Greek crisis/Euro Area agreement
Paris, May 12, 2010
Q. – Will France be able to agree to the Brussels Commission having a right to inspect her budget?
THE MINISTER – It is already the case under the European treaties. And even before the onset of the Greek crisis we had already pledged to the Commission to cut our public deficits to 3% of GDP by 2013. And we are already taking all possible measures to achieve this… apart from increasing taxes.
Q. – Did Europe pass a milestone on Sunday towards federalism?
THE MINISTER – Before Sunday, it was forbidden to go to the aid of others in the Euro Area. Oddly enough, supporting a country outside the Euro Area was allowed, as in 2008 with Latvia and Hungary. But States were forbidden, by the treaty, to bail out another State in difficulty. It was said that “your debt is your debt, sort it out with the markets if you have to refinance it”.
Q. – What’s the change?
THE MINISTER – Since Sunday, the view is that “your debt is our debt” – there are obviously conditions – and we all come together to protect whoever is in difficulty. But this is offset by everyone’s discipline becoming everyone’s problem: we’ll have the right to keep an eye on the others’ accounts.
Q. – How?
THE MINISTER – National parliaments will still decide their budgets, but our European partners would be able to look at them beforehand. So everyone will know if the others’ budgets are in line with the common discipline.
Q. – When will this come into effect?
THE MINISTER – The finance ministers will set to work from tomorrow. The Commission will also make its proposals.
Q. – Is this a breach of France’s sovereignty?
THE MINISTER – It is a significant development rather than a breach, since within the European Union, States have already agreed to transfer whole parts of their sovereignty: for example, the agricultural and trade policies are already European policies.
Q. – This is going to arouse a lot of debate in France?
THE MINISTER – Of course, and not just in France. In Germany too, as in the 16 Euro Area countries! What happened on Sunday will lead to genuine debate. Until now, parliaments contented themselves with abiding or not abiding by the 3% deficit rule. When it was broken, you received a protest from the Commission. This time things will go much further, but this is the essential condition of the mutual guarantee Euro Area States are now giving themselves./.