Here at the G20 summit in Los Cabos, Mexico, European leaders are making the claim that the credibility of the G20 is at stake if G20 members don’t step and kick in to a US$430 billion International Monetary Fund to help Europe sort out its fiscal crisis. So far, Prime Minister Stephen Harper has said Canada will not contribute to such a fund. He believes that Europe has enough financial firepower of its own to deal with the euro crisis.
This morning, European Commission Jose Manuel Barroso and European Council President Herman Van Rompuy held a press conference to make that claim — that they expect the G20, including Canada, to do its part to help Europe out of its mess.
During the question period, I put this question to those two gentlemen:
Why should North Americans risk their assets to help the largest and one of the wealthiest economic areas in the world? Shouldn’t IMF resources be used to help out developing countries and not the richest economic area in the world? What do you make of Prime Minister Harper’s contention that Europe has enough financial firepower on its own to deal with this crisis?
And, to Mr.Van Rompuy, you mentioned the credibility of the G20 is at stake as it considers whether to pledge billions to the IMF fund for Europe. Wouldn’t he say that the credibility of European leaders is at stake given you’ve had four years to fix this crisis and you still don’t have clear long-term plans?
Apparently I struck a chord. Here’s their responses:
If there is an issue that is recognized as important for the common good like financial stability including in some European countries, I don’t see any reason why that institution should not contribute. Let me tell you that European member states are – by far – the biggest contributors to the IMF. Even Euro area member states alone are the biggest contributors, bigger than the United States, certainly much, much, much bigger than Canada so the biggest contribution for the IMF all these years has been from European member states. And it is quite interesting to note that even in times of crisis, now when we have decided to increase the funding for the IMF, once again, it is the European member states that have given the biggest part,the biggest share. And we are on time to do it. Others,unfortunately are not on time.
So, let’s put things in the right perspective. The European Union is the biggest economy in the world, yes, we know that. Taken together the 27-member states are the biggest economy and the biggest trade partner. By the way, we are trying to conclude an important agreement on trade with Canada. Why? Because all the other parts of the world look at Europe as a source of possible growth for them. And, in fact, they also have an interest. The sooner the situation is stablized in Europe, the better for them. So that’s why my position and the position of the European Union has been to say, let’s work co-operatively for this. Let’s work together.
By the way, this crisis was not originated in Europe. Since you mentioned North America, this crisis was originated in North America. And many of our financial sector were contaminated by – how can I put it? – unorthodox practice by some sectors of the financial market. But we are not putting the blame on our partners. What we are saying is let’s work together when we have a problem like the one we have today.
That’s why I am expecting today the G20 leaders to speak very clearly in favour of the approach that the European Union is following, understanding one thing that is very important, is that in Europe we are open democracies. Not all the members of the G20 are democracies. But we are democracies. And we make decisions democratically. Sometimes this means taking more time. Yes, because we are a union of 27 democracies and we have to find the necessary consensus. But, frankly, we are not coming here to receive lessons in terms of democracy and in terms of how to run an economy because the European Union has a model that we may be very proud of. We are not complacent about the difficulties. We are extremely open. I wish that all our partners were so open about their own difficulties. We are extremely open and we are engaging our partners but we are certainly not coming here to receive lessons from nobody!
As far as the credility is concerned, in the draft statement for the G20, the G20 leaders … they show support and encouragement for the Euro area countries and leaders and for the European Union as a whole to overcome this crisis. So they show support and encouragement. The second point is that: Of course reforms take time. We are correcting internal imbalances and a lot of other countries have to correct their huge external imbalances but we understand that correcting the external imbalances that takes also time. And so we are not the only ones who are so-called responsible for the current economic problems all over the world. I mentioned in my introductory remarks that this year we will have an economic growth near to stagnation and next year we’ll have positive economic growth. That is completely different from the financial crisis which was launched, not in Europe, but in other parts of the world and this created a recession of, in some countries, -5 per cent and, in other countries, even -10 per cent. You can’t compare this with the stagnation in the euro area and even with the positive economic growth already next year. So we understand the problems of others. Please understand our own problems. And, as the president of the European Commission [Barroso] rightly said, that undertaking reforms in a democracy is much more difficult than in other regimes, I put it mildly. And working with 17 democracies and 27 democracies, that’s even more difficult. And we have to confront each time public opinion. But let’s take the example of Greece yesterday. Greece was involved in huge reform programs even including drastic cuts in wage levels and pension levels. And the people were asked if, although they have to make this sacrifices, they wanted to stay in the European Union and in the eurozone. And after unprecedented debates and two elections, they gave confidence to those parties who made a clear choice for Europe. So this is very specific for our continent but we will overcome, step-by-step, slower than expected, but we will overcome our problems. But please, let all the other ones correct also their external imbalances. And even in some of our trading partners, they have to correct also huge internal imbalances. But as I said, we are who made a clear choice for Europe. So this is very specific for our continent but we will overcome, step-by-step, slower than expected, but we will overcome our problems. But please, let all the other ones correct also their external imbalances. And even in some of our trading partners, they have to correct also huge internal imbalances. But as I said, we are patient. We understand that it is not an easy task. Reforms take time and certainly in democracies. Thank you.