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Rehn warns there must be reform

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Rehn warns there must be reform

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Rehn: “It is really high time now to supplement the monetary union with a stronger economic union.”

The European Union’s commissioner for economic and monetary affairs Olli Rehn has said without reforms Europe faces economic stagnation and political irrelevance.

He believes the EU is at a crossroads as it tackles debt problems in Greece and other euro zone countries.

He told euronews Brussels correspondent Sergio Cantone that there must be reform of the stability pact and Brussels should have the right of in-depth monitoring of national budgets.

Sergio Cantone, euronews:

“Commissioner Rehn what do you think about these measures that some EU countries, Greece, Italy and Spain, are taking in order to tackle the current crisis. Do you think that these measures can be combined with growth?”

Olli Rehn, EU Commissioner for economic & monetary affairs:

“Yes they can and in fact they are necessary because there are several member states of the EU who are suffering from very high levels of public debt and deficits which are as themselves hampering economic development. They may have in the short term, the very short term, some negative impact on growth, but on the other hand these measures are necessary in many countries because they are facing such high public debt levels and moreover this servicing of public debt is crowding out private investment, which is needed for economic growth and job creation.”

euronews:

“When it comes to measures to be taken for more fiscal discipline and especially budgetary discipline, do you think that after last Friday we can say that the EU is on the right path?”

Olli Rehn:

“We can say that the EU member states have clearly understood the paramount importance of fiscal consolidation and sustainable public finances. It’s important that we combine both fiscal consolidation and mobilisation of economic growth through structural reforms.”

euronews:

“What about the economic governance of the euro, of the euro area, that’s important. We don’t pay the same taxes, we take the same economic decisions. Do you think that this is viable for the single currency?”

Olli Rehn:

“The current state of affairs certainly is not viable and it is really high time now in the EMU to supplement the monetary union with a stronger economic union.”

euronews:

“Do you think that member states are ready to yield their national sovereignty when it comes for instance to budget control?”

Olli Rehn:

“There has been a big, big change among the member states in their attitudes on this particular issue and I find that reinforcing preventive budgetary surveillance is really at the heart of economic governance. What is legitimate to expect is that the Commission can analyse and the finance ministers and the eurogroup can peer review the national budgets in terms of broader budgetary guidelines and fiscal balance before they are finalised.”

euronews:

“Did these 750 billion euros come too late for saving the situation?”

Olli Rehn:

“Well, politics is a matter of will, but it is also the art of possible and this time even though we had very strong will at the same time we have to coordinate several positions of the EU or euro area members states. So all in all, we can move rapidly if there is a need for that, but this must be accompanied with accelerated fiscal consolidation by the countries concerned.”

euronews:

“Is Barack Obama a sort of new president of the European Union, because this measure to help the member states was taken only after the intervention of president Barak Obama? He did it twice actually.”

Olli Rehn:

“It was a coincidence that some phone calls took place around the same time, it would be underestimating the intelligence of the Europeans to claim that we would not have noticed ourselves that we have a forest fire which we have to contain and that’s what we did.”

euronews:

“But the decision was taken only after the American pressure.”

Olli Rehn:

“There was no pressure and I see the United States of America as a partner and not somebody who is pressurising us.”

euronews

“Is the stability pact going to be reformed?”

Olli Rehn:

“It will have to be reformed and the commission’s proposals aim at reinforcing the economic governance and especially strengthening the preventive and also the corrective arms of the stability and growth pact.”

euronews:

“And what sanctions could be taken?”

Olli Rehn:

“My view is that prevention is always better than correction, but if prevention and early correction fail then we need to have also concrete instruments, incentives for compliance, such as a broader use of the EU expenditure in order to encourage the member states to comply with the pact.”