President of the European Council Herman van Rompuy faces the task, with others, of convincing EU member states to go along with a proposal by Germany and France to reform the bloc’s Growth and Stability Pact on economic governance. This will come up for discussion at a European summit this Thursday and Friday in Brussels. euronews asked him about that in an exclusive interview.
Sergio Cantone, euronews:
European Council President Van Rompuy, what is your role going to be with France and Germany about to propose a revision or reform of the Stability Pact?
Herman van Rompuy:
The countries have varying positions. I have to find a consensus. That’s my role. It’s not about imposing my own point of view. If I were to do that, I would make compromise or consensus impossible, so I don’t do it.
euronews:
But, on the other hand, what do you think about the content of the proposal that came out of Deauville?
Herman van Rompuy:
An impression has been created that the Deauville agreement, as it is being called, implies a toning down of the system of sanctions. No. What was said in Deauville was only a reiteration of what is in the Treaty. The Treaty says clearly that to classify a country as being in a situation of excessive deficit there has to be a decision by the Council of Ministers, made up of all 27, with a certain majority. But that has been the case since the beginning because that is the treaty. There’s nothing new in all this, and therefore in our proposal, the proposal of the Task Force, we are within the framework of the Treaty.
euronews:
What was also said is that Germany would like to do away with automatic sanctions, or reform the automatic nature of sanctions, because in this revision of the Treaty, it sees a possibility to create a European monetary fund, a fund that would allow for debt restructuring. Is this true? What do you think?
Herman van Rompuy:
Well, I wasn’t at Deauville, so I can’t talk about it, I can only talk about the Task Force. We’ve talked about a permanent crisis system, following on from the system we’re familiar with today, the famous 750 billion euros about which we found agreement at the beginning of May. So, if we want to extend the system after 2013, a permanent system is necessary. But a permanent system has to have certain conditions. We’ve raised the participation or the role of the private sector.
euronews:
Are we, in your opinion, moving towards the creation of two different euro zones, a two-speed euro?
Herman van Rompuy:
The final goal is more convergence, which is the opposite of that [two-speed euro]: more convergence in the euro zone, more convergence in economic development and more convergence in economic policy. That’s why we have installed this economic governance, and the Task Force proves that we can attain this. Now it has to be executed, implanted, fleshed out.
euronews:
But if interest rates are used as an instrument, let’s say, of sanction, in a manner of speaking, we get to a dual standard within the euro zone.
Herman van Rompuy:
You are right when you talk about the present situation. There is a…
euronews:
But even in the future, if we talk about restructuring of debt, for example?
Herman van Rompuy:
I’m not talking about…
euronews:
It has been brought up.
Herman van Rompuy:
The differentials in interest rates are, in our opinion, temporary differentials. Once confidence has been restored in certain countries, then the spread, as we say, the difference between interest rates in some countries and, in this case, the German interest rate will diminish. But confidence has to come back first. It won’t unless we see tangible results in economic terms and budgetary terms. So, the markets are waiting for results, for example in Greece, where the first results are good. The evaluations of the European Commission, the European Central Bank and the International Monetary Fund are positive. But the effort has to be sustained, and it’s an effort that’s going to go on for another two or three years. In Greece, there is a 110 billion euro package to cover the difficult period, and it’s during this period that reforms have to begin. The Greek government is doing this, even with a lot of internal problems such as social and political problems. But Greece is holding the road. It’s the same in other countries, in Spain, Portugal, France, and other countries: deep reforms are being launched. They’re not popular, but the governments have the courage to take difficult measures.
euronews:
What do expect from the next summit with the United States in Lisbon, and are you working well with the Obama administration?
Herman van Rompuy:
They bear a responsibility to their country and to the world. They have effectively launched a vast budgetary stimulation programme, that has also helped the world economy, but of course, as in any other country, the US should gradually reduce its deficit.
euronews:
To conclude, do you think that Europe’s citizens should get used to taking their retirement a lot later?
Herman van Rompuy:
I believe that this is the trend everywhere in Europe and the developed world, that we’re going to have to work more, so people’s working lives will be longer. That will also have an effect on retirement age, but in general we’re going to have to work more to sustain our social model. But what’s also important is more economic growth, and increase in structural growth. That’s why productivity has to be increased. We need to invest in innovation, in education. That will help that much more.