Europe Needs Better Common Rules and More Effective Oversight, Based on Principles of a Social Market Economy: President of European Parliament

Politics Materials 3 November 2008 13:22 (UTC +04:00)

Azerbaijan, Baku, November 3/ Trend , corr E. Ostapenko/ Interview of the President of European Parliament Hans-Gert Pottering with Trend .

Question: How do you estimate the efforts to overcome the current financial crisis? Are there any effective measures that EU can propose for solution of the problem?

Answer: Over the past few weeks, the European Union has been trying to address the international financial crisis. On 15 October, we had a summit of EU Heads of State and government in Brussels focused on the financial crisis. The overriding objective has been to avoid a systemic banking collapse, limit the spill-over effect in other branches of the economy, and put in place new foundations for future economic stability.

The European Union has proved to be much better equipped to face instability as a result of it having adopted a single currency. Immediate problems in individual Member States might have led to really serious currency runs had the common framework of Economic and Monetary Union not been in place. The performance of the European Central Bank, which intervened almost daily to bring liquidity to the market, had been a powerful stabilising force. The crisis has proved the value of the euro.

In my speech at the meeting of EU Heads of State and government in Brussels, I drew attention to the need for an effective, coordinated European response to the crisis. One of the most important measures to be taken by the European Union is to save the financial system from insolvency. This is crucial to restore the trust of the citizen. The decision of the Council of Economic and Finance Ministers (Ecofin) to raise bank deposit guarantees for private individuals to € 50,000 is most welcome. In terms of the medium and long-term, we need a much more pro-active approach, with the creation of a new framework for the regulation of the financial markets in the EU and beyond. Europe needs better common rules and more effective oversight, based on the principles of a social market economy.

However Europe is not alone and we need European action in a global setting. A comprehensive response to the crisis also calls for long-term, worldwide solutions. As soon as it has set the reform of its own rules in train, the EU should take the lead in pointing the way towards a more comprehensive review of the rules to be applied to the financial markets on an international scale. We need greater transparency, more disclosure and better risk management in order to avert this type of situation happening again in the future.

Question: It is known that EU and US offer governments to interfere with the solution of the financial crisis to a great extent. What impact can it have on the system of market economy?

Answer: In his last address to the European Parliament, the President-in-Office of the European Council, French President Nicolas Sarkozy described the different actions taken by European Union bodies as ones of 'crisis management'. Measures taken by the European Central Bank, Eurogroup, the Ecofin Council - as well as national central banks and governments - were all designed to 'help banks work' and to 'help them to lend to each other'. He added that he would not like to see European companies now being bought out by non- European companies or governments, at the bottom of their share value and proposed that European countries consider developing their own sovereign wealth funds as an instrument to invest in 'strategic' sectors and maintain European ownership.

I believe we need updated structures for global governance over the economic and financial system. The European Union will need a more pro-active approach to improve regulation of the financial markets. It will also be crucial to securing an agreement on a new set of rules to govern the global financial system - providing both stability and prosperity for the citizen. The European Union has an important role to play in making all of this happens - and if we have a clear agenda and act as one, this can make a big difference.

Question: What is the possibility, that the Lisbon Treaty, that foresees the transformation of EU structure, will be signed? What consequences could be expected from this treaty?

Answer: The Lisbon Treaty is necessary because it will give the European Union more possibilities to act. The changes provided for by the Lisbon Treaty will make the Union more democratic, more transparent and more efficient. The Treaty of Lisbon will make a decisive contribution towards making democracy and parliamentarianism in the European Union a reality at all levels. By strengthening its institutions, it will also make them capable of welcoming new members. It is the answer to the challenges of the 21st century.

We need to find a solution to the current situation: 22 Member States have already ratified it, others not totally but are on track. Finally the question of Ireland remains. We are waiting for proposals from the Irish. These should arrive from the Irish Prime Minister at the European Council meeting scheduled for December. Unfortunately, it is going to be very difficult to find a solution before the European Parliament elections of June 2009. Nevertheless, I hope that once Ireland has found a solution the Treaty can become a reality at the end of 2009 or beginning of 2010.