EP supports EU joint action to tackle financial crisis

The European Parliament supports the idea that EU needs a coordinated response on a range of fronts in order to tackle the financial crisis and limit its impact on economic growth, jobs and small businesses. In a resolution on last EU summit, they also call for measures to improve financial supervision and look at issues from climate change to the Caucuses. MEPs held a debate over those issues with  EU President-in-Office Sarkozy.

The European Parliament stressed 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, Caucuses 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 Caucuses, 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.

Such issues were addressed by MEPs in their debate with French president Sarkozy on the EU October Summit. EU President-in-Office 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 P√∂ttering, 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".