Medium-term financial assistance for Member States' balances of payments and social conditionality (debate) 
President
The next item is the debate on the oral question to the Commission, by Tatjana Ždanoka and Jean Lambert, on behalf of the Verts/ALE Group, Alejandro Cercas, on behalf of the S&D Group, and Marian Harkin and Elizabeth Lynne, on behalf of the ALDE Group, on medium-term financial assistance for Member States' balances of payments and social conditionality - B7-0215/2009).
Tatjana Ždanoka
author. - Mr President, I come from Latvia, a country hit severely by the financial crisis. Latvia was at risk of going bankrupt without financial assistance from outside. We received such assistance from the EU and the IMF. However, as a precondition, the Latvian Government had to cut budgetary spending. It did so by reducing pensions by 10% and the pensions of working pensioners by 70%, reducing family benefits and maternity benefits for working parents by 10%, as well as reducing non-taxable personal income tax thresholds.
The approach, as you see, was an egalitarian one. Whether one's pension was EUR 100 or EUR 1 000, 10% was taken off. The Commission welcomed these cuts which were made in such a scandalous manner, and signed a memorandum of understanding with Latvia. It was clear from the very beginning that such unselective cuts would hit the most vulnerable in society. Is the Commission not aware of the European Year against Poverty?
The Latvian situation is not unique in the Union. Hungary and Romania have also received Community loans. Other countries may one day be forced to apply for such loans. We must therefore avoid creating a precedent of accepting antisocial measures.
Commissioner, of course you can say that you only give the money, and that the governments of the Member States are responsible for social policy, but social rights are legally binding on the institutions of the European Union. This means that everything the institutions do must be measured against social rights. Otherwise, words about a high level of social protection as an EU task will do no more than raise an ironical smile.
Elizabeth Lynne
author. - Mr President, this is not about telling Member States exactly what they should or should not be spending their money on. Each country has its own immediate priorities for getting themselves out of their financial difficulties.
But when Member States do receive that aid from the European Union under this provision, they should be encouraged to spend it in a way that respects the principles of the Union - in other words, not ignoring the need for social protection and social inclusion.
This financial crisis has hit people across the European Union hard, and therefore it is right that this fund exists. Millions of people have lost their jobs. Many of those who have become unemployed in those Member States are the most vulnerable and the least likely to find employment quickly. That is why it is important that social safety nets in those Member States are not ignored.
We have asked in our oral question particularly about whether Member States are required to include an evaluation of the social impact in their reports that they submit to the Commission. I would be pleased if you can inform us about whether that is the case.
It is important that we give the right message to Member States that are receiving European funding through the medium-term financial assistance. I believe personally that we must make it clear that the Commission might take into account the way the most vulnerable have been helped, before agreeing any further assistance.
I know that when Member States are in financial difficulties, it is quite often not easy to continue to be aware of their social obligations, hence this oral question. It is so important to remember that this financial crisis has a human face as well and that face is represented quite often by the already most marginalised in society.
Alejandro Cercas
author. - (ES) Mr President, Commissioner, before asking the question, I carefully read the previous questions and the positions that Parliament had taken on those questions. It is a fact, not an opinion, that on 24 April this year, Parliament adopted a legislative resolution with the aim of amending Regulation (EC) No 332/2002 which, under Article 100 of the treaty, governs those financial instruments.
Commissioner, in that resolution, Parliament supported this assistance to tackle the specific public finance problems of those Member States most affected by the financial crisis, it expressed its full solidarity, above all with the states that have most recently joined the EU but, at the same time, Commissioner, Parliament clearly said that this assistance ought to be conditional and set out four criteria, which are the Community objectives.
These are: firstly, that there should be quality in public expenditure, that money should not be wasted; secondly, that social security systems and sustainable growth should be adhered to; thirdly, that the policy of full employment of a decent quality should not be abandoned; and, fourthly, that climate change should be combated. Logically speaking, if these are good objectives for us, they should also be complied with in those countries.
A few months have passed and we have received quite a few reports from NGOs, trade unions and citizens about one of the four countries that have received very significant amounts of assistance to public finances: EUR 6.5 billion, 3.1 billion, 2.2 billion and 5 billion. They are giving us figures such as those which my fellow Member just quoted: cuts of 40% in the education sector; cuts of 10% in the pensions programme; a halving of subsidies for the ill, etc.
Commissioner, in the face of this situation, Parliament wishes, at least, for our silence not to be interpreted there - as it is being interpreted - as if we are the ones imposing these measures; at least, we ought not to be complicit in this interpretation, which sees Europe as attacking these most needy sections of the population. Commissioner, if possible, we ought to avoid a situation where it is the weakest who pay for the adjustment.
Joaquín Almunia
Mr President, ladies and gentlemen, the problems in Latvia, Hungary and Romania, which are the three European Union countries that are currently receiving loans through the balance of payments facility, are problems that have not been created by this Parliament, or the European Commission, or the European Union. They are problems created by the economic crisis, but they have been aggravated by mismanagement and misguided policies undertaken by the political leaders of those countries. I say this because there are countries in the same region of the European Union as Latvia, in the same region of the European Union as Hungary, and in the same region of the European Union as Romania, which are not having the same problems, and which are doing a better job of tackling the crisis, with support from European budgets, through the Structural Funds and the Cohesion Fund, with the protection given by membership of the European Union and prospective membership of the euro, but without the need to ask for assistance from the balance of payments facility.
Why have these three countries had to ask for assistance? Why have we had to lend them money? It is not through the fault of the Commission or Parliament, or the European Union in general: it is because of mismanagement in those countries.
How are we helping them? We are doing so by lending them money; and nobody makes loans without conditions; we do not have the authorisation of this Parliament or of the Council to make loans without conditions. We are lending upon certain conditions, and we are imposing on those countries some conditions which are tough, because their situations are extraordinarily difficult, but we are saying to them: 'do not make cuts in order to be able to cofinance the Structural Fund and the Cohesion Fund; do not adopt retrogressive measures; do not make cuts that damage the weakest'. Sometimes we are successful and sometimes, unfortunately, we are unsuccessful, because the matter is not in our hands, but in theirs.
Therefore, I share your concerns, and not only do I share them, but also, on behalf of all of you, I am passing them on to those governments at the same time as giving them money in the name of the European Union: EUR 3.1 billion of lending to Latvia, and very large amounts also to Romania and Hungary.
Please note this, however: nobody makes loans without conditions, and I am not authorised to do so on behalf of you, on behalf of the Member States. We cannot, for better or for worse, take decisions which are the responsibility of the governments and parliaments of those countries.
What we do do is to remind the governments and parliaments of those countries, firstly, of their responsibility for extricating their countries from a crisis which other countries are not suffering to such a serious extent; and secondly, that there are measures that cannot be taken, and we are not prepared to lend money so that measures are adopted that go beyond what is strictly necessary to adjust public finances and place those countries in a position to tackle their futures without the need to ask the European Union for loans.
Jean-Paul Gauzès
Mr President, Commissioner, ladies and gentlemen, I believe that the commissioner's comments just now genuinely answer the question that was asked.
The European Union does not make funds available without conditions. Those conditions have been mentioned: quality of public spending, sustainable development objectives, employment policy, climate change, but also, of course, the need to make up for the shortfalls of the previous administration as quickly as possible, so that these countries that we are helping can reach the level required.
However, in a crisis such as the one we are going through, I believe that we must not go overboard with conditions. We must trust the governments of the Member States that receive European aid to implement the necessary provisions and avoid, as the commissioner said, provisions that could be retrograde or backward-looking.
Social spending is, of course, important - it must be preserved - but here, too, we must trust the Member States to adopt the measures needed to rectify the situation and not carry out nit-picking checks, which would be ineffective anyway.
The time to assess the way in which the Member States have used European aid will be when any new aid is granted, and it is then that we will perhaps be able to draw conclusions from measures that were unsuitable, particularly in the social sphere.
Pervenche Berès
Mr President, Commissioner, you will very clearly recall that when, on 24 April - as my colleague, Mr Cercas, pointed out - we endorsed, validated and ratified the increase in the balance of payments facility, we did so on two conditions: firstly, that this aid come with conditions attached, particularly in the case of social aid; and, secondly, that there be transparency, so that this House would be clear about the conditions under which such agreements were concluded with the Member States in question. I therefore believe that the debate that we are holding this evening is a just, useful and democratic debate and one which must provide evidence of effective action.
We are in an absolutely critical situation where the European Union is concerned and we can clearly see that this crisis is damaging the very foundations of solidarity among Member States and particularly solidarity towards certain Member States. The situation is only made worse by the news reaching us from Romania, where we are in a very difficult position as a result of the political uncertainty caused by the consequences of this crisis in particular.
However, I would not want us to repeat the mistakes of the past, especially those that we were able to attribute to the IMF which, 10 or so years ago, was applying formulas that were ultimately making things worse. Furthermore, I strongly disagree with my fellow Member, Mr Gauzès, when he recommends not carrying out nit-picking checks but waiting for the next request to examine the quality of aid spending. No! It is when the aid is committed that one can define the conditions, and I feel that Europe has paid enough of a price for not examining the conditionality of aid in many areas to close its eyes in this case.
We cannot accept today, within the European Union, the most vulnerable having to pay for the adjustment policies. I do not believe that it is a case of accusing the Commission of mismanaging Latvian policy. No one in this House indicated to you, Commissioner, that that was the path that we wanted to follow.
However, we cannot allow the most vulnerable to pay the price for the European Union's budget commitment and for our solidarity towards Latvia, because we do not believe that this is the way to restore solidarity and the balance of the Latvian economy.
Marian Harkin
on behalf of the ALDE Group. - Mr President, the EU's social protection and social inclusion process is core to ensuring the achievement of the European Union's strategic goal of sustained economic growth, more and better jobs and greater social cohesion.
During an economic crisis, there are increased risks of poverty and social exclusion for many citizens, but particularly for those on the margins of society, for those who become unemployed and for those who rely on the various social safety nets that operate within the different Member States.
This question asks the Commission if it is attempting to mainstream the social protection and inclusion process in the provision of medium-term financial assistance for Member States' balances of payments under Council Regulation (EC) No 332/2002.
I am always sensitive to the imposition of too many conditions and excessive red tape on recipients of assistance, and that goes for Member States right down to SMEs and individuals. However, when that imposition would help to realise a core EU principle such as social inclusion, then it is indeed important. We cannot aspire to a social inclusion process and produce lots and lots of documents outlining how to achieve it if, at the same time, we do not ensure that this process is mainstreamed in our initiatives.
The Commissioner says that we have attached harsh conditions to these loans, but I was not exactly clear as to what these conditions are and, indeed, if they include social conditionality.
Regardless of the circumstances whereby EU funds are disbursed, we cannot wash our hands and hope for the best. We have been asked to trust Member States. Trusting Member States is fine, but trust has always to be earned and if there are concerns, I believe they need to be dealt with.
Patrick Le Hyaric
Mr President, Commissioner, ladies and gentlemen, most economists now say that the crisis is largely due to the transfer of wealth created by labour into capital, into profits. Moreover, in general, it is also agreed that it is in the countries that have maintained their social welfare systems and their public services that the populations have suffered relatively less as a result of the crisis.
However, the problem facing us this evening is indeed the nature of the conditions that you attach to the granting of European assistance or International Monetary Fund assistance to the populations. This assistance can no longer be conditional on the application of structural adjustment plans reducing social expenditure, training expenditure, and privatising public sectors, including social services of general interest. It is this that has become ineffective today, and it needs to be recognised. All of this will only make the crisis, unemployment and poverty worse.
This is why, in our view, we have to reverse the criteria of this conditionality and decide that European public funds or IMF funds can be conditioned, can be combined with a new system of appropriations and will be granted in accordance with new criteria aimed at and encouraging a new distribution of wealth so as to increase pay, pensions and minimum social requirements and to maintain a high level of social protection, the guarantee of a job for all. Ultimately, it is social progress that goes hand in hand with economic efficiency, not the other way round.
Arturs Krišjānis Kariņš
(LV) Mr President, Commissioner, the European Commission has shown clear and cooperative understanding to those Member States that have encountered fiscal difficulties because of the crisis. Stable, strong social support systems cannot be maintained if the Member States do not have strong economies. My fellow Members are proposing to restrict the conditions for offering financial support, but I consider this to be undesirable in principle. Instead, we should give serious consideration to the possibility of extending the conditions under which financial support may be obtained, allowing it to be used not only to reinforce states' budgets and financial systems, but also for the development of the economy.
Investment in the economy is necessary in order to guarantee a stable social support system in the long term. The use of financial aid resources in this way too would be the best way in which to provide help as quickly as possible to Member States encountering financial difficulties. The recovery of states from the crisis and their further stabilisation is closely linked with European Union policy in relation to those states. Only harmonised and effective action will produce results on an EU-wide scale. Financial aid is not, and cannot be, the only way in which European states can support each other. Complex solutions must be found that will foster the economic development of all the European Union Member States.
Kinga Göncz
(HU) The countries which we are talking about in this case are the European Union's new Member States which have had, following the changes of regime, to look after those who lost out from the change of regime, become more competitive after economic restructuring in an open market, as well as create and build economies with balanced structures. People have the smallest reserves then in these countries. It means that they are finding it difficult to repay home loans due to the high currency-based debt ratio. Unemployment is rising due to economic problems developing unilaterally and social expenditure is also decreasing.
We can see instability, particularly political instability developing as a result of social tensions. More countries are seeing a rise in support for extremist views, and populism is gaining ground. I think that we must take all these factors into account when assessing the situation and devise what other measures we need to take in relation to European solidarity and which are based on it.
Jürgen Klute
(DE) Mr President, the topic we are debating this evening has already been on the European Parliament's agenda many times. It is well-known that, in its granting of aid, the Commission is guided by the conditions of the International Monetary Fund. That has been said a couple of times already.
Against this background, questions have repeatedly been put to the Commission by the European Parliament. In November 2008, the European Parliament called on the Commission to present an analysis of the effects of the behaviour of banks that, at that time, had transferred their assets out of those Member States that had recently acceded to the EU. On 24 April of this year, the European Parliament repeated this request. It also requested to be brought up to speed about the declarations of intent between the Commission and the Member States receiving aid in which the conditions for the aid are laid out in detail. As far as I know, there has, as yet, been no response to these requests.
Thus, my first question is this: is it correct that these requests have, as yet, not been answered? If so, then my second question is: why have these requests not yet been answered? My third question is therefore: when can we expect an answer to these requests?
Theodor Dumitru Stolojan
(RO) As a representative of Romania, a country which has benefited from financial assistance for its balance of payments from the European Commission, I would like to thank the European Commission for the speedy action it took in granting financial assistance for the balance of payments, without which Romania's economic and social problems would have been much tougher.
Those countries which have received financial assistance certainly have many social problems, and we can discuss what type of social conditionality could be included in these financial assistance agreements. If we present the problem in this manner, we must bear in mind that there are insurance and social assistance systems in these countries which have contributed to the imbalances that required the financial assistance for the balance of payments. This is why if we are discussing social conditionality, we must also discuss the reforms which need to be made to these social sectors, primarily the pensions scheme, so that we can achieve medium and long-term financial sustainability, which will help radically resolve the problems in these countries.
Proinsias De Rossa
Mr President, the ILO said recently - in June when it launched its global pact for jobs - that the world should look different after the crisis.
I fear that is not what is happening. What we should have at the end of this crisis is a more sustainable economy with decent work, with quality public services and fair globalisation, moving towards the implementation of the Millennium Development Goals. But that is not what we are getting. What we are getting is a retrenchment by the banks and by the financiers in Europe and around the world who are simply trying to retain their privileges.
At the same time that the Commission is sanctioning the pumping of billions of euros into the saving of the Irish banks, we have an Irish Government which is planning this very minute to destroy local development, to destroy community development programmes which are supported by the European Union. They are setting out to destroy our education system.
Today we had the launch by the European Foundation for Living and Working conditions of the report entitled Restructuring in the Recession. If I could just quote two lines here: 'Ideally it would be preferable to ensure that measures to address the immediate problems caused by the recession are aligned with long-term goals'. Surely the Commission should be insisting that all Member States should at least seek to do that.
Czesław Adam Siekierski
(PL) At a time of economic crisis, when we are all still feeling its painful effects, many countries have decided to approach a variety of financial institutions with a request for financial assistance. However, it is worth asking what proportion of these not insignificant sums has reached those most affected by the crisis or those most in need in this difficult situation.
Thousands of people in Europe are losing, from one day to the next, the source of their own and their families' livelihood. Do the governments of Member States in any way take into account the social factor when requesting financial aid? This may seem doubtful, when looking at the worsening conditions under which many people are having to live, and the rising unemployment in many European countries. Therefore, I would like to make an appeal that we do not remain indifferent to the needs of ordinary people who, as usual, suffer most acutely from the negative effects of mistakes of those in government.
Ilda Figueiredo
(PT) Application of the principle of economic and social cohesion becomes particularly important in crisis situations. It requires not only a significant increase in the Community budget but also a fair sharing of risk, as well as other policies that prioritise protection and social inclusion, the creation of jobs with rights for all, and access to universal, quality public services, so as to guarantee the fundamental rights of all citizens.
Community funding and all proposed economic and financial measures alike should therefore be accompanied by an assessment of their social impact in order to avoid exacerbating inequality and poverty. We hope that after this debate, Commissioner, there will be European Commission initiatives with this objective.
Seán Kelly
Mr President, it is interesting - if somewhat depressing - to listen to the discussion and debate here this evening, particularly when the European Union is acting in good faith in trying to help countries in difficulties.
Our own country, Ireland, has benefited to a certain extent, and particularly the globalisation funds, which should be upcoming, are an example of that. At the same time, one wonders how, when money is made available to these countries under what are described as harsh conditions, there is maladministration taking place. One would imagine that part of those harsh conditions would be to ensure that there would not be maladministration and, if there was, that there would be a correction put in place.
Can the Commission ensure that these funds can either be cut off or withdrawn or some fines or other put in place? Because it is not acceptable that, if something is given - as my colleague, Ms Harkin said - on trust, that trust is not returned.
Secondly - and finally - we will never get to the situation that Proinsias De Rossa spoke about of having a better society post-depression than we have now.
Joaquín Almunia
Mr President, firstly I would like to say that I fully agree with the conditions approved by the European Parliament; that is what the Commission is doing: when it lends money to those three Member States making use of the balance of payments facility, what the Commission does is to take money lent by the markets, and to lend it subject to exactly the same conditions - which are conditions much more favourable for those countries than they could obtain if they went to the market directly to borrow - and to lay down some conditions to ensure that they pay us back the money, but we take into account the four conditions that you mentioned and which this Parliament adopted. We are fully in agreement with them.
When the balance of payments facility is used, however, one should not equate - and it seems to me, from what I understood, that in some of the speeches you were trying to do so - a utilisation of budget resources (Structural Funds, Cohesion Fund, programme of another type, aid) with a loan to solve a financial problem in a country.
Latvia's problem, which is the same problem as Hungary and Romania experienced, is that it has to have recourse to this balance of payments facility because it cannot have recourse to the markets to borrow in order to finance its financial requirements. That is the problem. We are not talking about a programme for a specific activity or for some specific programmes; we are talking about some countries that have a financial difficulty. In part, of course, this derives from the crisis, but as a result of past mismanagement, it is much greater than in other countries where conditions are, objectively speaking, similar.
Please do not blame the Commission or the European Parliament or the Council of Ministers for mismanagement by some governments in certain Member States. That is not our responsibility; our responsibility is to try to help solve a financial problem. In part, this financial problem is a balance of payments problem that has to do with the indebtedness of the private sector, which has to refinance certain amounts or pay back certain debts and does not have the ability to finance itself to carry out these transactions and, in part, at times, it is a public sector need.
In the case of public sector need, to finance its public debt, there is more scope to impose specific conditions, and we do impose them, believe me. The day before yesterday, here in Brussels, I was still trying to convince a representative of Latvia's Government to make the measures to be included in the budget for 2010 more progressive. However, please do not ask the Commission to compel a country to adopt a tax reform which that country does not wish to adopt; for better or for worse, and you know this as well as I do. We do not have that ability.
What is our alternative, then, as representatives of European citizens? To leave the country to collapse into insolvency? To default on its external commitments, whether these are public or private debts? For these financial problems to force the country to devalue its currency by 25 or 30%, which would immediately impoverish families, businesses and the public sector, with debts in foreign currency? I am sure that you do not want that, and nor do I. These are the conditions within which we are working.
I share all your analyses: those of Mr De Rossa, those of Mr Cercas, those of Mrs Berès, all of you; of course I share them. The situation on the ground in a country such as Latvia or Romania, however, at the moment, is more complicated than that. Please, put yourselves in the place of someone who has to act in the name of all of you to decide whether or not to lend to a country that cannot borrow on the markets, as the majority of the Member States can, or as the most industrialised countries can. That is the situation. That is what we are trying to resolve, while meeting the four conditions that you have imposed and which I endorse.
President
The debate is closed.
Written statements (Rule 149)
José Manuel Fernandes  
The global financial crisis has had a deep, global effect on the movement of people across the world. Against this backdrop, greater political and social integration is required, with a stronger and more unified Europe. The European Union has to guarantee protection of all fundamental rights within it its own area, otherwise it cannot preach a policy that it does not practise. I am therefore in favour of a new concept of solidarity in the European Union, which can guarantee the minimum social rights for every European citizen. For example, minimum standards are required in the areas of health, education and state pensions and benefits, which should be guaranteed at European level. I believe it is vital to establish these minimum standards since they promote greater uniformity of working conditions, which has a regulating effect on the movement of businesses and labour. Clearly, EU financial support cannot, on the one hand, be subject to policies that are the exclusive responsibility of the Member States, nor, on the other, can it subject these same policies to conditions. This does not mean, however, that better political and social coordination is not required. On the contrary, this integration is vital.
Silvia-Adriana Ţicău  
The financial crisis has obliged some Member States to call on assistance from the EU (Council Regulation No 332/2002(1) of 18 February 2002) and from the international community (International Monetary Fund). This support must be geared towards both ensuring that appropriate conditions exist for providing social protection and inclusion and implementing a framework conducive to economic development and the creation of new jobs. In the period between March 2008 and May 2009, the rate of unemployment in the EU27 reached 8.9%, with the number of unemployed rising from 5.4 million to 21.5 million. Job losses are the main concern of European citizens. The European Union and its Member States must be able to retain existing jobs and create other new jobs. This can be done through effective investments in agriculture, education and health, as well as in the transport and energy infrastructure. For every European citizen who loses his or her job, this represents a European family with a lower income and, by extension, a drop in their quality of life. Every job created means a family with a decent living and good-quality education for the younger generation. The success of the European model is measured by the quality of life of Europe's 500 million citizens.
