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The Euro-area debt crisis

The Euro-area debt crisis and the deepening of the EMU:

Since the beginning of the sovereign debt crisis in the EU, Greece maintained that the right approach is to address the root causes of the problem, namely the competitiveness gap between the various Eurozone member-states. All partners must work together, creditors and debtors, thereby improving the intra-Eurozone balance of payments. Bridging this gap through balanced growth and support for employment, will continue to be the central issue in Europe for the foreseeable future. This can and should be achieved by a solid fiscal and financial framework, which is the prerequisite of any future growth and stability.

During the past year, there has been further important and much-needed progress in effectively improving fiscal discipline within the Eurozone, by establishing this solid fiscal framework. Only recently, the Treaty for Stability, Coordination and Governance entered into force, enhancing budget coordination and safeguarding stability in the euro-area.  Furthermore, last March the fiscal coordination of the 17 Eurozone member-states was further enhanced through the adoption of the “two-pack” set of regulations. This builds on the coordination framework already agreed at EU level since 2011, the so-called “six-pack”, which reformed the 1997 Stability and Growth Pact by improving its prevention and surveillance mechanisms.

Greece believes that the EU should complement the above progress by intensifying efforts to deliver on the commitments made in the European Council's Compact for Growth and Jobs, including through the European Semester process and the Europe 2020 Strategy, the EU’s primary growth tool for the coming decade.It is now the time to build on the European Council’s decisions and implement immediate, robust fast-acting measures to boost employment, especially among the young, and help finance the real economy: active and prosperous SMEs will generate jobs and more economic activity.

We consider the Eurozone integration to be the catalyst in persuading the markets about the sustainable overcoming of the crisis: a full banking union, with effective supervisory, resolution and deposit guarantee mechanisms at the European level, coupled by a genuine fiscal and economic union, as specified in the European Commission’s Blueprint and the European Council President’s Roadmap. We see this as the natural next step to the fiscal coordination framework already in place.

The relevant proposals of the President of the European Council, based on the December 2012 Conclusions are in the right direction: extending the coordination of major national economic policies by implementing contracts for competitiveness and growth with the Commission, where the necessary, country-specific structural reforms would be financed by appropriate solidarity mechanisms.  Special importance is attached at safeguarding the European Social Model, by including social and employment indicators within the EMU coordination mechanisms. We expect concrete progress at the October and December 2013 European Councils.

Especially for Greece, the timely completion of this process could be instrumental for efficiently dealing with the crisis. The markets should be convinced that the Eurozone is built on new, solid foundations.

Democratic legitimacy and accountability should be an integral part of this process. To this end, we will work towards greater involvement of both the European Parliament and national Parliaments in achieving EMU reform.

Last Updated Wednesday, 26 October 2016