For a little over two years, Michel Barnier has been the European Commissioner for the Internal Market and Services. Part of that brief is to calm the markets and complete the single European market. Those are two challenges which the current debt crisis has made even more urgent. Euronews talked to him about these challenges. The Commissioner who has held several ministerial jobs in France also gave his opinion on the difficult balance between austerity and growth.
Audrey Tilve, euronews: “Michel Barnier, welcome to Euronews. At the European Commission, you are on the frontline in the fight against the crisis and its causes, I want to return to that. But first, I would like to discuss with you Europeans’ frustration at what is seen as the dogma of austerity. We saw this recently in the Netherlands where the government fell. Do you not think it is time to think again on these austerity measures and instead give priority to growth?”
Michel Barnier: “The austerity measures have been put in place in several countries to reduce their deficits, to lessen the countries debts. It has been made more difficult because for 20 or 30 years some countries have been badly managed, writing blank cheques secured against the future generations and spending more than they earned.
‘That’s why it is such a difficult situation today and so action has to be taken quickly because if these countries, not just Greece, do not make the effort to control, to better manage their finances so they can borrow, they will be forced to borrow at exorbitant rates or no one will lend to them.”
Euronews: “But there are still many countries that are in recession, unemployment rates are soaring- in Spain it is nearly 25 per cent. What some countries are asking for is simply to have a little more time to return to below a three per cent deficit because sometimes that objective is not sustainable. But no flexibility is allowed, especially with the Treaty budget.”
Michel Barnier: “This treaty budget is a joint ownership agreement. It was not decided by technocrats or bureaucrats here in Brussels. It was discussed by governments, by heads of state …
Euronews: “Germany especially wanted it.”
Michel Barnier: “It was discussed by 25 governments, 25 prime ministers and heads of state, democratically elected officials who chose this path together, what we should have done for the last 10 years, that is to say economic and budgetary union accompanied by monetary union. If we want this task, what you call austerity, to be bearable, if we want people to support this budget we need to create growth which will stimulate employment.”
Euronews: “Let’s talk about growth. Everyone including Germany agrees it is urgent, there is a consensus on that. However, there are differences. There are those like Mrs. Merkel and Mr. Draghi who want stimulus by structural reforms: more flexibility on the labour market, more liberalisation. And then there are those who want stimulus to come through what they imply should be public investment. Where do you stand? “
Michel Barnier: “It is not as clear cut as that. I hope the Heads of State and Government who will meet soon at the European Council, can discuss all this and create the policy Mario Draghi has talked about, or the initiative which I have proposed, growth for European citizens. There are short term measures, for example, making better use of the available structural funds, finding better means to expand the workings of the European Investment Bank and how it invests, creating what the European Commission proposed, so-called project bonds, that is to say loans which have been pooled at European level to invest in infrastructure, in networks, networks for the digital economy, for energy or clean transport. The second component is the single market. There are structural reforms. We have proposed fifty rules or European laws to facilitate mobility, to facilitate investment, to facilitate innovation.”
Euronews: “When you think of the single market, you think of harmonisation or a level playing field. But there is competition among European countries, for now its not on equal terms. There are huge gaps in salaries with many consequences notably relocation. There are limits to this single market.”
Michel Barnier: “Of course, not everything is equal in the single market, but the path we have laid down is to harmonise to come together more, to have standards, common rules, and not to prevent competition, competition is part of life, what I am working for is competition which is fair and equitable. The single market is the main opportunity for growth.”
Euronews: “Michel Barnier, you are also responsible for regulating finance in Europe. It is something on which you have spent a lot of time for two years now. Still, even today, financial markets continue to hold governments by the throat. Is there a way out of this? “
Michel Barnier: “No financial market, no financial player, no financial product will escape, I stress, effective regulation and the relevant supervision. That’s my job, to give transparency, set down rules, governance, put simply, to provide morality where it has been missing for 15 or 20 years, and to get the financial markets to serve the real economy. You are right we are not there yet. We’ve made great progress, no market, no person, no product will escape this regulation.”
Euronews: “One word about the rating agencies. They are omnipotent, at least the top three, you tried to address this, but encountered resistance.
For example, you didn’t want countries which were in crisis to be downgraded, but that was not accepted. You also want, I believe, a European public agency, but the idea was not passed. How can we regulate rating agencies? “
Michel Barnier: “All those involved in financial services, and rating agencies are at the forefront, all stakeholders must be prepared to be guided by public regulation, the ratings agencies just like the others. So I proposed to reduce dependence on the rates in all our laws to remove any potential conflicts of interest between those who demand rates, those who pay, those who make them, there was too much confusion, we have to have transparent rules.
‘I am not conducting a war against the agencies. I just think they are too few regulatory bodies they were at fault in the past, we have seen, when they noted the U.S. toxic assets or when they noticed, correctly banks that went bankrupt a few weeks later. “
Euronews: “One last word on the banks. You are working to make them more robust, is that a guarantee the taxpayer will not have to bail them out as in recent years?”
Michel Barnier: “That is precisely the object of the package, the toolkit, that I prepared. At the moment it is the subject of recent consultations. I have long thought that prevention is cheaper than repair.
And when you are obliged to repair, you have to be prepared for it. Being prepared for that is cheaper than improvising or a disorderly bankruptcy which we ask the taxpayer to pay for. I want the banks to pay for banks when they are in difficulties, and not the taxpayers.”