Jonathan LEVEUGLE : The debt crisis in the euro area does not work out despite the successive European summits. What decisions should the European leaders take in order to lead us out of the crisis?
Valéry Giscard d’Estaing: At the present time there are two crises. The American rather standard crisis, and the European crisis linked to debt problems. The media mix them up while they are different in nature.
The debt crisis is at the first place a crisis of guiltiness. At the euro birth, the States established the criteria forging the Stability Pact. The debt of each country could not exceed 60% of the GDP and the budgetary deficit could not reach 3% of the GDP. The European institutions were not able to enforce this pact and the euro area became an irresponsible financial disorder.
How to prevent it to happen again and to strengthen the system?
Leaders should take a long-term view. In a couple of years the countries will have converging public finances with mandatory coordination. As from that moment the debt will become gradually common.
Nowadays, a common debt would only gather the countries managing their public expenditure the worst. In a close future we will be able to set up a European Treasury issuing debts in proportion to the needs of the countries commonly approved in advance. But until now the situation does not permit it.
J.L.: Current management of the debt crisis in the euro area has shown its limits. Shouldn’t it be a reform of the European economic governance? What form should it take?
VGE: Presently there a confusion between the countries of the euro area and the EU at 27. But the crisis of the euro area does only concern the euro area. The institutions with 27 should be excluded. One cannot ask country rejecting the euro to solve issues of the single currency. There must be a clear separation. The countries of the euro area should deal with their own problems without any external help.
On the long-term, the euro area will have to adopt its own projects, different from the one of the 27. It is therefore vital to come back to the budgetary equilibrium and to restore confidence to the economic actors (households and businesses) and allow a return to the growth.
J.L.: In the middle-term, what measures are required to ensure a real budgetary convergence?
V.G.E : In a few years the convergence of the budgetary and fiscal policies will have to be realised. It is necessary to set up a mandatory coordination on the budget with automatic sanctions.
In a second step, the euro area will have to nominate a general secretary that will follow the budgetary and monetary questions, just like at the OECD during the Marschall Plan. Nowadays, we lack a follow-up implementing the past agreements.
Finally, one has to ensure a gradual equilibrium and enforce the implementation of the decisions. Therefore, a system of fines has to be set up. Several forms are conceivable. An allocation of structural funds or dissuasive fines could be imposed on States that are not complying with the passed measures.
We have to tend to this system step by step.
J.L : Would these sanctions not produce bitterness towards the EU institutions ?
V.G.E : No. We have to explain the necessity of these reforms to the citizens. Many think that periods of bad public expenditures lead to growth. Nothing is less true. The periods of growth are synonymous with good public management. The European countries with the highest growth are these with tidy public expenditure.
Moreover, as soon as sanctions become automatic they will be less humiliating. The people should better know what the leaders impose to Greece. The government had to decrease the salaries of public employees and the pensions by more than 20%. If the euro area remains in this mess of many different budgetary policies, we will end up with the same situation that Greece is now experiencing. The alternative is better management.
J.L : These reforms require a deeper democratic control. Are you in favour, as proposed by the CDU, to a direct election of the President of the European Commission?
V.G.E : I do not have strong views on this issue and I believe the Parliament should be able discuss this matter. Here the main problem is the disparity between small and big Member States. The election would mainly be decisive in Germany, France, the United-Kindgom and Italy.
According to me, we should establish a panel composed by Members of National and European Parliaments and transfer several decisions nowadays taken by the Council to that new structure. In this context, there could be a president elected by the universal suffrage.