Learning the lessons from Greece

After Eurozone Finance Ministers agreed measures to address Greece’s financial woes last Sunday, MEPs quizzed leading economic figures, including the chairman of Goldman Sachs - former financial advisors to the Greek government - on how to strengthen EU economic governance and improve reporting of national statistics. Debt management and derivatives markets were also discussed during a hearing on the Greek crisis in the EP in Brussels on Wednesday.

A public hearing on the Greek fiscal crisis was organised by the EP's Economic and Monetary Affairs Committee on 14 April, Wednesday. MEPs quizzed Olli Rehn, European Commissioner for economic and monetary affairs, Walter Radermacher, Director-General of Eurostat, the EU's official statistical office, Gerald Corrigan, chairman of Goldman Sachs Bank USA, and Richard Metcalfe, Head of global policy at the International Swaps and Derivatives Association.

On April 11 European governments offered debt-burdened Greece a rescue package worth as much as 45 billion euros at below-market interest rates in an effort to restore confidence in the euro. Eurozone countries would offer 30 billion euros in three-year loans in 2010 at around 5 percent. Another 15 billion euros would come from the IMF.

Strengthening economic surveillance in the EU

Since he started his mandate on 10 February, Commissioner Olli Rehn told MEPs, he has spent "90 percent of his time" dealing with the Greek crisis. In his introductory speech, Mr Rehn said Greece was now on track to meet the 4 percent target of deficit reduction and the EU's governance system was undergoing a series of reforms, reducing the risk of similar crises in future.

To a question asked by Dutch Liberal MEP Sophia in't Veld on whether the stability and growth pact should be legally binding Mr Rehn answered: "There are evident weaknesses in the enforcement system. Peer pressure has lacked teeth. We need to reinforce the pact."

Furthermore he underlined the need to set up a permanent crisis resolution mechanism, "making it so unattractive that no country will want to use it". He added that the European Commission will present its concrete proposals to that end mid-May.

Belgian MEP Derk Jan Eppink of the Europe of Conservatives and Reformists (ECR) wanted to know if the Commission planned to introduce a legal procedure to expel countries that kept breaching the stability and growth pact. "This would require a treaty change" answered Mr Rehn, adding that he had "certain reservations as regards the option of force to exit" as he thought it was not in line with the philosophy of the EU Founding Fathers.

Eurostat: Greek statistics have substantially improved

Walter Radermacher, Director-General of Eurostat: "It has been clear that the Greek government has been using certain financial derivatives for the purpose of artificially reducing its debt and has not reported them to Eurostat". However by now the Greek statistical offices have substantially improved their work, he added.

He said that the lessons the EU had learnt in recent years had helped improve the quality of the European statistical system greatly. A Commission proposal opens the possibility for Eurostat to access relevant sources of information such as public accounts. However this does not eliminate the risk of being misinformed but only reduce it, he added.

Goldman Sachs: speculation is a good thing

Gerald Corrigan, Chairman of Goldman Sachs Bank USA, started off by presenting what he called the "core principles" of debt management.

"If you had to undertake the operation you did with Greece again, would you do this?" Hans-Peter Martin, a German independent MEP asked. "Goldman Sachs would probably do it again. But in a different way", Mr Corrigan replied.

British Member Kay Swinburne asked on whose doorstep did the responsibility lie for the use of the financial products that were used. "Is it with the buyer or the seller?" In his reply Corrigan said that both are to be considered responsible.

Swedish Liberal Olle Schmidt quizzed Mr Corrigan on his view on speculation. He replied that speculation was a good thing. "Without speculation it would be difficult to see how the financial system would work. People have to take risks. But there is currently bad speculation. When you see it you know it."

europarl.lv

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