they can be part of Europe as a whole and subsequently participate in life in Europe on an equal footing with others. There accordingly need to be monetary policy interventions, starting with those of the European Central Bank, since unless we help increase their GDP and invest in their production systems, they will not be able to redress the imbalances that are currently weighing them down, satisfy the Maastricht criteria and join the euro area. It is also important, as you mentioned, for there to be other actions such as easier access to the resources provided by the European funds and EIB financing.
I believe, however, that we should never forget that these actions must be carried out within a framework of simultaneous actions for other weak countries in Europe too. It is not just a question of the countries that we are discussing today, as we are all unfortunately aware, and for all these reasons, we can no longer delay the creation of a European financing system capable of supporting investment with a comprehensive vision for Europe. I am referring to the establishment of a fund financed by Eurobonds, which I believe to be the only practical solution available to Member States and the European Union.
The time has now come at this stage to show political courage and foresight with regard to the desire to overcome the crisis and create the conditions for the competitive development of Europe, a development that would ensure the well-being of all Europeans.
Guy Verhofstadt
Mr President, the reason why we, along with other Members here present, have requested this debate is because a new iron curtain has emerged with the economic crisis, Commissioner. This monetary iron curtain separates those outside the euro area from those within it.
Many problems that today affect the majority of the Baltic States, for example - you mentioned Poland, but I could, of course, mention Bulgaria, Romania, Hungary - are due to the fact that they are not in the euro area. Therefore, they must continue to use their local currency, and this is giving rise to harmful, devastating consequences at present. We may well talk of an economic recovery, but in those countries, there is no economic recovery for the time being. In some of these countries, the unemployment rate is over 20%, and public sector salaries have had to be cut by more than 20%. The figures relating to their economic growth are really very negative.
The important thing is that we allow them to join the euro area as soon as possible. However, at present, they are suffering the harmful effects of this situation. Clearly, the idea is not to change the conditions of the Stability and Growth Pact - no one has asked for that. They should not be changed because, as you rightly said, the euro area has acted as a defence against the economic and financial crisis. All the same, we must help these countries in a different way, not by changing the conditions of the Stability and Growth Pact, but by offsetting the negative effect that they are suffering because they are outside the system. If we do not do so, it will be several more years before they join the euro area.
We have made a number of suggestions, we have drawn up a six-point plan and asked the European Commission to take it into account. We therefore need the European Central Bank, the European Commission and the European Investment Bank to cooperate with one another. Which measures must be implemented in this context? Firstly, the Central Bank must also provide liquidity to local banks. It has granted liquidity to banks in Western Europe; it has also indirectly provided resources to Swedish banks, for example, but some local banks have received nothing from the European Central Bank.
These six points incorporate other proposals. For example, why not increase the proportion of EU funding and reduce the proportion of State funding of social, regional and cohesion funds, and so on? Indeed, the Member States do not currently have the budgetary resources to finance certain projects. We could therefore move towards having, for example, 75% of funding by Europe and 25% by the Member States, in particular, the Baltic States.
I have mentioned just two of the six very practical ideas that we have put forward and on which a decision can be taken by the European Central Bank or by the Commission or the European Investment Bank. This is what these countries need. Personally speaking, I do not see it as progress that the International Monetary Fund is intervening in these countries and dictating how they should behave. In my view, it is up to Europe instead to decide what must be done.
That is the request we are making. In any case, I have been to these countries and I have been shocked by the fact that these people feel abandoned by the European Union in their daily struggle. I urge the next European Commission to come back with a credible plan for the states of Central and Eastern Europe and, more specifically, for the Baltic States.
Tatjana Ždanoka
on behalf of the Verts/ALE Group. - Mr President, I come from Latvia, a country hit heavily by the financial crisis. Due to the irresponsible policy of right-wing governments, Latvia risked going bankrupt without financial assistance from outside. Now we are speaking about different financial and economic solutions which could change the situation for the better. Of course, we must properly discuss all the solutions, including the speedy introduction of the euro. In the meantime, I am afraid that the financial and economic perspective is only one side of the coin. We have to discuss the social perspective as well.
Now, the EU institutions are perceived as the 'bad guys' by many residents of Latvia: the bad guys who make our poor government cut pensions and benefits, the bad guys who are to blame for social exclusion and poverty. There are many politicians who cultivate this perception, mainly inside the ruling coalition, because, if people believe that the current social crisis is our government's fault, the government will not survive the forthcoming general elections.
Do I believe that Latvia and other countries of the region urgently need the EU's helping hand? Yes, I do. But I strongly believe that we need a strong mechanism for control and we need very strict conditions in the field of social policy. EU money should first of all go to save common people, not banks or state bureaucracy. Therefore, using this opportunity, I would ask all my colleagues and fellow Members to sign Written Declaration 0056/2009, which was initiated by representatives of three political groups, on social conditionality for European Union help.
Roberts Zīle
Mr President, Commissioner, thank you, Mr Verhofstadt, for tabling the question. However, the posing of the question during this evening's debate may confuse European Union citizens in Western Europe. 'Look, we have to suffer from the financial crisis too, because Eastern and Central Europe, through its clumsy governance, has created these problems for itself and also for us'. Such a view debases the already seriously impaired confidence in the European Union's cohesion policy. The example of the Baltic States, however, shows that we are in the same boat. The pursuit by the Scandinavian banking sector of market share and high profits in practice squeezed national currencies in the Baltic States out of the loans market, particularly the home mortgage loans market. With a fixed national exchange rate, the civil liability of borrowers towards lenders was very high: all the currency risk in the value of an overpriced pledge was borne by borrowers.
In late 2008, in tense talks between the Latvian Government, the International Monetary Fund, the European Commission and the Swedish Government, a decision was taken to buy up the second largest commercial bank, using only Latvian taxpayers' money, and to keep the national exchange rate strong. Thus, we Latvians, having over many years lost our revenue, competitiveness and, possibly, quality of society, saved the banking sector of the Scandinavians and other investors, at least in the Baltic States, since the domino effect in the event of banks failing would go far beyond Latvia's borders and would reach as far, let us say, as Scandinavian pension funds, as the banks' shareholders. Yes, the European Commission helped us, and the International Monetary Fund financed this choice, but the lion's share of the loan goes to stabilise the banking sector.
By not allowing a default and by retaining a strong exchange rate, we devalued our economy by 20% of GDP, but in reality, we were helping the neighbouring Estonians, whose advantage, of course, was having had a responsible budget balance for many years, to introduce the euro as early as 2011. It appears even more odd that for Europe's monetary union, an example like Estonia is even crucially necessary. This, as it were, shows that the Maastricht criteria for the introduction of the euro work even in times of crisis. It is not that we are not pleased for the Estonians, but our sacrifice, in buying the bank, was a certain measure of solidarity in not foisting off misfortune upon our neighbours and aggressive investors, too. We only wanted to see a certain solidarity from European financial policy makers, including on the subject of the barrier to new euro area states.
Politicians in Latvia had to take extremely harsh decisions, which the majority of my fellow Members in the older European countries would not have to deal with even in their most terrible nightmares. However, it is not within our power to take away the currency risk of private debt from our citizens, and we do not want to behave like hooligans by unilaterally introducing the euro or allowing the euro to circulate in tandem with our national currency. However, the goal of our demographically ageing society cannot be to spend many years exchanging every second lat earned into euros to pay back the banks, while in the evenings, offering up prayers that the lat will hold fast against the euro.
Alfreds Rubiks
Thank you, Mr President, in my view, on the issue of the modernisation of social policy and assistance to the states of Central and Eastern Europe, there is a lot of rhetoric, but not much actually happening. A new social policy has not been fully worked into the macro-economics of the European Union. The budget is small, and is not keeping pace with the enlargement of the European Union. Striving to extend its area of influence, the European Union often helps countries outside the EU more than the new EU states. Therefore, it is no accident that in Latvia, for example, the majority of inhabitants are today worse off than before accession to the European Union. More than 90% of pensioners are surviving on income which is below subsistence level.
Unemployment in Latvia has reached the 20% mark, gross domestic product has fallen by 19%, the State debt exceeds the annual budget, and pensions have fallen by 10%. The people are protesting, leaving Latvia, announcing indefinite hunger strikes or offering to sell their internal organs in order to get money to keep their families. The number of suicides is rising. The European Union's neoliberal social security policy must be changed. Capitalism caused the crisis, but it is workers and pensioners who are paying to find a way out of it. Investment by the major capitalist multinational companies and banks in solving the problems caused by the crisis is minimal. The European Union is allowing the upper classes and the banks to be saved with the tax revenue of the state, that is to say, with the people's money.
The countries of Eastern Europe want an equal allocation of subsidies to agriculture, since at the moment, subsidies are more concentrated towards the older Member States, which, at the same time, distorts the free market in labour. There must be an end to the unequal approach in the calculation and payment of direct payments, and to the separation of these payments from the manufacture of specific products. The European Commission and Parliament must democratically adopt regulations to protect not only the interests of large producers and bankers but also the needy in the rich, democratic European Union.
Jaroslav Paška
The economic and financial crisis has had a much harsher effect on the transforming countries of Central and Eastern Europe than on the stable democracies of Western Europe. It is therefore right to look for ways to counter this unfavourable economic development. We must not forget, however that miracles happen only in fairy tales. Therefore, the primary and fundamental requirement in terms of changes for the better is a responsible financial and economic policy of the government and a modern, right-wing working legislature in every affected country. Only then will it be possible through targeted industrial measures to play a part in gradually assisting economic development.
If such assistance is to be effective, its financial resources must not be spent on social benefits or consumption, nor must they be spent on artificially-created nonsensical jobs. It should not be possible, for example, for a government to use such assistance to resume the operation of an old thermal power station which produces more emissions than electrical energy only because it allegedly creates a few new jobs.
If we really want to help the affected countries, we must support only financial projects that have a high degree of innovation and which consistently conserve the environment. Let us take care that the funds invested in these support programmes contribute to a restructuring of companies and bring a long-term effect to the affected countries, and thereby to the whole of Europe as well.
Zoltán Balczó
(HU) First and foremost, we should find a solution to avoiding a similar crisis in the future. The mess caused by the global financial system is sweeping across the world, having a direct impact on the real economy because companies have no access to credit, which is the vital lifeblood of the economy. The lesson from this is obvious. It is clear that we must get rid of the belief placed in the market's self-regulation and supremacy, and accept and enforce the state's regulatory role.
We talk about economic recovery, but obviously, the ultimate aim we want to achieve through this is to protect jobs. This means that priority is given to support for small and medium-sized enterprises in Europe as well, as they actually provide the majority of jobs. The terms for gaining access to credit are a fundamental issue. Certainly, the banks have operated sensibly, as we heard from Mr Almunia. This applies to Hungary as well, for instance, where all the commercial banks are subsidiaries of foreign owned banks. Therefore, because of their prudence, they have tried to withhold credit in such a way that it has also paralysed the domestic economy.
Direct subsidies, which the EU also allows, are also obviously required, but they should not be given to those governments, like the current Hungarian Government, which primarily supports the settlement of multinational firms rather than small and medium-sized enterprises. Today, we discussed the matter of the European Agricultural Fund for Rural Development when dealing with the modification to the European Commission's 2009 Finance Bill. In its draft, the Commission has taken the significant and drastic measure of holding back these funds, even though they are precisely earmarked for maintaining the rural population.
Why are we talking about this region separately? The reason is that it has become much more vulnerable than the western part of Europe. We need to go back in time to the 1990s, when it became clear that our hope - that our economy in Hungary would also become independent in this democracy - was in vain. This region suffered from the ever-increasing burden of the instalment repayments covering the inherited debts, as well as the using up of its cheap natural and human resources, while all these generated very significant financial revenue in the Western countries. This is why I feel obliged to say now, with proper justification, that this region should receive more support, as this is a matter of obtaining partial compensation.
Enikő Győri
(HU) Ladies and gentlemen, the crisis has demonstrated that the countries of Central and Eastern Europe outside the euro area are much more vulnerable than those where the single currency is used. As a result of their dependence on strong exports and foreign capital, as well as the population's high level of foreign currency debt, the rate of recovery is also slower than in those countries enjoying the security of the euro area. If the solidarity between Member States does not work in practice, rather than just as a sound bite in slogans, the European Union's internal cohesion will diminish, thereby hampering the whole EU's performance.
However, we do not need any new EU instruments to achieve this solidarity, especially not handouts. The existing opportunities and resources must be used sensibly. In this respect, the European Central Bank can help in constantly maintaining the liquidity of the banks in the region. The European Investment Bank can also help by providing targeted credit to the region's small and medium-sized enterprises, while the EU's institutions can help by adapting the rules for using the money from the Cohesion and Structural Funds to suit the extreme situation. I would particularly like to draw your attention to the fact that many people like to treat Central and Eastern European countries en masse, even though these countries are very diverse, with different crisis exit strategies as well.
For instance, after nearly eight years of incompetent socialist administration, Hungary has used up all its reserves. At the moment, it is forced to exercise restraint, which is in stark contrast to the practical actions adopted in other European countries for managing the crisis, based on economic recovery. While the Western European governments are already thinking about drawing up their exit strategies, some countries in Central and Eastern Europe which have been worst affected by the crisis are still facing major recession in 2010 as well. Therefore, when it comes to devising exit strategies, it is vitally important to have some way of differentiating between countries.
EU leaders should not devise standard rules which would only exacerbate further the situation of some countries and that of their population. When drawing up the new financial system regulations, attention must be focused on ensuring that the tightening of capital requirements does not generate unfair competition between banks. The banks in Central and Eastern Europe which have turned out to be healthy have not received any injection of capital from anyone. This means that they would only find it more difficult to deal with the stricter capital requirement regulations than their rescued counterparts in Western Europe. This would result in a decline in their desire for credit, which was not very great anyway, with small and medium-sized enterprises ultimately ending up the victims of this situation. We must avoid this scenario at all costs.
Ivari Padar
(ET) Mr President, first I would like to congratulate Mr Almunia sincerely for his very effective work up to this point. For all the Member States of the European Union, there are many common problems and, at the same time, each country has its own economic policy and its own specific problems, and we must definitely all be self-critical here. The argument that only the new Member States of the European Union have been especially severely affected by the crisis is not true. Look at the countries where the banks have needed economic support - they are mainly the old Member States, not the new ones. Similarly, fiscal problems are bigger in the euro area than outside it.
At the same time, it is clear that banks operating across borders did not create an additional risk. The situation was exactly the opposite. The banks which operated in various countries were the most secure, and they were able to stabilise the situation in many recipient partner states. The banks which had problems are the banks which simply made bad commercial decisions, as was the case, for example, with the Royal Bank of Scotland.
Kristiina Ojuland
Mr President, I would like to join the previous speaker in thanking Commissioner Almunia. He has a clear view on the differences in different countries in Central and Eastern Europe and the current state of their economic and financial situation.
The Commissioner mentioned Estonia. I come from Estonia, and it has not been an easy job to fulfil our aspirations of joining the euro area, but the one thing I think we might share with the other countries around is self-responsibility. I have not heard the word 'self-responsibility' in this assembly in this debate so far; there is only the word 'solidarity'. How can we expect solidarity if we have big world competitors like China and India racing ahead? I think in the European Union we should be much more pragmatic and think what our national governments are responsible for.
It is difficult in these times to make cuts. In Estonia, it has been very difficult to cut expenditure in state government, yet we have been doing this for years. In the good years - in the booming years - we were able to make reserves, and nobody else - only the Member States' governments - is responsible for that.
Ryszard Czarnecki
(PL) Mr President, I represent Poland - a country which perhaps does not have to worry about the crisis in the way that, for example, Hungary or Latvia do, but in my country, in spite of government propaganda, unemployment is also clearly rising, and a demonstration today in Warsaw was attended by protesting shipyard workers who have just received the last part of their redundancy money.
According to an analysis carried out by the National Bank of Poland, the dynamics of the recession in nine countries of Central and Eastern Europe were definitely stronger than in the countries of Western Europe. What is worse, the differences between the individual countries of our region are greater than those in the 'old' EU. This is partly a result, not only of the greater stability of the economies of the old 15, but also, and let us say this directly, of their greater ability to use or bend certain financial instruments which theoretically have been banned by the European Union.
The European Commission and Mrs Kroes turned a blind eye to the help which Berlin gave the German shipyards, but condemned Poland for doing the same and ordered the return of EU aid given to Polish shipyards. It turns out in practice that some are more equal than others, and that double standards are being employed. The French motor industry can receive more government aid than the motor industry in the countries of the 'new' EU. This only increases the disproportions.
The Commissioner spoke about the salutary role of the euro, but it was surely a joke. Poland does not have the euro, and the crisis has affected us to a lesser degree than Slovakia, which has adopted the euro and where the consequences of the crisis are more serious than in Poland. I appeal for solidarity, of which the representative of the Group of the European People's Party (Christian Democrats) spoke, but I have the impression that he is, on this matter, a hypocrite. In this context, hypocrisy is not a tribute to virtue.
Joe Higgins
Mr President, I expected Commissioner Almunia and indeed Mr Verhofstadt to perhaps offer us an explanation, and an analysis, for the reasons behind the disaster which has befallen most countries in Central and Eastern Europe in the economic arena. Twenty years ago, we had an heroic movement of working people in those countries which brought down the Stalinist monolith. Unfortunately, instead of replacing that monolith by going on to genuine democratic socialism, it was the restoration of capitalism which followed. But that was what was prescribed by the entire political European capitalist establishment: the EU, the big business media all promised that capitalism would herald a bright new era for the peoples of Central and Eastern Europe.
The market was to be God; competition was to be king. So we have the imposition of the neoliberal agenda so beloved of the European Commissioner: the wholesale privatisation of public property - the robbery of public property, in fact - and putting the economies of these countries at the mercy of the sharks on the international financial markets. We even set up a special bank to oversee this process, and it has been an unmitigated disaster. The Baltic States are in freefall: Latvia 18% down in the third quarter, unemployment at 20%.
What do the EU Commission and Mr Verhofstadt offer? The prescription of the International Monetary Fund and of the western European banks. Slash and burn the living standards of working people; slash and burn public services. Therefore, we have in Latvia the threat that half the hospitals will be closed by the end of this year.
The policies of the EU establishment mean a nightmare for the ordinary people of these countries - the threat of barbaric conditions for the ordinary people. So I would commend the people of Central and Eastern Europe to reject this fatal prescription of the European Union establishment, nationalise their banks, put them under democratic control so that they invest for people and for jobs, nationalise or renationalise the major sectors of the economy, but this time under the control of working people so that they can plan their economy for people and not have themselves at the mercy of the sharks, of corporate Europe and financial Europe, which has brought about this dreadful disaster for the peoples of this region. You may laugh, Commissioner, but I await your response.
Nikolaos Salavrakos
(EL) Mr President, thank you very much for giving me the floor and my thanks also to Commissioner Almunia for the very detailed report which he submitted to Parliament. I was particularly gladdened by the fact that the Commission agreed to relax the Stability Pact, acknowledging of course that the strict Maastricht criteria, such as the 3%, are very hard to achieve in times of serious economic crisis such as we are experiencing at present.
I should like, first of all, to highlight the fact that, in recent days and weeks, the country which I come from, Greece, has been under attack from a specific credit rating agency, a consultancy firm, as regards its creditworthiness. This begs the question of whether we should seriously consider the creation of an EU agency to do this job, so that not just anyone can do it and so that it has nothing to do with hidden commercial or other competitive agendas.
I wish to voice the complaint that the European Union helps a great many third countries more than its members. I also wish to call for the solidarity to be shown which my country, Greece, needs in order to deal with its problems.
Iliana Ivanova
(BG) Thank you, Mr President, ladies and gentlemen, I believe that the sensible policy for combating the crisis in the countries of Central and Eastern Europe must be based on the principle of a social market economy, unlike the suggestions made by the previous speaker. This is why only a strong economy which respects the freedom of private ownership, the rule of law and personal liability can guarantee the cost of the sustainable social policy which our society deserves.
I firmly believe that our efforts and responsibility must be focused on a number of basic pillars. Firstly, stable public finances. An alarming number of Member States have high levels of national debt. We need to be very vigilant and disciplined. We must aim for budget deficits that are not only within the 3% GDP limit, but also do our utmost to achieve balanced budgets.
As part of the Stability and Growth Pact, the European Commission and Council must closely monitor Member States for macroeconomic imbalances.
Secondly, we must support small and medium-sized enterprises. The reason for this is not only that they provide more than 65% of employment in Europe, but also that they offer the most flexibility and dynamic growth potential, especially during a crisis.
Thirdly, it is important for us to support the unemployed and the most vulnerable groups in our society, as well as to provide sufficient investments in education, obtaining qualifications and research. The last point, and the number one priority for Member States who recently joined, is the expansion of the euro area.
I want to ask for your support and thank my fellow Members, as well as urge the European Commission and Member States to review their position with regard to the area's expansion. We need your understanding and solidarity, especially in countries like Bulgaria, where I am from, which has made great efforts to comply with the Maastricht criteria and also has one of the lowest budget deficits in the European Union, along with an extremely disciplined fiscal policy.
Fellow Members, I believe that it is important for us to continue with our joint, coordinated efforts in order to help our economies recover and emerge from the crisis stronger than before.
Edit Herczog
(HU) Mr President, ladies and gentlemen, let me begin my one-minute speech by thanking my fellow Members from countries in the euro area for considering it important to attend this debate. Their very presence at this debate is where solidarity begins.
Without forgetting about Member States' own responsibility, as my fellow Member said, the new Member States are facing general difficulties which definitely seem like objective difficulties to us. One such difficulty is the enforced procedure for the twenty-year accession process, which caused serious economic problems for these countries and expected genuine social solidarity from their inhabitants. Another one is these countries' lack of the defence mechanism offered by the euro area, which meant that they were in a much more defenceless position when the crisis hit them. Lastly, there is the proportion of SMEs and the people employed by them in these countries, compared to the figures for the European Union.
All in all, I firmly believe that, in order to achieve economic recovery in the countries of the European Union and Central and Eastern Europe, we must join forces and tackle a threefold objective involving employment, financial balance and economic growth. I believe that the small and medium-sized enterprises package contained some of these elements. At any rate, we ought to overcome somehow the financial difficulties of the small and medium-sized enterprise sector. We would definitely need the European Central Bank's assistance mechanisms to achieve this. The smaller an enterprise is, the more difficult the access the EU has to it.
(The President cut off the speaker)
Vilja Savisaar
(ET) Mr President, above all, I would like to draw your attention to the three Baltic States, whose situation is perhaps the most serious of all in this region. Here are some examples. Estonia's economic output has fallen by over 15%, while the European Union average is -4.1%. In no other European country apart from the three Baltic States has there been a drop in economic output of more than 10%. In all three Baltic States, unemployment has risen up till now to more than 15%.
I very much hope that the proposals by the Alliance of Liberals and Democrats for Europe to revive the economy and to improve the financial situation will receive very concrete attention and a response from the Commission. Last year, Estonia had to cut the budget three times and shrink public sector expenses, and further cuts will aggravate the already serious social situation. I very much hope that Estonia will join the euro area on 1 January 2011, in order to create an area for economic growth and for the resolution of financial difficulties.
Paul Rübig
(DE) Mr President, Commissioner, ladies and gentlemen, we are currently in the middle of a financial and economic crisis and I believe that liquidity is the most important factor in a crisis, not only for banks and businesses, but in particular for employees. Creditworthiness is, of course, always a prerequisite of liquidity and, therefore, the discussion about the creditworthiness of companies, banks and employees is particularly important.
Of course, creditworthiness is based on earnings, whether you are an employee, a company or a bank. If you are not earning anything, you have, of course, no creditworthiness and no liquidity and this is where the negative spiral begins.
For this reason, it is highly important for us to ensure that no additional taxes are imposed in future on commodity trading. Instead, we should be considering how we can make a financial transaction levy on purely financial transactions which are not based on a service or on commodity trading. This levy could be used to refinance the banks and national budgets and could therefore form the basis for creating new jobs.
In reality, unemployment is completely unacceptable. It is ultimately the main factor behind the emergence of the financial and economic crisis.
Silvia-Adriana Ţicău
(RO) According to the Treaty of Lisbon, the European Union's economy is a social market economy. Our main concern must be to create new jobs, reduce unemployment and emerge from the economic crisis. Member States in South-Eastern Europe are faced with huge deficits. They must stimulate the creation of new jobs, while maintaining a long-term, sustainable fiscal policy. Education, health, agriculture and development of the transport and energy infrastructure remain the main priorities for these Member States. It is important for the level of agricultural subsidies in these Member States to be on a par with those in older Member States. Assistance offered by the EU over a period of five years for balance of payments can be granted if the beneficiary Member States commit to reforming their system of taxes and duties or if they adopt measures to boost their administrative capacity in order to increase and achieve maximum absorption of European funds. These Member States also need to be supported in modernising their heavily polluting industrial sectors in order to reduce emissions, but preserve jobs and ensure economic development. I would like to add as a final point that I believe that support for these Member States requires the cohesion policy for the 2014-2020 period to continue to help Europe's regions which are less well developed economically.
Diogo Feio
(PT) Mr President, I should like to begin by congratulating the promoters of this debate, because it really is very important that we discuss the situation of economically weaker countries and countries outside the euro area. That is particularly so at a time when we are discussing strategies for coming out of the crisis, when we will have to bear in mind the different situations the various countries are facing. The situation is difficult in many economies in Eastern and Central Europe, but things are now starting to become difficult in many economies in the western part that are inside the euro area. My country, Portugal, is an example. The strategy must take account of the various situations, which differ from one country to another.
Several different paths can be taken. It is extremely important to have a suitable monetary and budgetary policy, if possible, one that is increasingly determined by political criteria that take into account the need for liquidity for companies and small and medium-sized enterprises, that do not create or perpetuate obstacles that are very difficult for countries outside the euro area to overcome, and that exert pressure on national governments to carry out the medium- and long-term reforms that are needed. To conclude, we have to move on from words to deeds. Cohesion has to be effective.
Elena Băsescu
(RO) Thanks to the successful implementation of the European Economic Recovery Plan, we will notice a slight improvement next year, in 2010, for the European Union's Member States.
The countries of Central and Eastern Europe have been affected in different ways by the economic crisis. On the one hand, Poland has recorded slight economic growth, thereby avoiding the crisis, whereas Romania and Hungary have been severely affected by the economic crisis.
Romania has experienced an unprecedented economic crisis this year, which has also been exacerbated by the serious political instability triggered by the Socialists, who wanted to leave the government for electoral purposes due to the forthcoming presidential elections. The presidential elections were only two months away. The Socialists' departure from government and the introduction of a motion of censure in parliament left Romania for two months with a temporary government with curtailed powers, which was unable to finalise and adopt a draft budget in parliament.
As a result, the International Monetary Fund postponed delivering to us the third tranche of a loan amounting to EUR 1.5 billion. However, the Swiss Government decided to grant us a non-refundable loan amounting to approximately EUR 120 million. My country has recorded 8% negative economic growth and an unemployment level two points below the European Union average. In the future, the EU requires a strategy focused on getting governments to step back from supporting their national economies. However, this will not be possible in Romania until 2010 as we are not allowed to do so by the agreement signed with the IMF.
Petru Constantin Luhan
(RO) I agree with the proverb that if you are coming from a fishing trip and you meet someone on the way, you should teach them to fish instead of giving them a fish. However, we have to know that we need to teach them to fish. I am referring on this point to the states which have recently joined the EU and still need to learn. However, they cannot learn off their own bat. We also need to give them the financial resources to do so. I personally believe that a healthy economy is mainly made up of medium-sized enterprises. As a result, economic, social and territorial cohesion policies must be targeted primarily at allocating European cohesion funds for this type of economy. I would like to add that the EU's economic, social and territorial cohesion policy has been neglected recently in terms of defining the European Union's priorities.
(The President cut off the speaker)
Victor Boştinaru
(RO) While listening to Mrs Băsescu, I cannot help but declare: 'O, les pauvres! What holy simplicity in the European Parliament'.
Returning to more serious matters, the economic contraction in the countries of Central Europe has reached drastic proportions. The disparities are growing between these countries and the rich countries of Western Europe. Furthermore, these countries' capacities to generate economic and financial incentives remains at such a low level that it is almost negligible. I want to draw the European Commission's attention to the fact that, as a result of the social costs, the considerable rise in unemployment and swingeing budget cuts, these countries' capacities to provide cofinancing for projects with European funding is also diminished. All these factors may condemn the countries of Central Europe...
(The President cut off the speaker)
Lajos Bokros
(ES) I would like to put a few very simple questions to Mr Almunia, without the difficulties of translation. What do you think about amending the Maastricht Treaty criteria to perhaps include a new criterion relating to the balance of payments, a maximum limit on the current account deficit and external debt?
What do you think about the exchange rate policy? Is it better to maintain a fixed or flexible exchange rate during a recession?
Also, with regard to the countries that have adopted the euro without being members of the European Union, is this an advantage or a disadvantage for them in the negotiations for taking on the responsibilities of the euro area in the future?
Csaba Sógor
(HU) Mr President, influenza strikes down those who have a weak constitution. Therefore, the countries of Central and Eastern Europe not only need a 'vaccination', but also something to fortify their constitution. You know what I am referring to here. The change of regime should be supported, not only the economy, although that should, of course, be supported too. The reason is that, in a large number of the countries of Central and Eastern Europe, the economy, media and politics are still in the hands today of those who systematically ruined this region over the last 40 years.
Therefore, we should support what we call European values so that one country will not be debating - in the Europe of multilingualism - the need for a language law and another will not seek to sneak collective guilt as a mere footnote into the treaty, rather than European values. Therefore, the countries of Central and Eastern Europe need...
(The President cut off the speaker)
Zigmantas Balčytis
(LT) Thank you, Mr President, Commissioner, at one stage in 2006, we Lithuanians actually also attempted to introduce the euro but, sadly, we missed the criteria by one hundredth. Nevertheless, I really want to thank you, Commissioner, for the previous period, for the work done and for very good cooperation.
As for today's problem, I really think that the conditions have changed and there really were some good proposals to review some things. By no means am I proposing Maastricht criteria, rather very elementary things that will give every state some opportunity to regulate prices. These are the various exchange rate mechanisms and many other things.
I would like the European Commission to bear this proposal in mind and thank Mr Verhofstadt who suggested that, in future, we might be able to sit down and calmly discuss how we can help the states of Eastern Europe, the Baltic States, as unemployment really ...
(The President cut off the speaker)
Joaquín Almunia
Mr President, thank you very much to Mr Verhofstadt, who initiated this debate, and to everyone who has spoken. I am very grateful to you for your contributions and ideas.
Allow me to begin with a phrase used by Mr Verhofstadt. He said that the fact that there are countries in Central and Eastern Europe that are not part of the euro area means that there is a 'rideau de fer' (an iron curtain). I do not agree, because some of the Central and Eastern European countries that are not yet in the euro are in extraordinarily difficult economic situations, but there are others whose economic situations are no more difficult than those of more mature, more advanced economies. The latter have belonged to the European Union for much longer, have been receiving finance from the European Investment Bank and the Structural Funds for much longer and are in the euro area, and they have equally serious or sometimes more serious problems than many of the economies of Central and Eastern Europe.
The problem is therefore not an iron curtain, which has not existed for twenty years, and it is not that the instruments available to the European Union are not being used in that region, because they are being used as I said in my initial speech. Some of you have alluded to this while others appear to be unaware that instruments are being used to a much greater extent than we could have imagined when this crisis began in 2007.
With the greatest respect, the problem is not how the criteria for entering the euro are interpreted, and we have debated this many times in this House. That is not the problem. There has been criticism in this House of those who, at the time, decided to allow some current members of the euro area to join it when it was not very clear whether the conditions had been fulfilled. What we are now seeing is that the economies that are not well prepared to deal with a crisis such as this are suffering the most, both within and outside the euro area. This is the problem that we should be concerned with.
Do we need to cooperate more? Of course we do. Do we need to strengthen the European instruments? Of course we do. The Commission is asking the Council and Parliament to do so. Parliament is also asking the Commission to do so, and what I am asking Parliament is to ask the Council to do so, because the Commission's proposal for the actions of the European Social Fund in 2009 and 2010 to be 100% funded by European resources in those countries that benefit from the European Social Fund has not been accepted by the Council. I would be very grateful if you could say this to the Council.
(FR) This is the last time that I will be here in my role as Commissioner for Economic and Monetary Affairs, and I want to convey your position, which is also my own, to the ECOFIN Council. Indeed, I believe that it is important, at times like these, to use the Structural Funds and the Cohesion Fund in a different way from that envisaged under normal circumstances. I shall continue in my mother tongue.
(ES) I agree. I agree with many of the ideas in the six points that Mr Verhofstadt mentioned, which he included in a letter to the President of the European Commission and to the President of the European Investment Bank. We agree in many respects. In many respects, we are already acting in line with the points that he made. I cited these straight away when I first spoke.
However, to think that by using European instruments, it is possible to avoid having to make difficult adjustments in order to deal with the consequences of a recession such as this shows a lack of awareness of the depth of the recession that we have suffered, both within and outside the euro area, in Central and Eastern Europe as well as in Western Europe. It has been of such depth that we can imagine how, for example, Ireland has made such extremely difficult adjustments, not because the International Money Fund says so, or because it has been imposed by anyone from Brussels, but because the Irish authorities consider it to be the best way to adjust its economy as soon as possible and move forward with the same impetus that it had before the crisis.
The social consequences of these adjustments concern us and concern me personally, just as much or even more than they concern Parliament. I can tell you, as it is public knowledge, that by using the balance of payments facility, the Commission has reduced many of the adjustments proposed by the governments of the countries benefiting from those resources. We are going to continue to do this. We have also tried, as far as possible, to preserve the amounts in the national budgets in order to be able to jointly finance the European funds, because otherwise, the reductions in investment expenditure that would have to be used to jointly finance European funds would have had very negative consequences in those countries.
We are, however, seeing positive signs, which it is also important to say in a debate such as this. We would not have been able to say this in a similar debate in October 2008. In December 2009, it must be said that there are positive signs, that we are beginning to see the light at the end of the tunnel, including in the countries that are suffering the most as a result of this crisis, such as Latvia, Lithuania, Estonia and Ireland.
We are still facing a great deal of uncertainty, and the obstacles that we have to tackle are very significant, but there is light at the end of the tunnel.
So once the recession has been overcome, will we go back to doing the same as we did before it? I really hope not! As this is my last speech in Parliament on the economy as Commissioner for Economic and Monetary Affairs, allow me to give you five points that are not among Mr Verhofstadt's six points, which we should all debate.
Firstly, in the light of our experience of this crisis, the countries of Central and Eastern Europe need a much more balanced model for growth. They cannot depend solely and exclusively on finance from foreign investment. Many of you have talked about small and medium-sized enterprises, and I agree with you. They also cannot depend solely and exclusively, or almost exclusively, on foreign banks, because when it comes to supervising the actions of the financial system, it is very difficult to have supervisory authorities and a financial policy that serves the interests of each country if practically all the banks are not from that country and take strategic decisions based on the interests of their country of origin. Having said that, it must be said that the foreign banks in those countries are conducting themselves extraordinarily well, as I have already said.
We must increase the take-up rate of the Structural Funds. In the current financial perspectives, we have proposed a very large amount of resources for your approval, which can be channelled through the Structural Funds during this financial perspectives period. In many cases, countries are not managing to use these resources, and there is still scope for action, in some countries amounting to 4% of their annual GDP. 4% of annual GDP and this money is not being used adequately.
We need to provide much more support for the integration of infrastructures, and we need to continue to debate how to do so. There are bottlenecks in parts of the region that have not yet been overcome through infrastructures to integrate their economic area and productive fabric sufficiently within Western Europe.
Finally the consequences of the crisis are being felt more, in social terms, in the countries that do not have a sufficient social protection system or welfare state. This is the case partly because they do not have a sufficient level of growth, income or wealth, but it is partly the case because, it has to be said, during the years prior to the crisis, in some of those countries, there was a 'less is more' tax policy, and when money is needed to fund public action there is none, because there is no income. This is also something to consider for the future.
President
The debate is closed.
Written statements (Rule 149)
Elena Oana Antonescu  
At a time when the global economic crisis is continuing to affect Europe, the states of Central and Eastern Europe are feeling its effects more intensely due to the existing disparities in economic development between the old Member States and those which have joined during the last accession rounds. The economic crisis magnifies these disparities, placing additional pressures on the governments in these countries, which have to deal with stringent macroeconomic conditions, the social repercussions of the crisis, while also having to resolve problems arising from the vulnerability of the financial system and the sustainability of the public health care and social insurance systems. Taking into account these economic and social policy constraints, I hope that the Commission will adopt an integrated plan focusing on the specific problems in this region. It must be a plan which supports the efforts made by these states to maintain an economic and social balance. The countries of Central and Eastern Europe have taken up loans granted by the IMF, the World Bank and the European Union in an attempt to overcome their domestic problems. However, the financial resources are not supplied at the rate required to support the measures adopted by these governments. For this reason, I call for these resources to be made available more quickly and for a plan to be adopted which will support the economies in this region.
Sebastian Valentin Bodu  
Romania and Bulgaria are feeling the full impact of the global economic recession which has hit the last two countries to join the European Union, against the background of a disparity with the developed economies of the other Member States. The latest Eurobarometer survey highlights that the populations of both countries state that they are very greatly concerned about their countries' economic path of development, as well as about the way in which the crisis is affecting every citizen personally. On top of the conclusions of the Eurobarometer survey, the crisis's impact, in the middle of winter, is only going to get worse. National governments have the duty to adopt the best measures to enable them to get through the winter without any drastic social consequences. The International Monetary Fund and the European Commission have been involved in helping Romania and Bulgaria, both financially and through providing expertise, by setting certain macroeconomic indicators. Greater involvement by the European Commission in stabilising the Romanian and Bulgarian economies will have a beneficial impact across the whole of the European Union, which cannot afford any major imbalances at the moment. All of the European Union's Member States are being affected by the different aspects of the crisis. However, it is evident that the new Member States are going through more difficult times than the well-tuned economies of the old Member States. Solidarity is one of the European Union's fundamental values, and an economic recession is a good time to show it.
András Gyürk
At the start of the year, we were pleased to note that more than EUR 3 billion were earmarked for energy improvements as part of the economic stimulus package introduced at that time. The European Commission rightly acknowledged that support was required for both the creation of alternative supply routes and the interconnection of energy networks. However, our delight is mixed with a degree of disappointment. If we look at the specific support sums, we can see that the support package neglects Central and Eastern Europe, the very region which is most vulnerable in terms of energy supply. The Franco-Belgian gas interconnection receives more support than the Central and Eastern European interconnections. While the Franco-Belgian interconnection will be the seventh, joining the existing six, this kind of infrastructure is very often lacking in the new Member States. In addition to this matter, we were also unhappy that the energy efficiency improvements were completely left out of the support package. However, this was precisely the area where the package's main aim could have been easiest to achieve, namely, job creation. Due to the shortcomings mentioned, we believe that two things are of paramount importance. Firstly, future support plans must focus on those regions where energy investments have the greatest added value. Secondly, energy efficiency, which is frequently mentioned in EU circles, cannot be forgotten when budget decisions are being made in the future, especially if we know that a more efficient use of energy can already produce absolutely spectacular results in the short term.
Tunne Kelam  
in writing. - I congratulate the Commission for the efforts they have made to help European economies. The knowledge that the EU provides measures for those most in need reaffirms and ensures that we will all come out of this economic crisis stronger than before. I would like to emphasise the importance of losing all currently existing barriers on economy, trade and free movement on the labour market. Completing the integration of the European single market must be the main target in the short term. Only this helps us effectively stand against any future crisis. One of the strongest incentives the EU has is being part of the euro area. The euro is an important incentive for investments and economic growth, reducing vulnerability. I truly hope that my own country, Estonia, will succeed in fulfilling the criteria necessary for joining the euro area. Estonia has one of the lowest foreign debts in Europe and has managed to put aside enough reserves during economic growth to be able now to face the crisis with its own means. Furthermore, I am convinced that the current means from European funds and the prospects for joining the euro area soon will allow us to reduce unemployment efficiently next year.
Wojciech Michał Olejniczak  
Ladies and gentlemen, over a year after the greatest shock to American society since 9/11, the declaration of bankruptcy by the Lehman Brothers Bank, we are wiser as the result of further experience. What has happened in the last 12 months is clear proof of the erroneous assumptions of neoliberal politics and, as was the case with 9/11, has persuaded us to look at the world in a different way. The economic crisis has affected basically every part of the world, but, most importantly for me, it has affected many millions of Europeans. The report published by the World Bank several days ago does not leave any doubt that the EU Member States in Eastern Europe need aid, and not only in the area of their internal affairs. If the crisis can reduce 11 million inhabitants of Eastern Europe and Central Asia to poverty, with a further 23 million set to follow suit by the end of 2010, under no circumstances can we be complacent. Financial support is essential, but so is intellectual support, to establish suitable social programmes for the countries which are feeling the effects of the crisis the most. During previous crises, families were able to save themselves by emigrating or by holding down several jobs. Today's crisis has a global dimension, which renders this type of solution impossible. If we do not want to see more effects of the events of a year ago, we should mobilise significantly more European funds, make it our aim to promote employment and strengthen international cooperation. All of these actions should focus on one thing - social policy.
Czesław Adam Siekierski  
The countries of Central and Eastern Europe have felt the effects of the economic crisis exceptionally hard. Falling economic indicators were a reality of the last year in many countries, and not only in our region. However, it should be stressed that different countries coped with the crisis with differing degrees of success. The clear leader of countries in the region with favourable results is Poland. As Mr Almunia admitted during the debate, Poland is the only country to have avoided a recession, maintaining a positive growth dynamic throughout the crisis. Despite the fact that the economic situation in the region is slowly stabilising, it is worth thinking about what measures should be taken to restore economic growth and avoid similar turbulence in the future. In the short term, the governments of the countries concerned should adopt more resolute strategies of escape from the crisis. They need to balance budget expenditures, actively fight unemployment and social exclusion, and create conditions for the development of businesses, on the one hand, and conditions for an increase in demand, on the other. Equally as important as action at national level is external help. European and international financial institutions should establish a special credit line for small and medium-sized enterprises and for the support of infrastructure projects. These measures would certainly bring a growth in employment and an improvement in the social situation. In the long term, the best solution seems to be entry to the euro area and creating the conditions for balanced and stable growth.
Csaba Sándor Tabajdi  
During the past year, the battle against the crisis was waged primarily at Member State level, using Member State instruments. The EU's Member States considered taking action mainly at national rather than EU level when it came to economic recovery, providing assistance to companies and preserving jobs. In some cases, even the minimum expected level of coordination, agreement and cooperation was lacking. The old Member States, with their stronger economies and more room for manoeuvre in budgetary terms, put together packages which primarily focused on their domestic markets and, in many instances, protectionist instruments that distort competition were used. One glaring example of this was the support offered by France's President Nicolas Sarkozy to the Peugeot company, stipulating as a condition the retention of jobs in France, while redundancies had to be made at the company's more efficient plant in Slovenia.
Similar discrimination can be encountered in connection with the financial sector in Central Europe and the Baltic region, as Western parent companies continue to this day to divert profits generated at their subsidiaries operating in the region. The credit crunch is having a particularly tough impact on the small and medium-sized enterprise sector, which provides the majority of jobs and is sacking employees in huge numbers as a result of the contraction of export markets and reduction in development opportunities. This means that the economic crisis is inevitably turning into an employment and social crisis. For this reason, I am asking the EU15 governments once again to do their utmost to block protectionist measures and take a stance against the behaviour of the domestic banks, which is infringing internal market principles.
Iuliu Winkler
in writing. - (HU) The global economic crisis has had a varying effect on the European Union's different Member States. The new Member States in Central and Eastern Europe have proven to be the most vulnerable. The reality of the situation has shown that Member States have had unequal access to the instruments contained in the European Economic Recovery Plan. We have also noticed that Member States in the euro area have enjoyed the best protection against the crisis. It is no coincidence that the consequences of the crisis were felt harder in those countries which did not have the benefit of recovery instruments and were not members of the euro area. The entry into force of the Treaty of Lisbon has marked the end of the European Union's period of institutional reform.
Now a joint effort is required to strengthen the European Union's cohesion. This is a vital condition for the EU to emerge from the crisis revitalised, as a crucial global player. The impact of the social and employment crisis will be felt most in 2010. The new Member States will definitely be its main victims. What we need is an economic recovery plan that is, in actual fact, equally accessible to all Member States. In addition, the terms for joining the euro area must be made more flexible. These obvious measures will contribute to creating a strong Europe, making it a community of half a billion citizens who profess the same values and are guided by the same ideas.
