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Van Rompuy,Speech

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  • 1. EUROPEA COU CIL THE PRESIDE T EN Brussels, 11 October 2012 EUCO 185/12 PRESSE 423 PR PCE 158 Speech by President of the European Council Herman Van Rompuy at the annual "State of Europe" eventIt is a pleasure to take part in this "Friends of Europe" roundtable discussion on the "Stateof Europe". It takes place in the run-up to next weeks European Council, which makes iteven more timely.As some of you know, I am not in the business of make-or-break summits, of "moments oftruth". It will of course be an important summit, one of many, on the way towardseconomic recovery.But what I feel more clearly around me in the last few days and weeks, is that peoplerealise we are heading somewhere new. And even if the exact destination will depend onmany factors, there is an increasing confidence in the future of the eurozone, a growingsense that we will get there. And also, that along the journey, before our eyes, Europe ischanging. Our Union and the architecture of the eurozone look already different todayfrom how they did 3 years ago, and this process of change is bound to continue further(before of course it stabilises).Shaping this change, together, is the driving principle behind the actions of all Europeansleaders. It is also the principle behind the difficult but courageous reforms taking place inthe Member States: reforms to adapt our economies to a fast-changing global economiclandscape and an ageing population, to bring our public expenditure in line with ourfinancial capacities and set Europe on the path of growth and jobs.This adjustment takes time, more than we expected. Every transition of this magnitudetakes time. Some Member States economies were mismanaged for years, or even decades.Moreover, the eurozone did not have the tools to deal with this crisis. The legacy of thepast was huge. PRESS Dirk De Backer - Spokesperson of the President - +32 (0)2 281 9768 - +32 (0)497 59 99 19 Preben Aamann - Deputy Spokesperson of the President - +32 (0)2 281 2060 - +32 (0)476 85 05 43 press.president@consilium.europa.eu http://www.european-council.europa.eu/the-presidentEUCO 185/12 1 E
  • 2. Creating jobs and boosting growth is our ultimate goal. And we know what we have to doto reach it. We have an action plan, that the European Council decided in June: theCompact for Growth and Jobs. All the levers are there: prioritising investment ininnovation, in skills, in infrastructure yet without compromising on sound public finances,and opening up new opportunities for international trade.The absolute priority now is implementation, action. I sent a letter earlier this week to the27 Presidents and Prime Ministers to urge them to mobilise their governments, so thatpaper commitments on the Compact turn into real results. This is especially important inupgrading the Single Market (where the homework is quite clear).Here as elsewhere, my message to my colleagues is: Mesdames et Messieurs, maintenonsle cap!This will also be my message on the upcoming EU multiannual budget, where I also wantto make sure we activate all the growth levers. It is not a huge budget but it can have a bigimpact on future growth, since it is to a large extent an investment budget. I have dedicateda special summit in November to the negotiations, and my colleagues have already beenwarned: it could become the first "three-shirter" under my watch!Growth and jobs are our main goals, the rationale driving all our efforts. But our successhangs on one key condition: restoring economic confidence of consumers and companies,which in turn requires the return to financial stability and trust in our currency. In thisrespect, the fact that "spreads" declined rather spectacularly in the past weeks is a goodsign. We are on the right track.We are working on three fronts:First, we need to keep reforming, and to demonstrate through actions and results that allEuropean countries are determined to remain among the most competitive in the world,whilst preserving social cohesion. The results are starting to show: look at the increase incompetitiveness and the export performances of Spain, Portugal and Ireland, to name justthree. Across Europe we already see a clear convergence for public deficits, inflation,current account of balance of payments and competitiveness. Admittedly, there aredivergences in growth and employment figures. But we can overcome this in a secondstage.My second front: we must make sure that we are equipped in a bullet-proof way towithstand short-term shocks. And here I salute the launch of the European StabilityMechanism earlier this week: it is the crown jewel in our tool-kit (if you allow me to mixmetaphors!).And finally, the third front, we need a longer-term plan to further reinforce our Economicand Monetary Union. Let me say a bit more about that.Most people around the table already know that in June, I was given by European leadersthe mandate to work on a roadmap, together with the Presidents of the Commission, theEurogroup and the ECB, to bring the Economic and Monetary Union to genuinecompletion.EUCO 185/12 2 E
  • 3. Over the past weeks, I have led consultations with all the Member States and with theEuropean Parliament. Next week I will share my initial findings with European leaders,and we will discuss orientations for a final conclusion due in December.We are working on three integrated frameworks -- on financial affairs, budgetary mattersand economic policies -- which will all require strengthening democratic legitimacy andaccountability.At this stage, what I can already tell you is that our immediate priority is progress on thebanking sector.The foreseen benefits are clear: both in terms of preventing bank failures, and protectingtaxpayers (and that also includes ensuring that the cost of failures is primarily shoulderedby the banking sector).Progress on the financial framework will also help alleviate the fragmentation of financialmarkets, and overcome the credit drought that has hit Southern Europe. At stake isbreaking the vicious circle between banks and the sovereigns.Our first aim is to agree in the upcoming months on a Single Supervisory Mechanism.There are Commission proposals already on the table, and also on bank recovery andresolution, and on deposit guarantees. We need to move fast on these proposals. I dontneed to remind you of the incredibly complex conditions under which we operate. You willall understand if I say that in institutional terms, it is as if we were doing a "sprint" on thebanking union in the midst of an EMU marathon.Integrating our financial sector frameworks will have important fiscal, economic andpolitical implications, so the work cannot be envisaged separately from progress on theother fronts.On the fiscal and economic policy front, a lot has already been done, and implementationis now key. We must get the most out of all the economic governance tools that we haveput in place, and agreement on the one still in the legislative process, the so-called "two-pack" on fiscal surveillance, should be reached as a matter of urgency.But in the longer term, as the experience of other currency unions shows, strengtheningdiscipline alone is not sufficient, and we may want to look at other options to complementit.Here I just want to single out two new ideas that still need to be explored. First, the idea ofa so-called fiscal capacity. This fiscal capacity could perform stabilisation functionsspecific to the eurozone, for instance help countries absorb asymmetric shocks overeconomic cycles so that we limit the adjustment cost in terms of growth and employment.This would also make the euro area as a whole more resilient.EUCO 185/12 3 E
  • 4. I want to clear out any confusion: this must not to be mixed up with the European Unionsmultiannual budget. As I said, the aim would be for this capacity to perform new separatefunctions, specific to the euro area. Ways to develop this capacity within the framework ofthe EU institutions will have to be examined. Obviously, this idea has to be explored inmore details in the run-up to the December European Council and it is in any case alonger-term project. Since we decide on the Multiannual Financial Framework inNovember, it is important that we dont start mixing that discussion up with this embryonicidea of a fiscal capacity.The second new idea is to potentially promote structural reforms through arrangements ofa contractual nature. Eurozone Member States could engage in such arrangements withEuropean institutions on the structural reforms they commit to. These reforms aim atincreasing growth and jobs, and they could be supported by temporary and targetedfinancial incentives.It is too early to take decisions on either of these two avenues. For next week, it is rather amatter of a mandate to explore these ideas further, between now and December. Thisbrings me to the last point.Many of the ideas and proposals in the three frameworks I mentioned might come to affectthe current balance of decision-making power between national and European authorities.Naturally, this would require strengthening the current framework for democraticlegitimacy and accountability. To take one example, clearly a new single bankingsupervision system will imply designing suitable accountability procedures to go with it.As a general principle, democratic control should occur at the level where decisions aretaken. So the European Parliament and national parliaments should be kept closelyinvolved, as appropriate.Here we should not mix up the goal and the means. The goal is not to build a politicalunion for its own sake or to completely overhaul our Union…No, the goal is to make theeuro stable -- financially and economically, but also politically solid. That we must do.We must not let ourselves be distracted, but instead remain focused on the real goal. Whileprogress must be swift, all the steps have to be carefully thought through and properlydiscussed. There can be no shortcuts.And there is no more effective way to guarantee this than well-informed public debate. It ismy hope that the ideas on the table will be prodded, scrutinized, and debated, and thatconstructive suggestions will emerge. This can only make for stronger decisions -- a robustbasis for our common future.And in mobilising this collective, informed debate, I am convinced that the "Friends ofEurope", all of Europes friends, have a role to play!EUCO 185/12 4 E

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