Speech Minister-President Mirek Topolánek over financiele crisis (en)

Dear co-Presidents of this joint meeting,

dear representatives of national Parliaments,

dear President of the Commission.

By coincidence, today’s regular joint meeting of Parliaments comes at a time when we are preparing for the extraordinary informal meeting of the Heads of State and Government of the EU-27 on 1 March, and of course, for the regular Spring European Council on 19 and 20 March.

We all know what is on the agenda. We all know that tackling the impacts of the world crisis is the most important task today, but also for the time to come. We all know that not only national governments, but also the whole of the European Union must get down to the job. We all know that both the executive and the Parliaments, both the European Council and the European Commission must join their efforts. We all know that we are in the same boat. We are in the same boat – all the 27 EU Member States and in each and every one of them both the government and the opposition are concerned.

But are we really in the same boat? Is it true? Some say that it may well be one boat, but it has several decks – first class, second class and other classes. Others say that it is the Titanic – the vessel is sinking and yet everybody on the deck keeps dancing a climate-change dance. There are some who want to extinguish the flames of the crisis with the fuel of protectionism and still others who want to have a boat of their own, a national boat.

Faced with this state of affairs, as President of the European Council I deemed it necessary to call an extraordinary meeting of Heads of State and Government. The urgency of the economic crisis and its impacts makes it indispensable for us to talk more often, be it only informally, the ordinary schedule of European Council meetings being insufficient.

I believe it is imperative that we should discuss these issues at the highest political level. But this debate is by no means intended to replace the expert discussions at ministerial meetings. Quite the contrary, I have nothing but the highest praise for the results of the excellent work done by these ministerial Councils, particularly the ECOFIN meeting, but also others. Our colleagues are getting on very well and take the tasks in their stride.

However, the current crisis is to a great extent a crisis of trust. In addition to the hard economic data there is also a distinct political dimension. This, after all, is the case for any major crisis. Overcoming this crisis quickly in now way depends only on the abilities of individual companies, but also – and I might even say in the first place – on the ability of politicians to agree on a coordinated approach.

If we do not reach political consensus at the highest level, the crisis will last much longer. It will last longer if we do not adopt a common approach that will adhere to the rules of the internal market and free competition and if we do not create a level playing field for all companies. If protectionism and mercantilism win, we will all lose.

This is why I consider it necessary that the search for an expert solution should be endorsed by the top political authority. The political dimension of the crisis could indeed turn out to be an even more serious problem than its economic dimension. And of course I think it is important that you, Members of the European as well as the national Parliaments, should have this information first-hand, even before the summit itself takes place.

When I spoke about the need for coordination at the level of the entire EU, I had mainly two features of the crisis in mind, the economic and social aspects. As President of the European Council I would therefore like to call two extraordinary informal meetings. The first one has already been set for 1 March. It will deal with the economy. The second one, which should look at employment, I have planned for May.

Let us now look at the theme of the first informal summit. Seen from the European Council’s perspective, banks were definitely part of the problem. Therefore, they must also be part of the solution. First, we must stabilise the situation on the interbank market. I fully support the conclusions of the ECOFIN Council of 10 February, where the Finance Ministers pointed at two overall tasks for us to accomplish. First of all we must help the banks get rid of their impaired assets, which keep on creating new problems for them. Secondly, we must make sure that the banks start lending money again, to both companies and households.

This is a graphic illustration of how the economic and political aspects of the problem are related. It is not enough to free the banks of their problems and lower the discount rate. If the banks are to start giving loans again, they must have confidence in the future. They must feel that future stability is guaranteed and should not fear any political risk of rash and uncoordinated government intervention.

The banks should have the breathing space and the conditions for lending money to companies which are basically sound, have signed orders and have something to produce and which only need to get over a certain objectively hard spell. On the other hand they must not be forced to keep unprofitable productions and companies that there is no market for artificially afloat. This is a general truth and it does not apply less in times of crisis. It is rather the other way round.

The key question is, of course, where to find the money for financing necessary and legitimate anti-crisis measures. We can already see that both smaller and bigger countries are running into problems. Their state bonds are downgraded. Their rates and interest in them dwindle. Governments are then no longer able to create liquidity.

Therefore, it is so necessary to prevent protectionism. That would hit us twice. First of all, it would disrupt our most important tool in the struggle against the crisis – the free market. Please allow me to crack a joke: At a committee meeting a Socialist MEP said to my Minister, “Minister, do you know that when you talk about 'the market’, we are afraid that you mean 'the free market’.” The enormous growth in prosperity that we have seen in the last decades is based on the international division of labour. Therefore, any wish to prefer 'domestic’ to 'foreign’ is basically only an attempt to go back to a primitive society. Secondly, any solo initiatives taken by individual countries would deal a hard blow to our common solidarity which the financial markets would punish with a slump in ratings for the individual national economies. Our strength and our only chance for the future is to stand together. The crisis hits everybody and we can only overcome its consequences if we act as one. However, this does mean that we all just go at the same speed as the flagship, especially not if it is heading straight for the iceberg. The speed of the convoy is determined by the speed of the slowest ship.

The crisis is an evident appeal to remove the remaining barriers that prevent the development of commerce. We need to strengthen the flexibility of the labour market. We need to implement more efficient regulation, including the regulation of the banking sector. All these measures will increase the EU´s resistance to future shocks.

By the same token, I would like to emphasise that our appeal to observe fiscal discipline and resume observing the Stability and Growth Pact, as soon as the economic situation of the relevant Member States allows it, remains valid. It is important for all countries to return to their mid- and long-term fiscal goals. In this context, the Presidency and the Commission are the common guards of the rules.

All measures undertaken in relation to the Recovery Plan will be assessed at the Spring European Council on 19 – 20 March, as stated before. Obviously, it is not within our power to stop the global economic crisis. However, it is absolutely within our power to limit its consequences by coordinated, decisive and sensible measures and prevent it from stretching over years, as in the 1930s. If it is in our power, it is also our duty.

I am fully confident in the citizens of the European countries and European companies. As politicians we can “only” create conditions for labour and provide them with a perspective for the future. We should also be a little more disciplined. I do not wish to upbraid you but populism may be the strongest risk for the future development. Nobody can successfully implement what the politicians promise before elections. It is not possible to tell people shamelessly that their lives will immediately become better than before the crisis, that someone has better recipes; blame ourselves for failure, destroy the European projects with our distrust, and repress the future realisation of our joint vision. Surely, we have this vision?!

In these times, the strengths of the European Union will manifest themselves. Face to face with crisis, we must confirm that our faithfulness to the values of freedom, solidarity and integration is not only on paper - no matter what it is called. We must resist the spectre of protectionism, we must help each other and we must observe uniform rules. Therein lies our joint responsibility and I believe that we will fulfil it. Therein lies our future. Therein is our power. Thank you for your attention.