GREECE WILL remain in the euro zone but the EU should act faster to introduce a €500 billion fund to address the debt crisis, EU Commission president José Manuel Barroso said yesterday.
Delivering a state-of-the-union address to the European Parliament in Strasbourg, Mr Barroso described the debt crisis as “the greatest challenge in the history of our union”. He called for faster action from political leaders and said the €500 billion European Stability Mechanism should be brought forward from mid-2013, to show EU determination to extinguish the crisis, and reassure financial markets.
Mr Barroso proposed a financial transaction tax aimed at raising about €55 billion a year and said proposals for euro bonds would be advanced by the commission “within weeks”. While “fully fledged” euro bonds would require changes to existing EU treaties, he said the treaty issue “should not be an excuse to delay”.
He also called for the promotion of job placement internships to give hope to the one in five young EU citizens who he said was without a job.
“We are facing the greatest challenge in the history of our union. The financial, economic and social crisis has resulted in a crisis of confidence and trust not seen in decades. [There is] lack of confidence and trust in governments, in leaders and in Europe, in our ability to change things for the better,” he said.
He said it had been “an illusion to think that we could have a common currency and a single market with national approaches to economic and budgetary policy”. It was now important to avoid “another illusion that we can have a common currency with an intergovernmental approach [to responding to the financial markets]”. But he said it was both possible and necessary to overcome the crisis and the serious challenge it posed.
Turning to the financial problems in Athens, he said “Greece is, and Greece will remain, a member of the euro area.” He warned that the issues being faced by the country would require long-term structural change. “This is not a sprint but a marathon,” he said. “Greece must implement its commitments in full and on time. In turn, the other euro area members have pledged to support Greece and each other.”
Addressing the euro zone crisis, Mr Barroso said a “mix of discipline and integration”, as was proposed in a separate economic governance package adopted by parliament yesterday, would give greater control to the commission and stability to the markets.
This package of reforms, known as the “six pack”, gives the commission greater oversight of national budgetary policy and prevents member states from ignoring commission recommendations to tackle economic imbalances more promptly.
Turning to the issue of a transaction tax, Mr Barroso said that in the last three years taxpayers in the EU had guaranteed €4.6 trillion to the financial sector. “It is time for the financial sector to make a contribution back to society,” he said. A transaction tax would, he said, generate about €55 billion per year. Speaking after his address Parliament president Jerzy Buzek said Mr Barroso had proposed “a true economic union with the commission at the heart of economic governance”.