"Having a common currency and no mechanism strict enough to control and push member states to behave responsibly is a mistake," the Lithuanian president said, referring to EU member states' persistent failure to respect the Stability and Growth Pact.
"In 2005, member states themselves laundered this pact. It became a rubber pact where you can inflow as much as possible flexibility without responsibility," she added.
Grybauskaitė, who has also served as her country's finance minister and vice-minister of foreign affairs, became president of Lithuania in July 2009, after having held the position of European commissioner for financial programming and budget in the first Barroso Commission.
"If one country is allowed to misbehave, to bluff with information, to avoid paying its full share to the European budget, to make uncoordinated moves in economic policy, the system collapses," she said, claiming that the euro debacle was an accident waiting to happen and was accelerated by the global crisis, which exposed the weaknesses and bottlenecks of the European fiscal and monetary situation.
The president explained that the rescue package adopted by EU leaders earlier this month to prevent the euro from collapsing under the weight of debt accumulated in countries such as Greece, Spain or Portugal is just a means of buying time.
According to Grybauskaitė, if Europe fails to act, "the investment of the rescue package will be lost and misused" as the crisis is not just a Greek problem, but a problem for the entire euro zone and the EU as a whole, because ultimately its resolution lies in fiscal policies and how they are controlled and harmonised.
"A currency without a common monetary and fiscal policy is an artificial design," she said. "And if you don't coordinate, you cannot speak with one voice, and cannot decide in one shot."
Europe 2020: A living document bound to change
Outlining her long-term vision for the European Union, the former commissioner, who worked extensively on preparations for the EU budget review, argued that the 'Europe 2020' blueprint, which was launched in March as a follow-up to the Lisbon Strategy, "is not a solution for all problems".
"It is clear that you cannot solve citizens' everyday lives with that kind of strategy," she said. "Any strategy needs to be open to change and adapt to reality, because life is changing fast and our documents ought too," she added, stressing that the European Commission has not fully learned the lessons of the Lisbon Strategy's failure.
Europe 2020 has fewer indicators and it is more structured, argues the former commissioner, but the control mechanism for member states' commitment and ownership is still weak. "This is really all we need no matter what we write in the document."
Policies have outgrown the European dress
Responding to a question on whether creating a European monetary fund or a European credit rating agency are sound proposals, President Grybauskaitė smiled and said that although there is a desperate need to manage situations regionally, regional institutions can only partly respond to the problem.
"Financial markets are more integrated than governments are […]. Some policies have outgrown the European dress," she continued. "Global markets are already a 'federation' and even more than that - they are so much united that we governments in different regions are running after them," she said, arguing instead for reform of international institutions.
No need to change EU treaty
European instruments, however, could help the bloc itself to be more coordinated.
Indeed, in the coming years Europe needs to be integrated not only as regards the single market of goods and services, but also in the field of energy infrastructure, Grybauskaitė argued.
"We do not need to change the EU treaty to have a political agreement on a common energy policy or foreign policy. It only takes the Council and governments to agree – a gentlemen's agreement," she said, expressing regret that economic integration and the single market were still far from being completed.
Deeper integration or club of friends?
Crises have always been perceived as opportunities for change and progress, especially in the European Union, which has developed through political and economic turmoil.
But it is not yet clear whether the EU will take this crisis as a lesson, the Lithuanian president cautioned. "The understanding is coming, but it is not shaping institutions yet."
She refuted suggestions that this is down to a lack of leadership at national level. "What we need is real European leadership. Do we go into deeper integration or we grow more like a club of friends?" she wondered, hinting at the fact that the Delors, Mitterand or Kohl of the 21st century was yet to come forward.
Lithuanian President Dalia Grybauskaitė was speaking to EurActiv Managing Editor Daniela Vincenti-Mitchener in the Vilnius presidential palace.
