Fenech cautious ahead of today’s EU summit

As European Union leaders gather for a crucial summit today on the future of the eurozone – closely watched by the international community – Finance Minister Tonio Fenech has adopted a cautious approach saying this is not the last chance to save the euro.

“I’ve heard this question about whether this is the last chance to save the euro many times. I always stress that this is not a crisis of the euro but a crisis that has been caused by the huge level of accumulated debt of a number of countries and the exposures of some banks to such debt. The summit will aim to ensure that there are mechanisms and structures to strengthen the eurozone. The government is always open to these types of discussions; we want a stronger eurozone and a stronger single currency,” he told The Times Business.

Mr Fenech said proposals on deeper economic integration and a common European Treasury, which are likely to be proposed at the summit, should be considered carefully, but was non-committal on Malta’s position.

“One has to properly examine such proposals in detail. Many times grand words are used, such as a ‘banking union’, which in reality means there will be a resolution fund, a European deposit guarantee scheme and better supervision. A banking union sounds very grand but in reality it is nothing extraordinary. However, I would rather comment at the conclusion of the summit,” he said.

Regarding a eurozone finance ministers’ conference call held yesterday, prior to the summit, Mr Fenech said that Cyprus’ request for a bailout was discussed.

“Cyprus has made a formal request for a bailout, not only for its banking sector but also for its whole economy. The euro group showed its willingness to agree to such a request. I would like to point out that two years ago there were calls by the leader of the opposition for Malta’s economy to emulate that of Cyprus, and I think that events in Cyprus speak for themselves,” he said.

Meanwhile BusinessEurope, the pan-European business organisation that represents more than 20 million small, medium and large companies employing some 120 million people, has urged tomorrow’s EU summit to take all the necessary decisions without further delay to restore confidence and put Europe back on track.

BusinessEurope President Jürgen R. Thumann said:  “Europe needs a much stronger investment and competitiveness agenda. Policy makers simply cannot continue to propose measures which increase costs for companies and lament that we are last in the world league for growth.”

BusinessEurope said no growth strategy can work without trust in the euro. “Europe can leave this crisis behind and emerge even stronger if policy makers recognise the central role of enterprises in driving growth and jobs. They must also recognise that recovery will only come if private investment is encouraged and facilitated in areas like energy, infrastructure or the digital sector,” it said.

Mr Fenech told The Times Business he agreed “100 per cent” with BusinessEurope’s calls for increased growth and competitiveness. He said: “Europe needs to talk about growth, not only about financial sustainability. Measures taken at the summit must not increase costs. The government’s opposition to the financial transaction tax, for example, is based on our belief that such a move will reduce competitiveness and not increase it.”