Industry commissioner Günter Verheugen meets the Tánaiste today in Dublin, writes JAMIE SMYTHin Brussels
IRELAND MADE mistakes in its economic policy but it would be wrong to write off the Anglo-Saxon model or globalisation, says EU industry commissioner Günter Verheugen.
“Some people are now blaming the UK and Ireland as the countries that imported the wrong business model to Europe. In principle the idea to transform an economy and build it on [a] modern globalised basis is reasonable, but as always, also in life mistakes were made,” says Mr Verheugen.
He will meet Tánaiste Mary Coughlan and business leaders in Dublin today to discuss Europe’s response to the economic crisis.
Germany’s nominee to the European Commission is a strong supporter of globalisation, noting that Europe has been among the big “winners from globalisation, not the losers”.
He says the economic crisis should not be used as an argument against this process, and creating a fortress Europe mentality through protectionism will only make it worse.
“Ireland was a kind of pioneer country and the problem of a pioneer country is that it is the first country to learn certain lessons, but that does not necessarily mean that the whole policy was wrong – on the contrary,” says Mr Verheugen, who notes that the protests in Dublin last weekend were the product of a major European crisis and not simply an Irish problem.
“A snapshot of the situation today shows a slowdown that is unprecedented in scope and speed and it is not yet finished . . . The industrial landscape in Europe after the crisis will not be the same as before,” he predicts, citing the example of the European car industry, which has informed the commission it needs €13 billion in aid to stay in business.
“I do not believe we can manage this, but we will try to do as much as we can,” says Mr Verheugen, who yesterday published guidelines for EU states to follow when supplying state aid in the form of soft loans to the car industry, to alleviate competition concerns.
France, Italy and Spain are proposing to pump billions into their car industries and Brussels fears that “delocalisation clauses” in the state aid plans will distort the internal market by forcing firms to cut jobs in other EU states rather than in their home country.
“I am very, very doubtful that it [this type of state aid] would be compatible with existing state aid rules that state aid was given under those conditions. I would be very sceptical,” says Mr Verheugen, when asked about media reports highlighting this type of clause in a car bail-out plan being proposed by French president Nicolas Sarkozy.
On the question of combining support in the car sector with job guarantees and a suggestion not to delocalise, governments must consider very carefully whether it is wise to interfere in management decisions as this could hurt competitiveness, he says.
Mr Verheugen says one of the biggest problems facing the economy and, particularly, small and medium-sized businesses, is access to financing.
This problem is more extreme in states such as Ireland, which does not have the same network of savings banks specially dedicated to providing finance to SMEs as a state such as Germany.
“My personal view is that we will not solve the problem without finding a solution to the problem of asset relief, not just toxic assets but undervalued assets,” he says, noting that the commission is trying to ensure that a common framework is put in place across the EU to ensure a level playing field. “This is a very, very difficult and sensitive issue,” he says.
Mr Verheugen says Ireland’s membership of the euro zone has helped it in the crisis, removing the potential problem of currency speculation. He also rejects as “unfounded speculation” the idea that the euro zone could split apart under the stress of the crisis.
“Nobody in the euro zone, neither stronger nor weaker countries, has the slightest interest to try to leave,” says Mr Verheugen, who predicts the current crisis will prompt much more harmonisation in economic and financial matters in Europe and worldwide.
He refuses to speculate on rumours that Germany is drawing up contingency plans to rescue Ireland’s ailing economy, noting only this wasn’t foreseen in the EU treaties.
Mr Verheugen says he hopes Ireland votes in favour of the Lisbon Treaty, which would help the EU to deal with the crisis by providing more coherent leadership through a new president of the council of ministers and a stronger high representative for foreign affairs.
However he downplays the prospect of Ireland being punished for voting no a second time.
“I do not believe that a country or a people can be punished just because [of] a democratic right to say yes or no to an important proposal or important political decision. We have to respect this,” he says. “The EU is not a state, it is a strong community of member states and the basic rule is that you can only go a step further if all member states agree.”