"We will do anything to defend the Euro"
Lesson learned: If Europe wants a monetary union, it must promote an economic union / Europe cannot afford its social model without economic growth and increased competitiveness
In less than 48 hours, Europe took "a historic decision" to provide an unprecedented rescue package in an effort to combat the debt crisis that has swept across Europe and threatened markets globally. "We have stated that we will do anything to defend the euro. We completed an agreement to respond in a coordinated, fast and effective manner to any difficulties in Member States. Any attempt to weaken the stability of the euro will fail," said José Manuel Barroso, President, European Commission, Brussels, at the opening plenary of the World Economic Forum on Europe.
After a meeting in Brussels lasting more than 11 hours, the Economic and Finance Council, comprising the EU's economic and finance ministers, reached an agreement in the early hours of Monday morning on a loan package of more than 720 billion euros over three years to defend the euro and to cover the needs of European Member States that, according to Barroso, are "living beyond their means". Stock markets, which fell to near threemonth lows last week over rising concerns about debt contagion from Greece, rallied on Monday in response to the substantial emergency loan package from the EU and the International Monetary Fund.
Referring to the bailout package as a "consolidation pact" for the eurozone, Barroso pledged to broaden surveillance of the EU's economic imbalances, reinforce competitiveness and push for a permanent mechanism to deal with economic crises. "If there is one lesson we have learned from this crisis, it is this: if you want a monetary union, you need to promote an economic union. This means reinforced economic governance and respect of all obligations Member States have under the Stability and Growth Pact."
The decision is "courageous and far reaching," said Herman A. van Rompuy, President, European Council of the European Union, Brussels. "All of Europe's institutions collaborated to save the stability of the euro, the second biggest currency of the world," he added. "Governments that faced internal problems regarding this decision to help Greece took their responsibility. They voted and showed political courage."
The stimulus package is "timely, targeted and temporary," commented Yves Leterme, Prime Minister of Belgium. Referring to Europe's footdragging in addressing Greece's escalating debt crisis, Leterme added: "We were wondering where the European institutions were when the situation of Greece over the last years worsened. We could have had more speed in our reactions. The lesson to draw is that, when you have a single currency, you need a common monetary policy."
To maintain the European social model, a vision of society that combines sustainable economic growth with ever improving living and working conditions, "we need people to work longer and to work more," said Barroso. "We can make the case for these reforms. We need leadership at European and national levels. With this, we can counter the trends of populism and narrow nationalism."
Van Rompuy added that Europe cannot afford its social model - which is a model for the world - without economic growth. "[This will] require sacrifices. But, if we focus on the longer term, we will have the support of our citizens," he said. Van Rompuy is heading a new task force with a mandate to broaden and strengthen economic surveillance and policy coordination across the EU. "We will pay close attention to debt levels and competitive development. We will [look at] sanctions and create a robust framework for crisis management while respecting budget responsibility." Van Rompuy promised a "radical package" for consideration by the European Council in October.
Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, praised European leaders for their "great act of European solidarity" and noted that this historical moment represents a "critical juncture" for the future of Europe.
The Co-Chairs of the meeting are: Chander P. Gurnani, Chief Executive Officer, Mahindra Satyam, India; Jeffrey Joerres, Chairman and Chief Executive Officer, Manpower, USA; Lord Levene, Chairman, Lloyd's, United Kingdom; Sir Martin Sorrell, Group Chief Executive, WPP, United Kingdom; and Ruben K. Vardanian, Chairman of the Board and Chief Executive Officer, Troika Dialog Group, Russian Federation.
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