Euro area and European Council: Interview with António Vitorino
In an interview with the Portuguese newspaper “Publico”, António Vitorino deals with the situation of the Eurozone and of the EU on the basis of an analysis of the outcomes of the recent European Council. Notre Europe offers an English version of this interview, published under the title: "Germany's problem is not so much that it is right but that it has to learn how to be right".
There may be no one better that António Vitorino to take us by the hand through the twists and turns of the decisions reached at the recent European Council meeting, decisions that are considered crucial to staunch the euro crisis. Beating the iron while it is still hot, the former commissioner and current chairman of Notre Europe, draws our attention to the risks involved in attempting to reform the treaties outside the framework of the European Union, and to the need for decisions to enjoy democratic legitimacy; he also urged a more tolerant attitude towards Germany.
The first question may be the most difficult one. Are the results achieved by the summit sufficiently convincing to pave the way for a solution to this crisis and to offer guarantees to the markets?
We will only have the answer to that question as the coming week unfolds, but as a careful observer I have to admit that the results do not seem sufficient to me. A response was thrashed out for an important part of the issue, in connection with what is known as the "fiscal pact": the medium-term indications for budget consolidation and for the construction of an economic union are all there in their basic elements. We achieved less than was expected and, above all, less than was necessary in connection with short-term liquidity guarantees. And in that regard the ball is now in the European Central Bank's court.
Before this summit, the ECB fostered expectations of a stronger intervention on its part in the event the "pact" were agreed on, but it then reneged on those expectations. And no signal emerged from the summit in that sense. Indeed, quite the opposite.
The ECB is already working on facilitating the banking system's access to liquidity. That points to more active intervention, including loans that come to maturity only after three years, and an expansion of the kinds of collateral accepted in refinancing the banking system. The issue here is to find out whether it is going to be more active in its intervention on the sovereign debt markets. But in that connection we are just going to have to wait and see. The ECB president's indications were contradictory in some ways. But there is still a missing link: the possibility for the ECB to intervene directly in financially reinforcing the EFSF. Not only did that not happen, but at the same time a parallel path was defined involving a strengthening of the IMF with the bilateral funding by member states to the tune of 200 billion euro, which can only have a leverage effect if other global partners, the United States and China in particular, support that strengthening...
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