Photo

EU chiefs urge joint efforts at G20

By Fu Jing (China Daily)
Updated: 2010-10-30 10:53

European Commission President Jose Manuel Barroso (L) and EU Council President Herman Van Rompuy hold a news conference at the end of a two-day Summit of the European Union Heads of States and Governments, Oct29, 2010. [Photo/Agencies]

BRUSSELS - Top leaders of the European Union (EU) have called on Europe's politicians to take joint action and ensure the bloc plays "a key role" in making next month's G20 summit in Seoul a success.

A letter from European Council President Herman Van Rompuy and European Commission President Jos Manuel Barroso made public on Friday said: "The G20 Summit in Seoul comes at a critical time. It will be a real test of whether the G20 can continue to deliver in its role as the premier global forum for international economic cooperation."

Related readings:  EU leaders to reassess regulation of financial services  China, EU focus on governance and technology  EU struggles over ways to prevent new debt crisis  EU struggles for more oversight

On the occasion of the EU summit on Thursday and Friday, they proposed that world leaders should drive forward the global recovery by forcefully implementing the G20 framework for strong, balanced and sustainable growth.

"All G20 countries must recognize that economic imbalances are a common concern, and that all major economies must do their part to achieve rebalancing," the letter said.

They said EU leaders cannot ignore the recent exchange rate issues and should promote their shared interests in a strong and stable international financial system.

"The G20 should reaffirm its commitment to move toward more market-oriented exchange rate systems that reflect underlying economic fundamentals and refrain from competitive devaluation of currencies," the two leaders said.

Meanwhile, in Seoul all parties should confirm the agreements reached at the G20 ministerial meeting last week in Gyeongju, South Korea, on quota shift and the composition of the Executive Board of the International Monetary Fund.

Apart from the stances on G20 summit, the European leaders reached a consensus on Friday to impose tougher fiscal discipline and closer policy coordination to make their economy more crisis-proof.

"Today we took important decisions to strengthen the euro," Van Rompuy told reporters at a news conference early on Friday.

"We have endorsed the final report of the task force. We have also found an agreement about the procedure to decide on a crisis mechanism for the euro zone," he added.

Following the outbreak of the Greek debt crisis, the EU set up a task force led by Van Rompuy to make proposals on necessary reforms to improve economic governance in the EU and prevent a repeat of the crisis. The task force completed its final report last week.

"This spring, we overcame a deep crisis of the economic and monetary union. And our next political duty was to draw the lessons for the future, to make the European economies more crisis-proof," said Van Rompuy.

Van Rompuy said that based on the adopted plan, the EU would create a new macroeconomic surveillance mechanism and make sanctions against deficit sinners earlier and easier.

In order to increase the effectiveness of EU fiscal rules, a reverse majority rule would be introduced to the adoption of sanctions, which means any recommendation on sanctions made by the European Commission would come into effect unless a qualified majority of EU member states votes against.

However, as a compromise, the decision to punish rule breakers would remain virtually in the hands of EU governments. When a member state is found in breach of EU budgetary rules in the future, it will first be given six months to take corrective action. Only when EU governments find the member state has breached EU budgetary rules and defies the order for it to correct the situation, may the commission propose sanctions.