In a landmark speech in Brussels, Almunia shed light on two of the most controversial issues debated in Europe over the past months.
"If you are asking me whether a common issuance of bonds is reasonable, I will tell you that it is. But it is up to member states to decide, and many of them oppose the idea," he said during a conference organised by the European Policy Centre (EPC).
The commissioner has so far always avoided making clear comments on the common issuance of government bonds by a group of member states, hiding behind fierce opposition from Germany and the Netherlands.
But growing pressure on Almunia, namely from the International Monetary Fund (IMF), the Organisation for Economic Cooperation and Development (OECD), Eurogroup President Jean-Claude Juncker, some member states and the European Parliament, might have pushed him to adopt a clearer position (EurActiv 19/11/08).
In another key statement, Almunia said the EU has a strategy to help eurozone members should one of them experience serious economic difficulties. The commissioner had previously been keen to stress the EU treaties' 'no-bail-outs' clause, which rules out such rescue operations.
But Almunia repositioned himself yesterday after German Economic Minister Peer Steinbrück had made repeated declarations in recent weeks that Berlin might intervene in support of a failing eurozone country.
"If a crisis emerges in one eurozone country, there is a solution before visiting the IMF," Almunia said, without giving details of the EU strategy. "Don’t forget we are equipped to interact politically and economically to face the crisis, but these kinds of things should not be explained publicly," he added.
One possible measure could be to issue common bonds - or EU-backed government debt - which can help countries in difficulty to lower interest rates to (re)finance their debt.
For instance, the spread between Greek and German bond yields has exponentially widened in recent months. The same goes for Italian bonds, while Ireland, Austria and Portugal are under threat too. Almunia himself yesterday reiterated his warning about bond yield spreads.
Another solution could involve the European Central Bank (ECB), which may buy government bonds directly, although this is currently not allowed under the EU Treaty.
Speaking to EurActiv, Polish EU Affairs Minister Mikolaj Dowgielewicz asked the rhetoric question: "Why should it be the ECB that saves Western Europe, and the IMF or EBRD that saves Eastern Europe."
Indeed, as an example of rescue measures for Eastern Europe, Almunia encouraged the intervention of 'Old Europe' capital, namely through the recapitalisation of local subsidiaries by cross-border financial institutions, such as Austrian or Italian banks which have invested heavily in Eastern Europe in recent years.
Moreover, the idea of fast-track eurozone membership seems to be back on the agenda, despite the opposition of many EU leaders at the informal summit last Sunday (EurActiv 01/03/09). The two-year test before countries can join the group (ERM II) may not be as binding as it had first appeared. Indeed, Italy, Finland and Ireland joined after shorter test periods, acknowledged Almunia's spokesperson.
Eurozone membership could indeed help "new member states" to address the extreme volatility of their currencies at present. Hungary, Poland and Bulgaria are among those pushing for more flexible criteria.
