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Debate prior to the European Council

Published on October 17, 2011
Speech by Jean Leonetti, Minister responsible for European Affairs, in the National Assembly (excerpts)

Paris, October 12, 2011
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EURO AREA/SOVEREIGN DEBT CRISIS

THE MINISTER – If European Councils are important meetings, the one on 23 October is major. They’re important for France and the whole population of Europe, which is anxiously waiting for a way out of the crisis and solutions to the problems it faces every day. They define the broad lines of European policy and enable the necessary decisions to be taken at the highest level. Today, those decisions are imperative and must be courageous.

In the turbulent times we’re living through, the Council of 23 October takes on a special meaning. (…) We have an imperative duty to forge ahead and enter this new era with determination and confidence.

To that end, we must examine clear-sightedly the European enterprise’s weaknesses. First of all, we adopted a single currency without securing a convergence of our extremely heterogeneous economic policies. Secondly, in the face of competition from the emerging countries, the developed Western countries took refuge in a public debt that has become intolerable.

Ladies and gentlemen deputies, we’re not facing a crisis of Europe, less still a crisis of the euro – which is a strong currency – but rather a sovereign debt crisis in a number of Euro Area countries. So we have to resolve national problems at European level.

I often hear it said that Europe takes time to reach its decisions, and I admit to being surprised to hear it from the lips of members of parliament. Europe is made up of democratic states, and the decisions taken by the heads of state go before the parliaments, whether these be the Bundestag or the National Assembly. So it’s logical for this democratic route – which passes through all the European parliaments – to take a certain time.

Moreover, some people wonder why President Sarkozy hasn’t taken any decisions. Let me remind you, ladies and gentlemen deputies, that President Sarkozy isn’t the master of Europe and that the Franco-German partnership doesn’t decide on behalf of the whole of Europe, either.

When the German Chancellor and the French President meet and propose decisions, I hear some people express astonishment that they alone are deciding for the others. But when they don’t meet, or meet but don’t take any strong decisions, some people are still astonished! We must be clear-sighted and realize that the Franco-German partnership is the essential engine of Europe for making proposals, for historical but also economic reasons: France and Germany represent 55% of the Euro Area’s gross domestic product; it’s not unusual for our two countries to get together to make proposals.

Today, people must be able to show moderation and see that President Sarkozy’s initiatory role is welcome but that, at European level, democratic decisions require a certain amount of time in order for parliaments to intervene.

Europe, I’m sure, will emerge from this crisis as from the others; it will emerge from it strengthened and more integrated.

The debates at the Council are focused on three decisive topics: the economic governance of the Euro Area and tomorrow’s growth; the G20, in which France, who holds its presidency, and Europe must make their mark on the world; and climate change and the Durban conference. (…)

EUROPEAN ECONOMIC GOVERNANCE

The European Commission will today announce proposals aimed at modernizing our tools for recapitalizing the banks and going further than the plans drawn up in the framework of the Basel III agreements. It’s a question of recapitalizing the banks so that they have more own funds. Having said that, I should add that French banks, as a whole, are not in difficulty.

Economic governance has moved forward. The European Parliament has passed what’s called the “economic governance package” or “six pack”, which will allow for better prevention, monitoring of macro-economic upheavals that may take place – particularly in our countries – and enhanced supervision of budgetary policies and debt risks. (…) The Euro Area’s management must be strengthened. Our goal is to establish a common economic government, because we share a single currency.

The President of the Council will make his proposals known in the coming days. France and Germany, on President Sarkozy’s initiative, have already asked the heads of state and government to meet regularly, in this case twice a year. The stable Euro Area presidency, which could be entrusted to Herman Van Rompuy, will grow from this embryonic European economic government.

Enhanced economic governance will be meaningful only if it depends on growth. On this point, we sometimes forget that today we have considerable strength at European level, with 500 million inhabitants and a combined annual GDP of €12,000 billion. If you remember that Greece represents 2% of this GDP and her debt counts for 4% of Euro Area debt, you understand that the problem isn’t insurmountable.

France is fighting for a strong industrial policy, particularly in the fields of innovation, with Galileo, the European Earth Monitoring Programme, and digital and green technology. That’s where the future of Europe, growth and jobs lies; that’s where our fellow citizens’ future lies.

Finally, let me remind you that France upholds the principle of reciprocity, which is nothing other than fairness in trade. I hear a number of countries accusing France of protectionism. Is it protectionism to impose social and environmental rules within the Euro Area, not to mention sustainable development, when our markets are being penetrated by countries which in no way respect those rules? (…) Is it right for a Chinese company, helped by its government, to distort competition between companies by landing the contract for a motorway in Poland that it’s not even capable of finishing? Europe must also be a market that knows how to protect itself.

G20/ECONOMY

As for the G20, as you know, the French presidency considers itself resolutely European. It must respond to the economic and financial crisis, which is a crisis of the world markets. That’s why the deadline set at the beginning of November is important: we must resolve the Euro Area’s problems before the G20 summit, or we’ll see Europe held responsible for the crisis, when it in no way bears responsibility.

A return to growth, restoring order to our public finances, and stability in the financial system: those are the goals of the G20, where France has established a social dimension to globalization, with recognition of a social protection floor. That is France’s hallmark; it’s the hallmark of Europe. In the agricultural sphere, we’ll have to look at preventing agricultural crises, and – regarding development – at the financial transaction tax. It does seem to us right for financial transactions to be taxed: it’s partly because of financial movements that the global crisis exists.

CLIMATE CHANGE

Finally, on climate change and the Durban conference, I know some of you have been heavily involved in this project – a French project and a French demand. The European Union has always conducted a proactive policy with regard to sustainable development. It set the bar very high in terms of the green economy and technology transfers for the energy of tomorrow; the aim is a 20% reduction in greenhouse gas emissions. But Europe accounts for only 11% of global emissions. Likewise, all the countries that signed the Kyoto Protocol account for only 16% of emissions.

That’s why it is imperative that we’re able to persuade the world of the importance of this economic and social challenge, which calls the future of our planet into question.

That’s why we must begin a second phase of the Kyoto Protocol, to allow a transition towards an ambitious, global, legally binding agreement that will enable us to meet the commitment to limit the rise in the global temperature to 2°C.

I have a strong belief I’d like to share with you. We need to build a new Europe. We’re clear-sighted enough to consider the weaknesses we’ve built up over time.

The crisis is a transition from a world that is disappearing to a world that is being built. We have a responsibility to ensure we can create a new Europe, a Europe which through its borders protects a whole territory but which also protects its economy from those unfairly competing with it, an integrated and innovative Europe, a Europe with stable and protected borders, a Europe of values capable of developing the idea of freedom and democracy, a prosperous Europe capable of encouraging the world to consider the European model.

COMMON AGRICULTURAL POLICY

Q. – (on the Common Agricultural Policy)

THE MINISTER – I can tell you that the Common Agricultural Policy is a priority for France. As such, we have three demands. Firstly, we are against the renationalization of the CAP. It is clearly a Community policy; Europe has responsibility for this and must continue to accept it.

Secondly, as regards defending the CAP in the Financial Perspectives 2014-2020, France very clearly stated that she wouldn’t agree to any financial plan for that period if the CAP’s stability isn’t incorporated in the financial package. We’ve repeated this several times, so even countries which don’t really approve of the Common Agricultural Policy have understood that we would be totally intransigent on this.

Finally, we reject any trade agreement with a third country or geographical area not adhering to the principle of reciprocity, which I’ve already mentioned. There’s no question of opening up Europe’s agricultural markets in a way that creates unfair competition. (…)

EU TRADE POLICY/COMPETITION

Q. – (on competition and the European Union trade policy)

THE MINISTER – (…) A Europe that’s growing is a Europe which defends itself, which is clear about her borders, borders which aren’t forever being extended to take in all the countries of the world. A Europe that’s growing is a deeper Europe, which supports competitiveness. A Europe that’s growing is a Europe which supports growth.

Competitiveness and growth: as I said in my opening remarks, how can we ensure we live in an open world without finding ourselves in a situation of non-reciprocity or unfair competition? (…) We’re not here to protect our manufacturers but to ensure that the ground rules are the same inside and outside Europe.

We’re here to ensure that, when an industrial product is manufactured under social and environmental conditions very different from those enforced within the Euro Area or Europe, a tax is levied at the borders. And so we come to France’s two major proposals at European level: we must make reciprocity and fair competition a necessity, make it a necessity for Europe to progress and project itself, thanks to the European budget, with large-scale projects in the field of digital technology, Galileo and ITER, and make the emergence of a social, cultural and democratic element within the Euro Area a necessity. Reciprocity, fair competition and competitiveness: these are France’s goals, these are Europe’s goals.

GREEK DEBT CRISIS

Q. – (on Greece)

THE MINISTER – (…) When Greece was put in this situation where austerity led to recession, and recession to poverty, we wanted – together – to bring growth to the country.

When the banks wrote off 21.5% of their debts, they partly restructured the Greek debt. It’s only natural that banks write off part of the debts owed to them by a sovereign state in great difficulty. And it isn’t unfair of us today to ask for banks to be recapitalized out of their own funds so they can take on the banking problem in terms of responsibility for the crisis we find ourselves in.

Yes, we’ll help Greece; yes, Greece will stay in the Euro Area; no, Greece won’t go bankrupt – Europe won’t allow it. On the contrary, it will ensure that, after this phase, Greece returns to the necessary growth, with the €8 billion made available for the structural funds. (…)./.

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