Parliament stresses the importance of a coordinated macroeconomic response to resuscitate global growth, without undermining the principles of the stability and growth pact. MEPs also want to see coordinated action to restore confidence in the financial markets.
Financial market crisis and the real economy
The crisis, says the resolution, has implications beyond financial markets: for business viability, jobs, personal finance and SMEs. Parliament stresses the paramount importance of ongoing access to credit for citizens and SMEs and of investments in EU infrastructure to avoid a dramatic downturn in growth and employment.
It therefore supports measure to return liquidity to the markets, and the rapid reaction of the Commission in applying state aid rules on measures taken to rescue financial institutions. When public money is spent in this way, say MEPs, it must be accompanied by public oversight, improvements in governance, limitations on remuneration, strong accountability to public authorities and investment strategies for the real economy.
MEPs welcome the setting up by the Commission of a high-level group to consider the future supervisory architecture for EU financial services, but they criticise the lack of Parliamentary involvement in the Commission's "financial crisis cell".
Better supervisory structure for the future
Looking beyond the immediate crisis, MEPs reiterate their calls on the Commission to propose measures to strengthen the EU regulatory and supervisory framework and EU-level crisis management, including on banks, credit rating agencies, securitisation, hedge funds, leverage, transparency, winding-up rules, clearing for over-the-counter markets and crisis prevention.
The Lamfalussy process should be strengthened, including colleges of supervisors for cross-border institutions and a clearer role and legal status for the Level 3 committees (which bring together all the Member States' banking, securities and insurance supervisors). Parliament also wants to see proposals drawn up for effective cross-border crisis management.
Lisbon, climate change, energy, Caucasus conflicts
The resolution also considers other issues arising from the European Council meeting last week. Among other points:
- Parliament reiterates its respect for the result of the Irish referendum on the Lisbon treaty, and for the results of other countries' ratification procedures, and hopes a solution can be found which is acceptable to all before the European elections in June 2009;
- MEPs say the financial crisis should not call into question the EU's post-2012 climate targets, though measures taken to meet them should be evaluated with competitiveness in mind;
- Parliament calls for Commission and Council to pursue the establishment of a common European external policy on energy, and for a stronger political commitment to a low carbon economy;
- MEPs stress that there cannot be a military solution to the conflicts in the Caucasus, condemn all those who resorted to force to change the situation in the Georgian breakaway territories of South Ossetia and Abkhazia and recall Russia's "disproportionate military action." They call on Russia to respect the sovereignty and territorial integrity of Georgia.
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.
