Verbatim report of proceedings

Monday, 24 October 2011 - Strasbourg

20. Global economic governance (short presentation)

  President. – The next item is the report by Gunnar Hökmark, on behalf of the Committee on Economic and Monetary Affairs, on global economic governance (2011/2011(INI)) (A7-0323/2011).

  Gunnar Hökmark, rapporteur. – Madam President, we stand before a number of crucial meetings for the European economy as well as for the global economy: this week, the European Council, and next week, the G20 meeting in Cannes.

This report aims to present the European Parliament’s position ahead of the G20 meeting. It is a meeting that will take place at a time of severe and difficult economic times all over the world, not least in our part of the world.

It is also a meeting that will deal with the fact that the world economy is characterised by imbalances that can easily be described as countries with surpluses and those with deficits. But, behind that, lies the fact that we have a number of emerging economies that have contributed to changing the global economy and have defeated poverty in large areas of the world.

However, there are still a number of countries in poverty who need more growth and more opportunities. We can see the fact that currency policies in some major economies are contributing to the imbalances. We can see that the lack of competitiveness in a number of other countries is also adding to this. We need to achieve a balance at global level, and that requires global governance and proper institutions.

First of all, I think we need to be aware of the fact that in countries and regions with a lack of competitiveness, we need new policies and reforms. But, at the same time, we need to ensure that we have a flow of trade with these emerging economies which are currently protecting themselves with artificial currency policies.

The report has very broad support in the Committee on Economic and Monetary Affairs, and I would like to forward my thanks to the shadow rapporteurs, who have made broad compromises possible. We underline the need to tackle structural misalignments and thereby the prime causes of the current imbalances.

We need to ensure that we have responsible monetary policies at global level, and we need to achieve currency policies that are convertible and open up more trade possibilities between the countries with surpluses and those with deficits.

But it is also important to look at the institutional set-up. The more we want global governance, the more need there is for accountability, transparency and legitimate institutions.

We think it goes without saying that the G20 is one of the most important structures. But it is also important that we achieve more global participation, better implementation of decisions and a higher level of transparency. Here, we also underline the importance of the IMF and the WTO because, within a better structure, decisions and discussions in the G20 can also achieve legitimacy and transparency by being implemented in the IMF.

In the report, we underline the need for the European Union to be able to speak with a strong voice, and we underline the need for the European Union to contribute to strong global governance and strong global leadership and to make sure that we are adapting international global institutions to the realities of today.

  Seán Kelly (PPE). – Madam President, first of all, congratulations to our colleague, Mr Hökmark, for his good report and comments. I just want to say two things.

One, the transaction tax, has been mentioned, particularly by President Barroso, as something desirable that we should implement within Europe and some say perhaps within the eurozone. I think it is obviously sensible in terms of logic. Firstly, because it is only right the financial sector should contribute, particularly when it has got EUR 4.6 trillion from taxpayers generally. But I think it has to apply globally because otherwise it could lead to distortion, particularly of foreign direct investment within various parts of the European Union. I think that is a very important point.

The second point is that I agree completely with Mr Hökmark that the European Union needs to speak with one voice and it does deserve a seat at the WTO, and also that the IMF needs to be more transparent and its managing director should be elected.

  Elena Băsescu (PPE). – (RO) Madam President, first of all, I, too, would like to congratulate my colleague, Mr Hökmark, for this report.

This crisis has highlighted the need to consolidate economic governance globally, especially in the financial sector. The lack of a common framework could result in macro-economic imbalances and squandering opportunities to get out of recession.

The current system must be improved by introducing new levels of regulation and control bodies. Unfortunately, the International Monetary Fund or informal G20 meetings are bodies with limited powers.

The EU must find an integrated solution for resolving the debt crisis in the euro area. A fragmented approach has not produced any results so far. My country has already adopted austerity measures in order to maintain financial stability. Romania currently has a cash deficit below 5% of GDP, with the 2012 target being a deficit below 3% of GDP.

  Ildikó Gáll-Pelcz (PPE). – (HU) Madam President, Commissioner, The issue of economic governance has gained increased importance recently. However, in order to discuss the global aspect of economic governance and to achieve results at the upcoming G20 summit, it is important to understand its European aspects and its dangers.

Although the European Council has discussed and will discuss very urgent matters, unfortunately, it seems that this is done very slowly. Months have passed and the Greek problem is yet to be resolved. This can pose further dangers for the euro and also the EU itself. We did adopt the ‘six-pack’, but this is not enough for progress.

In light of the above, it is to be welcomed that the report goes further and calls for global cooperation as regards monetary supervision, and even speaks about a more successful macro-economic policy. We must also see, however, that as long as Europe is unable to resolve the situation of its common economic policy, restore the stability of the euro and regain the trust of investors, it cannot expect any results from the upcoming World Economic summit.

  Monika Flašíková Beňová (S&D). – (SK) Madam President, Mr Hökmark has produced a very good report indeed, and it has to be said that we really have a lot to communicate in the area of global economic governance ahead of the November meeting of the G20 countries. There are two things I would briefly like to mention. First, it is already clear to most of the players that the former global economic order is collapsing and is highly unlikely to continue in its present form. I see this in part as good news, because the levels of global economic inequality and social injustice were beginning to be unsustainable. It is not at all clear, however, that the new system rising from the ashes of today's system will automatically be better.

In the event of an incorrect interpretation of what is currently happening, and incorrect responses to these developments, it is even possible and likely that the situation could deteriorate further. I would therefore like to call on European and national leaders to be aware of the seriousness of the situation and to act accordingly. We have reached a point where time is of the essence and the fates of entire countries and millions of their citizens hang in the balance.

  Edward Scicluna (S&D). – (MT) Madam President, at a time when European and global economies are facing an uncertain and difficult future, this is a very timely report. At the heart of two summits, the EU summit on the future of the euro area and the G20 summit, the proposals of the Hökmark report are intelligent and well-balanced, and they deserve the attention of global leaders attending these summits. What should we expect from these changes? For the economy to improve, we need consistency and cooperation between countries. We need tighter financial regulations, as well as trade agreements. Both the G20 and the IMF are important institutions that deserve a change that would make their governance structures more effective. There is a need for reform within the IMF, so that the BRIC economy gets the say it deserves in today’s world. The G20, which, at the moment, serves as a useful talkshop, needs a binding legal base. The recommendations on global financial operators are important; now is the time to make the separation between traditional and investment banking. Global economies, especially in the West, are going through a rough period. There is a general lack of self-confidence. It is crucial for these global institutions to adapt to today’s needs.

  João Ferreira (GUE/NGL). – (PT) Madam President, the fundamental issue that both the report and this debate have avoided is knowing what, in the end, are the causes of the so-called global imbalances; the real causes of the global economic and financial crisis. Moreover, it is no coincidence that they are avoiding this debate: their intention often seems to be to push ahead and strengthen the paths that have brought us here. There is therefore an urgent need to disregard the real causes of the crisis if the same road of iniquity, injustice, and economic and social disaster is to be pursued.

Make no mistake, the crisis we are experiencing is a crisis of capitalism, which forms the basis of a broadly dominant economic system at global level. As such, the solution to this crisis will not come from the international institutions, whose purpose is to ensure the conditions for expansion of capitalist relations of production, riding roughshod over the sovereignty of the peoples and over democracy itself, so as to force capitalist accumulation by repressing or crushing rights and the aspects of civilisation we have achieved.

The International Monetary Fund, the World Trade Organisation, the free movement of capital, and trade liberalisation and deregulation are actors and settings in a film that we have already seen, and whose plot and ending we, tragically, know all too well. The solution to the imbalances, which I would call global injustices, is to break with this path; and to break with these institutions whose records have already shown that they are neither good people, nor recommendable company.

  Jaroslav Paška (EFD). – (SK) Madam President, I agree with Mr Hökmark when he says that we need to discuss changes to the global economic system at the G20. The G20 is a forum at which discussions take place on the future and on appropriate changes to coordination in the area of finance, economic policy, banking and so on.

I am not sure whether the EU is, at this point in time, a player capable of offering alternatives or ways out, as the EU itself has serious problems which it is currently unable to handle sufficiently well. We need only recall the current economic crisis and the start of the problems with Greece, which remain unresolved, and if our economists and political leaders are unable to tackle the problems we currently face in Europe operationally and constructively, it will be hard for leaders from other successful parts of the world to take their advice. I am therefore afraid that our involvement in this area will not be valued.

  Viviane Reding, Vice-President of the Commission. – Madam President, I would like to underline that the European leaders are going to make strong proposals this week in order to get Europe out of the crisis. Having said that, Mr Hökmark is right to underline the importance of global economic governance, which is a very important contribution to all the governance problems on the different continents. As a Commission, we share many of Mr Hökmark’s recommendations. I would also like to thank the Members of Parliament who have taken part in the discussion and made contributions to this topic.

The current crisis was a real watershed in global economic governance. Before 2008, nobody could have imagined the large advances made in bringing economies together or the G7 coordinating a policy response to a recession or an economic slowdown. This is no longer the case. The G20 has taken its place and has become a prime forum for international economic cooperation.

However, more is needed to counter the current slowdown and this will be discussed in Cannes shortly. More is also needed to strengthen global governance and, as stressed in the report, the EU should play a leading role in this economic governance reform. We can only do that if we also lead by example and that is what our Heads of State and Government are going to do this week.

President Barroso said in his speech on the State of the Union in this House that it is also time to have unified external representations of the euro area with the strengthening of the internal governance. I am thinking here of the ‘six-pack’. We now need to move towards a more unified external representation of the euro area in international financial institutions like the IMF, and the Commission will soon make proposals in this regard.

  President. – The debate is closed.

The vote will take place on Tuesday, 25 October 2011, at 12.30.

Written statements (Rule 149)

  Csaba Sándor Tabajdi (S&D), in writing. – (HU) The debate on global economic governance came late, as proven by the very outbreak of the economic crisis in 2007. Since the beginning of the 2000s, economic and financial regulations have been unable to keep pace with the development of the financial sector. Regulatory authorities have been trying to keep global financial processes under control from within national frameworks, while the banking supervisory system left it to the speculators whether or not to follow the rules.

International economic governance organisations such as the IMF and the World Bank are suffering from a severe lack of legitimacy. Their organisational structure does not reflect the realities of the global economy and the increased role of emerging economies, especially the BRIC countries. The G20 have yet to transform into an organisation that can adopt truly substantial, legally binding decisions.

The European Union recently took important steps towards a more forward-looking management of financial processes. The financial transaction tax would make financial transactions more transparent and controllable and would, at the same time, ensure, without resorting to excessive anti-banking steps that could prove an impediment to growth, that the financial sector plays a greater role in mitigating the impacts of the crisis.

At the G20 summit in November, the European Union must aim to convince the major actors of the global economy about the necessity of stronger and more effective solutions, of damage prevention instead of damage control, in order to trigger economic growth and ensure job creation and a more equitable distribution of the burdens of the crisis. The aforementioned solutions can be considered a solid basis for creating a system of global economic governance.