Union faces huge crisis of confidence, admits Barroso

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In his annual "State of the Union" speech today (28 September), Commission President José Manuel Barroso admitted that the EU was confronted with the most serious crisis of confidence in its history and outlined proposals for moving toward an economic union, calling EU leaders to support further integration.

Barroso said that the economic downturn, coupled with a deep crisis of confidence in EU leaders and their capacity to find solutions, was the greatest challenge in the history of the European project.

"Many of our citizens are afraid of the future. There is, like never before, a danger of national egoism prevailing, not to speak of nationalism," said Barroso, speaking in French in the Strasbourg plenary.

Populist responses put in jeopardy the biggest achievements of the European Union: the euro, the single market, even the freedom of movement, he stated. If the bloc does not move toward greater integration, it risks fragmentation, the Commission President warned.

However difficult, Barroso said that solutions to the crisis existed. "Europe has a future", he said, adding that this depended on the availability of political will and political leadership on behalf of the national leaders.

"Let's be completely clear – the problems we have in Europe today do not come because of the European institutions. The problems that we have in Europe today come because of narrow national interests," Barroso stated.

He criticised leaders for not making the case in support of the euro to national audiences.

"But we have to ask them 'Did you make the case for Europe? Did you make the case for the euro? Did you explain to your citizens what we have to lose if we do not keep our strong commitment to our common achievements?' So we need to make the case for Europe," he said.

Barroso offered a few strong statements and concrete proposals. Amid applause from MEPs, he stated that "Greece is and will remain member of the euro area". He also said that The Commission would make a proposal for a unified external representation of the euro area.

As previously reported by EURACTIV, the President of the European Council Herman Van Rompuy is to be given a new role of eurozone chair at the level of heads of state and government.

He also said that the Commission will present options for introducing so-called 'stability bonds' in the coming weeks. Such issuance of joint debt will be accompanied by rules that reward those who play by the rules, and deters those who don't, he added.

Apparently, the proposed 'stability bonds' would not require a change of EU treaties. However, Barroso said a change of treaties may be needed to overcome the constraint of unanimity in EU decision-making.

Last but not least, Barroso announced that the Commission had also adopted today a proposal for a Financial Transaction Tax, which according to him would generate a revenue of over €55 billion a year (more on the FTT).  However, this proposal was decried by the EU's leading employers' organization, BusinessEurope.

The three largest political groups made statements largely supportive of Barroso. Criticism mainly came from left-wing and right-wing parties, as well as from eurosceptics (see 'Positions').

Joseph Daul, leader of the centre-right EPP group, called on Barroso to get back to the "centre stage" and propose an exit plan from the crisis through the Community method, not the intergovernmental method "which has proven once again that it is paralysing Europe."

"The Commission has a major role to play - the role of guarantor of the European general interest. Mr Barroso, I urge you to go beyond national interests and propose solutions which are both strong and rapid to get out of the current impasse", Daul appealed.

He also asked the Barroso Commission to finish the work started by the Delors Commission at the beginning of the 90s - the internal market. "A European market which is truly integrated, notably in the services sector, will help us grow quicker. What are we waiting for?", he exclaimed.

Socialists and Democrats group leader Martin Schulz welcomed Barroso's defence of the European Union and its values.

In contrast, he condemned EU governments for "shuttle diplomacy between EU capitals". He demanded that the EU "act as a community" and meet economic, environmental, social and cultural challenges together.

"There is nothing wrong with European integration," he said. "There is no crisis of ideals. We have a crisis of leadership," Schulz stated. He condemned "those who wave flags, who preach national slogans", declaring: "These are the people who are sowing fear among future generations. 

"That is why the pro-European groups in this House are called upon to act together," the S&D leader appealed.

Guy Verhofstadt, leader of the liberal ALDE group, welcomed President Barroso's passionate defence of the European Union and the central role of the Commission in proposing common solutions to the current crisis.

"We stand in the eye of a financial storm. Banks have lost trust in each other, stock markets are at a 4-year low, growth prospects are anemic and the spreads on government bonds in the eurozone are increasing by the day. Only courage, solidarity and leadership will provide a route out of the current crisis," Verhofstadt stated.

The leader of the liberal group also lobbied in favour of appointing a high ranking commissioner as European minister of finance.

Polish Minister for European Affairs Miko?aj Dowgielewicz, representing the Polish EU Presidency, saying that during its term at the EU's helm, Warsaw would continue to work with the European Parliament and the European Commission for "more Europe, not less of it", for "stronger European institutions, not more intergovernmentalism" and for "an ever-stronger Union, not an ever-looser Union".

UKIP Leader Nigel Farage accused Barroso of being one of "yesterday's men" and of jeopardising the interests of the UK with his proposals.

"Barroso's speech acknowledged that the EU is facing its greatest challenge at present and what answer does he provide? Further integration and centralisation. It is this kind of supposed solution that helped create Greece's current crisis in the first place.

"Whilst the people of Greece continue to suffer, the EU is using the crisis to perform a power grab on an immense scale.

"The proposal of a financial transaction tax could fatally undermine the City of London and see a mass exodus of financial firms leaving the city. It would be an utter disaster for this country," Farage stated.

Jan Zahradil, chairman of the European Conservatives and Reformists group, said that he didn't share many of the views expressed by Barroso. He said that the Union was turning into a "debt union" and that this was alienating citizens from the EU project.

He gave as example his country, the Czech Republic, in which he said 75% of people were against joining the euro. "Is this because of some anti-European propaganda? No, it's because people see and think. And they simply do not buy this idea of federal Europe anymore," Zahradil said.

Democracy is dead, long live austerity, Marie-Christine Vergiat of the leftist GUE/NGL group exclaimed. She blamed Barroso's vision of Europe, calling it a "punitive Europe, a Europe of experts deaf to the citizens' distress."

"This morning's debate only confirmed our worst fears. There has only been word of economy, of competitiveness, of tax relief for business and support for banks. Almost no word about the social situation," she stated. 

The EU employers' lobby group BusinessEurope welcomed "many of the growth-enhancing proposals" set in Barroso's speech.

According to BusinessEurope a positive step taken by the Parliament in adopting the 'six legislative proposals' of reform on economic governance. The group also supports Commission plans to take forward growth-enhancing measures in areas such as e-commerce, competitiveness checks for new regulation, free-trade agreements and labour market reform.

But apparently the business community is disappointed that the Commission has taken forward a proposal for a tax on financial transactions. According to BusinessEurope President Jürgen R. Thumann, the Commission "has blurred its message by presenting a Financial Transactions Tax. Any such proposal clearly needs to be agreed at G20 level to maintain a level playing field for European businesses and ensure financial services activity remains in Europe under our regulatory supervision," he said.

Andrew Duff MEP (ALDE/UK), President of the Union of European Federalists, warmly welcomed Barroso's speech.

"The new assertiveness of the European Commission gives us hope that weak intergovernmental forms of political cooperation will be discarded in favour of the more coherent, democratic and efficient approach. Every citizen - elector and tax-payer - must get to know who's in charge of the European economy and that those given that job are up to the task," he said.

"Mr Barroso was also right to call for much greater progress to be made in common security and defence policy ... Today was a good renewal of the European project," Duff concluded.

The 'State of the Union' speech, largely modeled on the US, is a recent initiative by Commission President José Manuel Barroso. A first such speech was delivered last year in a chaotic atmosphere, after suggestions that MEPs be forced to attend.

The main focus of last year's State of the Union's speech was the need to raise new sources of finance, including "project bonds", to fund EU infrastructure projects.

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