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03/12/2016

MEPs roast Katainen over support for austerity

Euro & Finance

MEPs roast Katainen over support for austerity

Jyrki Katainen was attacked for his austerity policies while prime minister of Finland. Brussels, 7 October. [European Parliament/Flickr]

After championing a €300 billion investment package to boost growth in the EU at his confirmation hearing today (7 October), Jyrki Katainen was attacked by MEPs for Finland’s tough stance on austerity and eurozone bailouts during the financial crisis.

Katainen, former Finnish prime minister and finance minister, is Jean-Claude Juncker’s choice for Vice-President for Jobs, Growth, Investment and Competitiveness. 

If Juncker’s new team is approved by MEPs, he will coordinate Commissioners overseeing, among others, financial services, economic and monetary affairs, industry and entrepreneurship.

Left-wing MEPs said his new focus on growth was incompatible with his support for austerity and cuts. They also demanded details of the investment package, which was promised by Juncker.

Katainen said he could not give too much detail about the investment package because the new Commission did not yet exist and he did not have time to meet the other Commissioners.

And he blamed Finland’s insistence on stringent bailout terms for Greece €110 billion rescue package and those for other crisis-hit member states such as Spain, Portugal and Ireland, on his Social Democrat coalition partners and public opinion.

Portuguese Socialist Elisa Ferreira said, “You assumed a moralistic stance that sinners must atone for their sins. Greece had to borrow to meet your demands.”

You proposed austerity, yet now your propose stimulus, she said before asking to applause, “Why? Where is the money coming from?”

Katainen said that austerity and growth were not mutually exclusive, and that confidence was a pre-condition for investment and growth.

“We have to reduce debt to increase growth. Governments were between a rock and hard place when defending their credibility and fighting to get their confidence back,” he said.

Now there is confidence, the time is right to invest, he said. “It’s not black and white between whether we need responsible financial policy or growth – we need both,” he added.

Responding to further questions from Portuguese and Greek MEPs, Katainen said he had supported the hundred billion euro bailouts of those countries.

He said, “I was in favour of both packages, unlike some people in my country. It was highly unpopular […] people were very disappointed in Greece, in Portugal, in Spain, and in Ireland.”

“Both as prime minister and financial minister, I made sure my country participated in those packages.”

“Let’s stop remembering what has happened in the past and look to the future,” he added.

But many MEPs were not in a mood to forgive or forget, denouncing his support for a “failed” austerity policy.

“Cutting wages did not restore competitiveness,” Eva Kaili, a Greek Socialist said.

http://www.euractiv.com/video/katainen-i-want-300-billion-real-investment-support-jobs-309019

300 billion package

Katainen said, “We need an unprecedented mobilisation of the public and private sectors, the Commission, the European Investment Bank and member states to pull together the €300 billion euro package.

“We need a fresh impetus for jobs, growth and investment, without creating new debt, and for that we will need to mobilise both public and private money in a new way,” he added.

Katainen said that many of the details were yet to be ironed out and that, as part of the new Commission structure, he would met with the Commissioner he is leading to discuss different priorities and plans.

He also said that some of the financial instruments being looked at were “market-sensitive” and so could not be discussed at a public hearing at this stage.

But he did call for public/private partnerships, increased lending capacity for the European Investment Bank and other EU lending bodies, more “future investment” by EU nations in areas such as infrastructure and the completion of the single market, including in digital.

By taking these measures, and by intelligently ‘leveraging the EU budget – targeting public money at worthwhile projects not attractive private money – the EU could regain competitiveness and tackle its high unemployment.”

Udo Bullman, a German Socialist, said the European Parliament would back Katainen’s package if he made a commitment to come back before the committee before the end of the year. That commitment was not forthcoming.

Belgium’s Philippe Lamberts, co-chair of the European Greens, said that Katainen was not expected to have the full package outlined at this stage.

But he criticised his inability to discuss any further details. He later told EurActiv that a final decision had not been made over whether top put his confirmation to a vote, as had happened with Jonathan Hill.

Hill is appearing for a second hearing before MEPs today. A decision on Katainen, who was praised for his handling of the hearing by some commentators, is expected tonight.

Katainen will enjoy the support of the largest group in the European Parliament, the European People’s Party, of which he is a member.

Background

Jean-Claude Juncker, the new President of the European Commission, announced the distribution of portfolios among his new team on 10 September.

Among the new Commissioners, due to take up their posts on 1 November, are 18 former (prime) ministers. The President has announced that the new Commission will be "very political".

The new Commission must now be approved by the European Parliament, who will interview the Commissioners between 29 September and 7 October.

Timeline

  • 1 November: Expected date for new Commission to take over.

Further Reading