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More Europe is the solution to the crisis

Forside-Poul-NyrupPoul Nyrup Rasmussen, president of the Party of European Socialists (PES), talks about the lack of effectiveness of the European Union in tackling the public debt crisis and urges for the establishment of a European-wide Financial Transaction Tax, while he opens up the discussion for setting up a Euro-bond system that would potentially allow for greatly reducing the risk in the financial sector within the European Union.
Question: What lessons Europe should learn from this financial crisis in order to prevent another one?


Poul Nyrup Rasmussen: The first lesson learnt by European leaders, albeit painfully late, was that the best course of action was based on the recommendations suggested by the Party of European Socialists. As early as from February, we stated –through press conferences, opinion articles, TV interviews, Seminars and even a Europe-wide Day of Action- that the response to the crisis needed three pillars: a Mechanism for Financial Stability, a European Monetary Guarantee and a Financial Transaction Tax. All of these recommendations have been belatedly, and sometimes half-heartedly, adopted by the Conservative majority.


The second lesson Europe should learn is that, in this type of crisis, tougher financial rules must go alongside policies ensuring economic growth and creation of employment. The principles guiding these policies should be solidarity and not selfishness, and the tools investment and not cuts. This two-way course of action is the alternative we are proposing to the current wave of austerity cuts.


The third, and most obvious lesson Europe ought to learn from the crisis is, precisely how NOT to conduct European business. Merkel’s costly and selfish indecision for months should give an appropriate example of why the future of Europe can not depend on national shifting moods and electoral interests.


Question: If there won’t be a global banking crisis – will there be one in Europe?


Poul Nyrup Rasmussen: Europe has that answer in its hands, again. In 1990, conservatives tried to resolve a similar crisis through savage cuts. They failed. Now it’s time for more serious and responsible thinking. If leaders stop obsessing about cuts and incentivize banks to facilitate loans, increase spending in innovation –vital to recovery based on progress and fully in line with the Lisbon Strategy- we have good chances to steady the financial ship while expanding the economy again. In other words, I measure the success of the recovery in terms of how many jobs we create.


Question: Can there be contagion, thus putting the Euro in peril?


Poul Nyrup Rasmussen: There has been contagion! The Euro is currently endangered by financial markets’ attacks and speculation. Credit Default Swaps and naked short-selling were just the tip of the iceberg against which Chancellor Merkel has been steering the European ship. Conservative hesitations caused debt crisis contagion. This can become worse if we do not sort out the other big contagion we currently have in the EU: divisiveness. The way to go forward is to build unity and this can only be done, as it has always been since the foundation of the European Economic Community, with solidarity. We are the biggest trading bloc in the world. People and not markets should decide what we do with this power.


Question: What’s the best solution? Will the new bank levy being proposed in Europe help?


Poul Nyrup Rasmussen: The Commission proposal to create national resolution funds does not go far enough. As I said above, more Europe and not less is the solution. We need an approach at the European level. Furthermore, we need a European-wide Financial Transaction Tax that raises money to pay for already caused damages and that tackles speculation.


We also need to start looking seriously at a Euro-bond system that would allow us to greatly reduce the risk in the financial sector within the European Union.


We must not give the banks a free ticket for taking even greater risks. In cases of mismanagement, bank owners will have to pay. Citizens’ savings must be protected at all costs.

Source: www.re-public.gr