Sarkozy: Mistake to let Greece join euro

IT WAS a mistake to let Greece join the single currency when it did because its economy was not ready to form a monetary union with others in the club, French President Nicolas Sarkozy said last night.

“It was a mistake,” he said, when asked during a TV interview about having Greece adopt the euro two years after the single currency was created.

“Its economy was not ready,” Sarkozy said.

Sarkozy gave a rare televised interview to explain the eurozone crisis plan agreed in Brussels the previous evening to the French electorate, six months before a presidential election.

He likened Greece’s sovereign debt crisis to the crisis at Lehman Brothers, and said that a failure to come up with a way to help Greece would have thrown the eurozone and world economy into disorder.

“If Greece had gone bankrupt, there would have been a domino effect that would have affected everybody.

“The entire eurozone risked being taken down,” Sarkozy said.

Meanwhile, it is also understood that China is willing to invest up to €100bn in the EU rescue plan.

The European Parliament is unimpressed by yesterday’s deal to shore up the euro, as many get ready to demand nothing less than a fiscal union to solidify the euro’s existence.

Members did not share the commission president’s conviviality after an EU summit to resolve the debt crisis which ended yesterday morning.

“I am pleased to stand before you this morning and confirm that Europe is closer to resolving its financial and economic crisis and to getting back on a path of growth. We are showing that we can unite in the most difficult of times,” Barroso said, addressing the European Parliament in Strasbourg.

But prominent MEPs poured cold water on the deal, arguing it merely bought time and that much work remained to be done.

Many are anxious to begin work on a fiscal union, which would transfer more national decision-making, such as taxation, to Brussels.

“With the time we have bought, we need to set up a new fiscal union because economic government is more than two meetings per year,” the former Belgian prime minister and EP Liberal group leader, Guy Verhofstadt, said.

To assuage MEPs demands, Barroso said that as early as next month the European Commission is expected to make new legislative proposals on further fiscal surveillance.

Better governance

TEN measures identified in the EU summit statement that are designed to improve the governance of the euro area:

1. There will be regular euro summit meetings, bringing together the heads of state or government (HoSG) of the euro area and the president of the commission. These meetings will take place at least twice a year, at key moments of the annual economic governance circle; they will if possible take place after European Council meetings. Additional meetings can be called by the president of the euro summit if necessary. Euro summits will define strategic orientations for the conduct of economic policies and for improved competitiveness and increased convergence in the euro area. The president of the euro summit will ensure the preparation of the euro summit, in close cooperation with the president of the commission.

2. The president of the euro summit will be designated by the HoSG of the euro area at the same time the European Council elects its president and for the same term of office. Pending the next such election, the current president of the European Council will chair the euro summit meetings.

3. The president of the euro summit will keep the non-euro area member states closely informed of the preparation and outcome of the summits. The president will also inform the European Parliament of the outcome of the euro summits.

4. As is presently the case, the eurogroup will ensure ever closer coordination of the economic policies and promoting financial stability. Whilst respecting the powers of the EU institutions in that respect, it promotes strengthened surveillance of member states’ economic and fiscal policies as far as the euro area is concerned. It will also prepare the euro summit meetings and ensure their follow up.

5. The president of the Eurogroup is elected in line with protocol number 14, annexed to the treaties.

A decision on whether he/she should be elected among members of the eurogroup or be a full-time president based in Brussels will be taken at the time of the expiry of the mandate of the current incumbent. The president of the euro summit will be consulted on the eurogroup work plan and may invite the president of the eurogroup to convene a meeting of the eurogroup, notably to prepare euro summits or to follow up on its orientations. Clear lines of responsibility and reporting between the euro summit, the eurogroup and the preparatory bodies will be established.

6. The president of the euro summit, the president of the commission and the president of the eurogroup will meet regularly, at least once a month. The president of the ECB may be invited to participate. The presidents of the supervisory agencies and the EFSF chief executive / ESM managing director may be invited on an ad hoc basis.

7. Work at the preparatory level will continue to be carried out by the Eurogroup Working Group (EWG), drawing on expertise provided by the commission. The EWG also prepares eurogroup meetings. It should benefit from a more permanent sub-group consisting of alternates/officials representative of the finance ministers, meeting more frequently, working under the authority of the president of the EWG.

8. The EWG will be chaired by a full-time Brussels-based president. In principle, he/she will be elected at the same time as the chair of the Economic and Financial Committee.

9. The existing administrative structures (ie: the Council General Secretariat and the EFC Secretariat) will be strengthened and co-operate in a well coordinated way to provide adequate support to the euro summit president and the president of the Eurogroup, under the guidance of the President of the EFC/EWG. External expertise will be drawn upon as appropriate, on an ad-hoc basis.

10. Clear rules and mechanisms will be set up to improve communication and ensure more consistent messages. The president of the euro summit and the president of the eurogroup shall have a special responsibility in this respect. The president of the euro summit, together with the president of the commission shall be responsible for communicating the decisions of the euro summit and the president of the eurogroup, together with the ECFIN Commissioner shall be responsible for communicating the decisions of the eurogroup.