Interview with António Vitorino on the occasion of the European Council and Summit on 23 October 2011
On the occasion of the European Council and Summit on 23 October 2011, Antonio Vitorino, President of Notre Europe, takes a stand on the debt and Eurozone crises, the management of structural funds, the action of the EU at international level, the Schengen area and the European Food Aid Programme for the Most Deprived.
The heads of state and government have been moving in the right direction since the start of the debt crisis, but it has not always been easy to work out which direction that was... Emergency measures adopted to handle the current crisis have crisscrossed with initiatives designed to strengthen the EMU's architecture, particularly in terms of the prevention and management of potential future crises. The member states have displayed solidarity towards the more fragile countries – although it is worth pointing out that that solidarity is not simply a gesture of purely sentimental generosity, it also reflects a well‐understood defence of their own interests. In helping Greece and the other eurozone countries hit by the public debt crisis, the member states are defending their currency's stability and protecting both their banks and their citizens.
The EU and its member states are thus moving forward in the right direction, but they are often doing too little and too late, and the European response has not succeeded in forestalling the contagion effect, in a context in which too many discordant voices are being heard in Brussels and in the national capitals. The decisions taken by the heads of state and government are clearly being taken too slowly compared to market requirements, and that undermines their credibility and the effectiveness of their action. This simply underscores the need for a more effective "chain of command" to tackle the crisis, a chain of command capable of clearly sharing out the tasks among all of the players involved.
2 – Do you think that the eurozone is in a more favourable position today than it was six months ago? What action needs to be taken regarding the recapitalisation of banks?
Six months ago the sovereign debt crisis affected three countries which, together, account for 6% of the eurozone's economy. To offset Europe's aid, these countries have made the necessary adjustment efforts but it is going to take time for their effects to be seen. However, the time lost at the European level has meant that at this juncture the crisis is affecting also Spain and Italy, which account for 12% and 16% of the eurozone's GDP respectively. That puts the problem into a totally different perspective: about one‐third of the eurozone's economy is under pressure from the markets today. The situation has deteriorated, no one can dispute that, especially since the sovereign debt crisis is triggering a lack of confidence that is now having a very negative impact on the banking systems.
Yet despite that, there are some positive developments worth pointing to. The European Central Bank continues to display welcome pro‐activism, as indeed it has been doing since the crisis began. The measures concerning the European Financial Stability Facility, adopted on 21 July, have just come into force, which now makes it possible to intervene on the sovereign debt's secondary market and to contribute to the recapitalisation of banks in trouble. Thus the EFSF and the ECB are going to intervene in a big way, but the EU cannot and must not do everything, if for no other reason than that its member states, although admittedly interdependent, are in different situations from one another.
So where the recapitalisation of banks is concerned, because that is now the key issue, the member states must also act at their own level and shoulder their responsibilities, in the awareness that ad hoc responses on a case‐by‐case basis do not reassure the markets. What they need to do is to respond in a coordinated manner so that their intervention does not trigger a lack of confidence on consumers' part or in terms of unfair competition. Nor can resorting to private capital be ruled out a priori.
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