Verhofstadt: ‘Commission should lead on economic governance’

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Proposals on the shape of Europe's economic governance infrastructure should be put forward by the European Commission – not the Van Rompuy task force – Guy Verhofstadt, leader of the liberal group in the European Parliament, told EURACTIV in an interview.

Belgian MEP Guy Verhofstadt is leader of the liberal ALDE (Alliance of Liberals and Democrats for Europe) group in the European Parliament.

He was speaking to Georgi Gotev.

To read a shortened version of this interview, please click here.

In your statement on the day of the 'State of the Union' speech, you said the European Commission should take the lead on economic governance – an area where Council President Herman Van Rompuy's 'task force' is currently in charge. President Van Rompuy appears to have a lot of ambition for this work. Why do you want it taken away from him?

What Mr. Van Romuy is doing is very useful, but in the end, it's up to the Commission to take a legislative initiative, based on this input, and other input. I was pleased by the fact that Barroso said [in his State of the Union speech] that he is coming forward with a legislative proposal on 29 September.

That was a positive reaction by Barroso. Because in the end, it's up to the Commission to make legislative proposals, not the Parliament. I'd love to do that, but we don’t have the possibility, and it's not for the Council either.

But certainly, what's done in the Task Force can be one of the key sources for a number of these legislative proposals. But again: the Task Force cannot replace the right of initiative of the Commission. 

Mr. Van Rompuy was speaking about 'smart sanctions' to improve economic governance. You probably know what he has in mind. Can you tell us more?

We shall see Mr. Van Rompuy over the next Parliament session in Strasbourg, the third week of September, and have a discussion with him about this. I cannot anticipate his concrete proposals.

In Parliament, you advocated decreasing national contributions and replacing them with the EU's own resources. Is the Tobin Tax becoming a panacea to all problems in the EU? And are those ideas realistic? Recently, we have seen enthusiasm wane for a financial transaction tax.

Well, I think that in Parliament there is a clear pro-European majority to say two things about the budget and the financial perspectives. First, there is no question of reducing the [EU] budget by 20%, 30%, as some governments said they wanted.

And secondly, we have to have our own resources this time. There are even ideas like those from Mr. Lamassoure [French MEP; chair of the Parliament's budget committee] to go in seven years, from the actual budget, mainly based on national contributions, to a budget based on own resources. What 'own resources' could be – this we will have to discuss.

There are some ideas. We have already discussed in our group several ideas – carbon emissions tax, financial transactions, some said the aeroplanes – and others said let's stick to the existing own resources, the Customs Union and VAT. So you could increase those, a bigger own resource from VAT is indeed a possibility.

It is still at discussion stage, but for the moment, it's important that the Parliament is saying to the Council: we think you need a budget of around 1%, so as not to cut into research and the 'Europe 2020' strategy, and we need a budget that is mainly based on own resources. We are open to discussing with the Council and the Commission what it could be.

Were you surprised by Barroso's initiative for EU 'project bonds' to finance major European infrastructure projects, in conjunction with the European Investment Bank? You have been calling for a long time for European bonds…

In my book, The Way Out of the Crisis [published in 2009] I had two proposals: the first was eurobonds for big investment.

So this must be satisfying for you?

Yes, I remember, a year ago, the Commission was still very negative when I spoke in plenary session about eurobonds, I think it was in November or December. But now it is making them part of its proposals. The idea of eurobonds was already used by the European Investment Bank, but it was limited. Now it becomes more common practice.

But the special mechanism of 750 billion euros [put in place last May to calm markets and stem fears of serial Greek-style debt crises in the currency area] is also based on a similar model. One year after the start of this discussion, we have achieved our goals. That's on the positive side.

But as you mentioned, some governments want the EU budget reduced by 20-30%. That’s a non-starter. Those who think this is possible are dreaming. I’m pleased with this unity of view in the big groups: EPP [European People's Party], S&D [Socialists & Democrats], our group [ALDE], who say if you do that, you have to compensate it with own resources.

Lamassoure has a proposal, in which [we move] from the current situation, where you have one third of own resources and two-thirds national contributions, to a budget mainly based on own resources, but do it for, as he proposes, for a seven-year period. Why not?

Another issue: the bank levy to wind down insolvent banks. Some countries are against it, as they fear distortions to the internal market. Do you see again a need for more leadership from the Commission? Often countries are reluctant simply because they don't know how a proposed mechanism could work.

I think we need such a system. The money for that should be used for solving the problems of banks: you cannot use it for other purposes. I think we need a European solution for that.

The discussion between the countries is: do you put this money in a special fund, or do you put it in the budget? But for me this is not such an important issue, because if you raise a banking tax, what is necessary is that you do it everywhere in the 27 countries, and that you use it at the right moment to clean a bank which is failing.

But where you put the money – in a fund, in the budget – this is not so important. 

The Ecofin ministers signed off on the European semester this week and will submit their national budget plans to the Commission for early review. Do you think this will work in practice? 

It depends a bit what the national authorities and national parliaments do with it. Because you can do the scrutiny, and then it may appear that some countries are not doing what they have to do. And what are the consequences of it? It's an important step, but the most important step has to come, and it is what will be in the legislative proposal of the Commission?

The carrots and sticks?

Exactly. It's a good starter. And that's one of the main issues of the economic governance package on which we are waiting a legislative proposal from the Commission.

Do you think countries that repeatedly break the rules should be expelled from the euro zone?

I'm against expelling. There are many sticks and carrots possible that can be very efficient – like suspending voting rights, financial penalties, receiving less from the structural funds. And if we put in place the eurobonds, the possibility that a country is excluded from its advantages – that's also a possibility.

Is treaty change necessary in your view?

I think there is sufficient room inside the treaty. When somebody says 'I think it is necessary to change the treaty', it simply means he doesn't want the proposal.

Commission President José Manuel Barroso is getting more and more prominence, and the Commission is adopting strategies to make him even more prominent. But we don't see Mr Van Rompuy. Isn't this against the spirit of the Lisbon Treaty, which put in place the permanent Council President precisely to give Europe more prominence?

What is important for us is to apply the Lisbon Treaty so as to reinforce the communitarian method. It's not a question of who is doing what job, it's a question of method.

There is a worrying feeling in Europe about Belgium. Can you feel it?

For the moment they are doing a very good job as president of the Council. If you see what they have already achieved: the financial supervision package, for example, which was blocked for months.

They can concentrate one hundred per cent on the European dossiers.

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