At a debate with MEPs on the EU summit of 15-16 October, EU President-in-Office Sarkozy said the Russo-Georgian war and the financial crisis had strengthened the case for a united European response to major world problems.

At a debate with MEPs on the EU summit of 15-16 October, EU President-in-Office Sarkozy said the Russo-Georgian war and the financial crisis had strengthened the case for a united European response to major world problems. He rejected any idea that the EU should backtrack on its climate change commitments because of the crisis. While the main EP political groups broadly supported him, some felt the roots of the financial crisis went back a long way and queried the role of unbridled free markets.

Introducing the debate, the President of Parliament, Hans-Gert Pöttering, said that in the recent crises, Europe under the leadership of President Sarkozy had shown its ability to take coordinated, collective action.  Without such action - and without the existence of the euro - “we would have been in a disastrous situation”.
 
Georgia
 
The first subject considered by President Sarkozy, speaking on behalf of the European Council, was the Russo-Georgian war. While regarding the Russian reaction as “disproportionate”, he also stressed it was a “reaction” to a previous “inappropriate” action.  He then described the peace-making efforts carried out by himself on behalf of the EU. The Americans had thought “dialogue with the Russians is pointless” but in his view this was folly, since “Europe does not want another Cold War”. He emphasised “it is Europe that has brought about peace”, adding “it is a long time since Europe has played this sort of role in this kind of conflict”.
 
World financial crisis: how to prevent a recurrence
 
Turning next to the world financial situation, Mr Sarkozy said “what was a serious crisis became a systemic crisis” with the collapse of Lehman Brothers. Moreover, the solutions now being found - in which Europe had taken the lead - simply amounted to “crisis management”.  
 
A key point was “how can we prevent a recurrence?”. He had proposed to the UN General Assembly the creation of a “new global financial system” or “new Bretton Woods”.  The aim must be to “overhaul capitalism”, not “by questioning the idea of a market economy” but observing certain principles: no bank working with state money must work with tax havens, all financial institutions must be subject to financial regulation, traders' bonus structures must not push them to take undue risks and the monetary system must be rethought.  The USA and the EU had proposed a series of “summits on global governance”, starting in November, involving first the G8 and then adding the G5, at which, he stressed, “Europe must speak with one voice”.
 
Elsewhere in his speech, Mr Sarkozy returned to the financial crisis, saying it was undoubtedly now leading to an economic crisis and this too would require a “united European response”.  Among ideas he floated were measures to ensure that “European companies are not bought up by non-European capital while their stock exchange values are low” and the creation of sovereign wealth funds by each EU country.  At a later point in the debate he pointed the finger at hedge funds and questioned the competence and independence of ratings agencies, pointing out that the latter were mainly US-based and perhaps Europe needed its own ratings agencies. 
 
He also believed that “the eurozone cannot continue without clear economic governance”.  The European Central Bank must be independent but must be able to hold discussions with “an economic government” at head of state/government level.
 
No backsliding on energy/climate change
 
Mr Sarkozy's next topic was the future of the EU's energy and climate package.  He rejected any idea “that the world should do less to combat climate change because of the financial crisis”, saying “Europe must set an example” to the world.  He recognised the difficulty some European countries were facing, especially those that are 95% dependent on coal, but some flexible solution must be found. Referring to the 20/20/20 targets, he described “respect for the climate change objectives” and “respect for the timetable” as essential.
 
Turning to the EU Immigration Pact, the French president said this was “a great example of European democracy” as, despite initial differences, the EU had agreed on a joint policy.
 
Lisbon Treaty
 
Lastly, the president argued that the recent crises with Georgia and the financial markets showed that “it would be a major mistake not to proceed with institutional reform” since Europe often needs “a powerful, rapid and united response”, something which was difficult, for example, with the EU's six-month rotating presidency.  The French presidency was thus looking to a roadmap to find a solution by December to the question of Irish ratification of the Lisbon Treaty.  Concluding, he said “the world needs a Europe that speaks with a strong voice” and expressed appreciation to the EP for its “solidarity” in helping to create this sense of unity.
 
 
Commission President Barroso 
 
President of the European Commission José Manuel Barroso said Mr Sarkozy's handling of the crisis had shown him as “dynamic as only he can be” and welcomed the fact that Europe was now working hand in hand with the US. He said “the EU should mould a global response with it values and interests”.
 
He outlined a number of practical steps.  He said the Commission would be looking at executive pay and derivatives. The feasibility of pan-Europe financial regulation would also be under review. He also signalled his forthcoming visit to China for talks saying: “The goal should be to devise a system of global financial governance adapted to the challenges of the 21st century – in terms of efficiency, transparency and representation.”
 
Turning to the so called “real economy” he said that Europe faced a “serious economic slowdown” with jobs, incomes and order books affected. He went on to say: “There is no national road out of this crisis...we will swim or sink together. We must not give in to siren calls for protection. We must not turn our backs on globalisation or put our single market at risk.”
 
He said that “European citizens need support - especially the vulnerable”. To deal with the slowdown he called for “smart support” that would hit two targets at once. For example: “Helping the construction industry...but doing this by promoting an energy-efficient housing stock....Helping key industries like cars...but preparing them for tomorrow's markets of clean cars.”
 
 He told MEPs that there is “no national route out of this crisis” and that in Europe “we swim or sink together”.  He said that: “Europe shows its true colours in a crisis - in Georgia we stopped a war whilst with the financial crisis we are dealing with it.”
 
He went on to say that: “There is no magic bullet to turn around the EU economy.  What we have to do is take every option, explore every potential way in which EU policy can help Member States to seize every opportunity to put Europe on the road to growth. That is our task in the coming weeks.  And it is a task I want to tackle together with the European Parliament.” He finished by saying that it was: “The kind of occasion where the crisis calls into question old certainties and minds are more open to change.”
 
Later, speaking after the main group speakers Mr Barroso said that analysis compiled by the Commission showed the crisis was triggered “by sectors that were not regulated in US”.  On climate change he said that with the financial crisis it would be “dramatically bad” if the EU backtracked on the 20/20/20 emission formula agreed last. He said that “the world - not just Europeans, are looking to us”.
 
Political group speakers
 
For the EPP-ED group, Joseph DAUL (FR) believed that Europe working together had twice over the summer helped show the way through major crises:  Georgia and the financial markets.  President Sarkozy had worked tirelessly and shown the value of the EU Presidency and the role for Europe on the world stage. 
 
Parliament had already done key work on the financial situation with recommendations on regulation and surveillance, reform and an end to golden parachutes. He said “It is in economic crises that we develop rules for the future.  Free markets have to be accompanied by rules and regulations  If they existed previously they were not properly applied” 
 
Mr Daul did not want to see the efforts of the little people in Europe wiped out.  SMEs need support and we need to guarantee the social market and solidarity. He asked for all to ratify the Lisbon Treaty as soon as possible so that Europe could run more smoothly.  He concluded that ahead we face many major issues together:  climate, energy, defence. For the sake of future generations he stressed that we need to work on the basis of a Social Market economy model to solve them.
 
 For the Socialist group, Martin SCHULZ (DE) was impressed by the recent resolute action of both President Sarkozy and Barroso.  However, he felt we need to make full use of the current crisis to make sure we never again suffer such a disaster in the financial markets which has triggered a disaster in the real economy.  We need new rules by the end of the year for banks, private equity.
 
Mr Schulz noted that in this debate Messrs Sarkozy, Daul, Barroso all spoke the language of true European Social Democracy.“ I am glad you have finally arrived, however late” he said.  Mr Schulz was concerned about the situation of the ordinary citizen, the taxpayer, the small business in this crisis.  We need to boost purchasing power to revive the Single Market and we need to cover the risks for the ordinary citizen not just the big fish. 
 
He was delighted everyone was now singing from the same hymn sheet of social democracy but warned this was the time also to remember the long-term issue of climate change which would remain after the credit crunch had subsided.  We should all be working towards sustainability.  Finally, in this crisis he emphasised that we must not forget rights and keep the question of fundamental values on the agenda.
 
Thank you for these warm and encouraging words about working hand in hand“, said Graham Watson (UK), for the ALDE group, ”but why do the Council conclusions refer only to the Commission and the Council? Why, for example, under climate change, is there no reference to the Parliament?“  ”You will need the EP“, he predicted, pointing to some Member States' behind-the-scenes attempts to ”unpick“ agreements on CO2 emission targets for new cars (2012) and emission sharing (2013).
 
”Since the Berlin wall fell, 50 million people have been lifted out of poverty, but today we are seeing what happens when markets lack transparency“, said Mr Watson, welcoming the fact that co-ordinated measures had alleviated the immediate pressures. He stressed that the EU must play a leading role in applying such remedies internationally - working with the US if possible, and without it if necessary.
 
Mr Watson nonetheless regretted that the summit had failed to produce plans for an effective supervisory regime, such as a European financial services authority. ”Supervision is still the missing piece of the jigsaw“, he said.   Finally, Mr Watson acknowledged that Mr Sarkozy's role as a ”man of action“ in managing the crises underlined the EU's need for a permanent President.
 
”Energy and willpower are required in politics, and are good for Europe“, agreed Daniel Cohn-Bendit (Greens/EFA, DE), for his group.  He stressed that all the crises - financial, environmental and hunger worldwide - are interdependent, and must be tackled together.
 
”These crises did not start in July or August, but years ago“, he said in a reference to Mr Sarkozy's speech. ”It was calls for unbridled growth and the rejection of financial market regulation a year ago that led us into these crises“, he said, urging Europe's leaders to be ”more self-critical“. What Europe needs is a ”social and environmental market“, which entails ”rethinking the way we manufacture, and the way we live“.
 
”The German car industry already has money in tax havens, and does not need more“, said Mr Cohn-Bendit, in a reference to car industry ”climate change waivers“ (which, he said, had been backed by both right and left wingers). He urged Mr Sarkozy to press for tax havens to be obliged to declare the country of origin of these funds.  Finally, subjecting climate change proposals to unanimity in the Council ”will put you at the mercy of countries that are backsliders“ in December, he warned Mr Sarkozy.
 
For the UEN group, Cristiana MUSCARDINI  (IT) said she agreed 100% with the statements and proposals made by French President Nicholas Sarkozy and thanked the Council for the immigration pact and the asylum pact, ”common sectors which are important to us all“. However, she called on certain ”Commissioners, including competition Commissioners “to do the right thing”. The statement on heating oil has not reassured the markets. “We need more on financial derivatives, which have laid low some European States.
 
Mrs Muscardini said a united, if not equal, Europe, would help to pinpoint strategies to solve the crisis, which she called ”systemic“ and ”in order to combat a systemic crisis we need a new system“. She called on Nicholas Sarkozy to recast global capitalism and maybe even go further to make sure that ”market freedom is not untrammelled liberalism“.  She added that the European Central Bank ”could have done more“ to help banks that have and are ”failing“.
 
Francis WURTZ  (FR), on behalf of the GUE/NGL group, warned that the ”worst is still to come“ of this ”multidimensional crisis of such scale and seriousness“. The dimensions may be ”unfathomable“, but the crisis still needs to be debated. The ”shock“ of this crisis is being felt everywhere and ”we have a drop in public expenditure and plans for privatising public services are ahead,“ he said.
 
Mr Wurtz continued ”We need to be held accountable to our citizens“, adding that this cannot be avoided, by introducing regulation or ”doing away with golden handshakes“. He pointed to the fact that 2% of monetary transactions were for services and production, while the remaining 98% went on finance. ”We must attack the roots of this evil“ and we need a ”new Bretton Woods“.
 
According to Nigel FARAGE (UK) of the Independence and Democracy group, when President Sarkozy went to Georgia he was ”not acting for the EU“ as ”there had been no meeting“. ”You did it as the President of France“.  As regards the financial crisis, ”I'm glad the Irish and the Greeks did their own thing“, he said, before adding ”I haven't heard anyone say that this crisis is a failure of regulation. We haven't had a lack of regulation, we have a blizzard of regulation and this has not protected a single investor. We need to rethink what we have been doing. We need to act in our national interest.  The Swiss can and they have the adaptability, to weather the financial crisis better than EU states“
 
The speaker from the non-aligned MEPs, Bruno GOLLNISCH (FR), said ”We are looking at part of things here but we are quiet on the causes. No one saw this coming …. apart from a few economists and Jean Marie Le Pen's voice crying in the wilderness.“ In his view, ”We need unfettered freeing up and decoupling of the financial side of things and the real economy, which is now declining.“ Turning to foreign affairs, he said ”You don't see that Kosovo's unilateral declaration of independence paved the way to South Ossetia.“ His final comment was ”You have to have a radical break with the global system and the movement of goods has to be rethought.“
 
British and Irish speakers
 
Linda McAVAN (PES, UK) said it was not time to abandon climate change ambitions, adding that the socialists want ”a credible agreement that balances environment, jobs and competitiveness“ by Christmas and in time for international talks. ”Let's have the political courage,“ she said.
 
Avril DOYLE (EPP-ED, IE) said that Europe's leaders had ”committed themselves to reducing greenhouse gases by 20%“. Now, in order to secure an agreement at Copenhagen ”we will have to make a clear and unambiguous statement“, she added.  ”There should be no delay and we cannot pay the higher price in the future“ or, as President Sarkozy said, we will miss our date with history.
 
Giles CHICHESTER (EPP-ED, UK) told the House ”It would not be far fetched to liken the crisis to a hurricane. Once the wind abates there is an illusion of calm but the devastation takes years to clear up.“  He continued ”Tackling change is a long-term matter and there is no silver bullet“. Moreover, ”Over-regulation could precipitate something much worse, a re-run of the 1930's slump“. ”Let us not kill off the goose that lays the golden egg“, he concluded.
 
John BOWIS (EPP-ED, UK) agreed with President Sarkozy that the climate change package ”is so important that we cannot simply lose it under the pretext of a financial crisis“.  However, he went on ”we will need reassurances for the countries which have real problems, as Poland does with coal“ and ”we must also be very clear that our support for biofuels in transport is dependent on the development of fuels from sustainable sources“.