Economic governance in times of crisis – Interview with Mr. Jose E. Leandro

Jun 25th, 2010 | Category: Interviews

Jose E. Leandro, (Mr.), Advisor to the President of the European Council

June 12 2010

ELIAMEP: Mr. Leandro thank you very much for giving us this interview and once again welcome to ELIAMEP’S 7th annual European Seminar, which is organized in cooperation with Bruegel and the support of the Jean Monnet Action of the European Union. So , since we are talking about the economic governance in the Eurozone, in the EU, I would like to ask you: How do you feel about the fact that for many observers this crisis that we are facing has challenged the concept of solidarity, that has been considered crucial and at the core of the European project. How do you asses this observation?

Jose Leandro: Well, I think this crisis has highlighted a number of issues; one of them is that one. That we need to have a credible crisis management mechanism in a monetary union where you have monetary policies centralized and fiscal policies decentralized. And so, a monetary union of this type without a credible crisis management mechanism is problematic. So that is one aspect. The other aspect is also linked to this. When you have decentralized fiscal policy you have to have very strong roles and incentives for people to treat fiscal policy as a matter of common interest. We had the SGP, the Stability and Growth Pact, it has not performed in the way it should, also because some Member States, Germany and France, in 2003 weakened the Pact because that suited them at the time. So now we have to come back to more fiscal discipline and one way of doing it is also by strengthening the SGP but not only. We need to complement the SGP with other things.

ELIAMEP: So do you think there is a contrast to be made between the roles of the European Commission, the European Parliament and the European Central Bank? What’s your opinion on this?

Jose Leandro: Well, the mandate of the Central Bank is very clear and its set in the Treaties and should not be touched. They have an effective mandate and are an independent institution, their mandate is about monetary policy and price stability. [Now] the Commission and the other institutions. The role of the Commission in the reform of the fiscal governance, is being very active. Actually the Commission is amongst those that have proposed a lot of ideas, and most of the ideas that we are discussing now in this task force that is chaired by President Van Rompuy come from the Commission. So the Commission is a very active player in this process of redesigning economic governance.