Posted By: Admin, 16 Jul, 2011 - 09:28 am
The European Commissioner for Economic and Financial Affairs, Olli Rehn, has urged ministers to accept new corporate governance standards designed to stop EU nations from running excessive fiscal imbalances.
Following the collapse of the Greek economy and fears - accelerated by last week's rapid sale of Italian stocks and bonds - the crisis may spread to other countries in the region; Rehn believes immediate reform is necessary to ensure growth, stability and citizens' trust in the euro.
Under the new proposals, the European Council would vote to punish nations with high-risk fiscal strategies such as Spain and Italy, which has the highest sovereign debt ratio relative to its economy in the EU after Greece.
Rehn, who will discuss the issue this week at a meeting the Economic and Financial Affairs Council, said: 'Concluding the governance reform is badly needed to show that Europe has the capacity to act and thus restore confidence in our economic prospects.
'The adoption of the package is fundamental to our response to the crisis, to strengthening and giving teeth to our economic policy coordination, in terms of both prevention and correction, and for both sound public finances and the avoidance of harmful macro-economic imbalances.'
He added: 'People who are watching from outside are not interested in the smallest detail. If we fail - and I say we and really mean us all - they will simply say that "Europe" has failed.
'And people's trust in the capacity of Europe to address their real problems would suffer a huge blow.'
I agree with Rehn; in an environment where European countries are inextricably linked and the economic failures of one country are directly related to the success of another, monitoring governance affairs and frameworks is particularly crucial.
Bailouts of Greece, Ireland and Portugal will be detrimental for the other member states, irrespective of whether they agreed to be part of the rescue packages.
Therefore, any proposal that helps to highlight and monitor the behaviour of the European Parliament should help to give more confidence to other member states.
A rejection of the proposals may further reinforce the perception that member states generally have very little influence over regulatory and monitoring frameworks, and MEPs are a law unto themselves.
This type of resolution is imperative, especially at such as a pivotal time when we can see how individual member states' economic policies affect each other.
If the situation is not addressed quickly, MEPs will have no one to blame, but themselves.