Commissioner hearings: ECFIN Commissioner Rehn calls for more economic co-ordination and unified international representation
12 January 2010
He also called for a swift repair of the financial sector. A robust framework for promoting macro-financial stability must bring real steps forward in economic coordination. The euro area and the EU as a whole should speak with a single voice at the international level.
Written responses to EP questions: EP press release , selected comments - below; CV
Olli Rehn, proposed Economic and Monetary Affairs Commissioner, was the first candidate to be interviewed by the ECON committee on Monday 11 January .
He made the following introductory remarks:
The main goal is to re-launch employment and growth in Europe by:
· Strengthening coordination of economic policies among the Member States, new face of development
· Stabilizing Member States' public finances. Although the economic stimulus package is still necessary, public debt should be controlled.
· Create a single representative for Europe in world economic governance, because there is a need to have a real impact when it comes to changing and leading economic and financial regulation at a world level.
He emphasised that economic stability is urgently needed and that economic growth should be based on the EU 2020 programme. He also said that he is aware of the difficulties that the ECFIN portfolio holds at the moment, but he believes joint economic action can solve the current crisis. There is a need to look to the medium term but already take action in the short term.
MEP Gauzes (FR/EPP) asked how Mr Rehn sees the combination of the requirements of healthy public finances and at the same time economic growth. Mr Rhen answered that both objectives are not opposed but are complementary. Sustainable growth needs healthy public finances. Whilst public spending helps the economy, obviously it has to be quality spending - and controlled. So the stability and growth pact is essential to work toward more sustainable growth in the EU.
MEP Udo Bullman (DE/S&D) asked how cooperation on sustainable economic development might be ensured. Mr Rhen said that the future of the European economy should be based on the reinforcement of economic cooperation between Member States. Under the Lisbon Treaty, the Commission has the right to adopt warnings and issue recommendations to Member States and an overall approach should be taken within the EU 2020 strategy. Mr Bullman then raised the issue of the Spanish Presidency proposals for more binding powers at EU level. Mr Rehn said again that economic coordination has to increase in order to achieve better results at EU level.
MEP Sylvie Goulard (FR/ALDE), on the same issue, asked what the Commission will do to ensure that, in reality, decisions taken are more at European than national level. Mr Rehn answered that the use of the Lisbon Treaty will enable the Commission to have the right to give warnings and recommendations to Member States. In unity, the EU can lead and set the international debate on economic and supervisory changes.
MEP Sven Giegold (DE/Greens), on the other hand, asked how Member States will manage to have a homogenous policy when economic indicators are showing that there is a considerable divergence among Member States. Mr Rehn said there is a need to focus on job creation. Each Member State will have to provide their knowledge and education as essential elements in order to bring Europe beyond the crisis and ensure sustainable growth. But at the same time, there will be European guidelines.
MEP Derk Jan EPPINK (BE/ ECR) raised the issue of what the Commissioner will do if a Member State does not comply with the Stability and Growth Pact (SGP). Mr Rehn said that countries have to comply with it, once the situation is normal again. The crisis has shown that certain exemptions have been applied, but exemption is not the rule. Mr Eppink also asked whether Greece will be pushed to leave the EU or the Euro zone. The answer was No, as the Greek government is showing its efforts and will shortly present a comprehensive package.
MEP Gunnar Hokmark (SE/EPP) wanted to know Mr Rehn’s opinion on how to strengthen the SGP and proposed forcing Member States to run surpluses in good times and then use them during a crisis. Mr Rehn intends to present a Commission Communication at the beginning of his mandate and this will touch on the issue of economic policy surveillance by reinforcing the SGP and also considering strategy during good times.
MEP Pervenche Beres (FR/S&D) asked how he will deal with micro-prudential supervision, when it is within the competence of another Commissioner - Internal Markets. Mr Rhen emphasised that Mr Barnier and he will work closely and cooperate so as to ensure that the European supervision system works effectively.
MEP Wolf Klinz (DE/ALDE) presented two interesting questions. The first related to EU and US divergences in some key policies - such as international accounting standards. The second was on whether the Baltic States should, or not, enter the Eurozone. Mr Rhen agreed that cooperation with the US should be improved but at the same time, in the context of the G20, the US and the EU together had agreed a considerable package on financial supervision. On the Baltic States, he said there is a need to respect rules but he is aware of the debate about the economists and lawyers on the issues. He will of course look at them carefully and analyse the indicators.
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Written response to EP questions - extracts
Policy-related questions
4. What are the three main priorities you intend to pursue as part of your proposed portfolio, taking into account, where relevant, the financial, economic and social crisis and concerns related to sustainable development?
...We need to work out a coordinated strategy for managing the exit from the current crisis, and we have to create conditions for sustainable and smart growth for current and future generations. I consider the forthcoming EU 2020 Strategy as a key instrument of this approach. It is both about fiscal sustainability and about preparing our economy for the different world that will emerge from the crisis
The crisis has undeniably demonstrated that Europe is stronger and more efficient when it is unified. We are stronger and more efficient when working together. Therefore, we should benefit from the opportunity the Treaty of Lisbon opens as regards reinforced economic coordination, particularly in the euro area. This has brought a new role for the Eurogroup and new possibilities for the Commission, such as those under article 121 TFEU. I believe that the EU must use these new opportunities to take real steps forward in economic coordination.
... A swift repair of the financial sector and the implementation of a robust framework for promoting macro-financial stability in the EU are important conditions for ensuring sustainable economic growth. I consider my participation in the future European Systemic Risk Board important in this respect. Equally important are an integrated surveillance of developments in Member States and the improvement of adjustment capacity, notably with a view to reducing imbalances within the euro area, and paving the way for its gradual and rules-based enlargement.
My second priority is to work to ensure the sustainability of public finances in the EU, and to improve their quality. In many Member States and in the EU as a whole, trends in government debt are currently on an unsustainable course. A timely and credible consolidation of public finances within the framework of the Stability and Growth Pact as part of a comprehensive "exit strategy" is therefore essential. We have to strengthen existing instruments for EU policy coordination, while using their flexibility to cope with the exceptional depth and duration of the current economic crisis. Consolidating public finances will also require an improvement in their quality and the reorientation of public expenditure, at national and EU level, to areas with a positive impact on potential output....
My third priority is to strengthen the EU's role in international economic relations. The EU has a key role to play at the international level, through its various external instruments and through its contribution to policy coordination and multilateral surveillance. At the same time, the European Union (and the euro area in particular) will need to establish itself in the emerging new system of global economic governance where the G20 plays an increasingly central role. It will therefore be particularly important that on matters involving an important Union dimension, the euro area and the EU as a whole speak with a single voice at the international level. While in the longer term the solution should lie in a unified representation of euro area Member States as provided for by the Treaty, it is of the utmost importance to put in place a significantly strengthened coordination mechanism as soon as possible...
5. What are the specific legislative and non-legislative initiatives you intend to put forward, and according to what timetable? What specific commitments can you make regarding in particular the committees' priorities and requests attached hereto which would fall within your portfolio? How would you personally ensure the good quality of legislative proposals?
The existing Treaty-based framework for policy coordination has proven its worth in the recent financial and economic crisis. I therefore intend to put my primary focus on continuing to implement the recently adopted policies of economic recovery and fiscal sustainability, and make full use of the existing instruments to achieve stronger policy coordination and governance in the EU. These include the Commission's assessments of the national Stability and Convergence Programmes and its evaluation of the effectiveness of action under the Excessive Deficit Procedures, as well as its Convergence Reports evaluating a country's readiness for accession to the euro-area.
My intention is to prepare an exit strategy which allows for investments in the EU's future bringing the EU back to a sustainable growth track, providing new jobs, welfare, green technologies and innovation for Europe and beyond. At the same time, we have to return to sustainability of public finances, including through improved economic governance procedures and cooperation.
In a world of scarce public resources, a major challenge to tackle will be the mobilisation of sufficient resources for reaching the objectives of the EU 2020 Strategy. I am looking forward to cooperate with the Parliament to find innovative ways for making this possible. Stemming from my political priorities outlined under the previous question and building on the mentioned established instruments, I intend to present the following initiatives in the course of my mandate, of course subject to further policy analysis and collegial acceptance:
· A Communication on the establishment of a system of enhanced policy coordination based on broader and deeper surveillance for euro area Member States (also in the light of Article 136 of the Treaty on the Functioning of the European Union).
· A Communication on strengthening European participation and representation in international financial institutions and fora.
· Working together with the Commissioner for Employment, Social Affairs and Inclusion and the Commissioner for the Internal Market and Services, a Green Paper on the adequacy and sustainability of pension systems in the EU.
· A legislative proposal on the external mandate of the European Investment Bank (EIB) for the 2011-2013 period and a Commission Communication on the longer term future activity of the EIB and the reshaping of the European Financial Architecture.
· If possible, a proposal for a framework instrument on EU Macro-Financial Assistance to third countries, in order to speed up the concerned procedures duly respecting the prerogatives of the EP.
· A Communication on establishing within the framework of the EU 2020 strategy, a methodological framework and data collection for measuring progress towards its headline targets, but also complex socio-economic phenomena and cross-cutting issues (as a follow-up to the Stiglitz-report and the Communication on GDP and Beyond).
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