February 2, 2011
It was not surprising that Herman Van Rompuy’s first UK speech as President of the European Council dealt primarily with the EU response to the sovereign debt crisis in the Eurozone and its chances of success.
In the following Q&A, Phillip Stephens of the Financial Times sounded sceptical. He suggested that the injection of loans may well solve the liquidity problems in Ireland and Greece, but took no note of the solvency question surrounding these and some other EU member states. This issue also formed the leader in the Economist on the following day, the magazine advocating an early “restructuring” of debt with bond-holders taking a hit on the value of their holdings.
But unlike the caricature of UKIP’s least favourite Belgian, President Van Rompuy responded robustly. He pointed out that the loans were conditional on both structural reform and cuts to budget deficits. He added that both Ireland and Greece, along with other countries at risk of contagion, were taking reform seriously and quickly getting on with the job. China’s move into Euro bonds was a sign of market confidence that the measures would work. He was bullish about the prospects of troubled member states cutting debt as a proportion of GDP, pointing to his own record as Belgian Finance Minister.
Mr Van Rompuy had already given a clear sign of his position on the bail-out package in his speech (see box, right), but also paid attention to further development of the Single Market and supply-side reforms to make the EU economy more competitive.
His linking of past failures in this respect to the current crisis indicated a determination to resurrect the aspirations of the Lisbon Agenda to turn the EU into the world’s most competitive economy (see next page). This process was let down by a lack of enthusiasm for reform among member states rather than failings at European level.
My own view is that the crisis has decisively brought home the need for reform, so Mr Van Rompuy will find it easier to make progress than Commissioners in the last decade. Also, as Council President, he will be better placed to address the main failure points; the member states. I also suspect that he has spotted this opportunity.
In a wide-ranging speech, the Council President also covered the new stress tests for banks to reduce the risks of future banking crises having such catastrophic effects. He concluded with an overview of the EU as a player on the global scene, in which he, Mr Barroso and High Representative Baroness Ashton co-operate. He mentioned in particular, relations with India and Pakistan, maintaining a very strong neighbourhood agreement with Turkey and bringing Iran back to the negotiating table on its nuclear capability.
I talked to fellow LDEG members Jonathan Fryer, Hugh Dykes, Graham Bishop and Dinti Batstone at the end of the event and there was a consensus that this was a very strong performance.
I agree. Mr Van Rompuy has a clear agenda, largely consistent with liberal thinking, and may well have the determination to push it through. He deserves our support.
By Phil Bennion, LDEG Chair, first published in Europhile, Jan/Feb 2011Author : European Movement UK