Finance Minister Tonio Fenech has said that while Malta understands the basic thrust of what Germany and France want to achieve in the area of greater economic integration, eurozone member states that act responsibly should not have the same conditions imposed on them as those who do not.
In an interview with The Times Business ahead of today’s crucial EU summit on the eurozone crisis Mr Fenech said:
“If a country is within the three per cent GDP deficit threshold or close to the 60 per cent debt ratio it’s not the same as a country which is nine per cent and 120 per cent and you can’t adopt the same method of intervention in the two cases because that is unfair.
“If a euro member state is acting responsibly it should be given full flexibility with no intervention. But if a country is beyond that then I’m sorry that country has to pull its socks up and politicians have to assume that responsibility.
“We cannot deny the right of sovereignty, we are a union of states, unless there is an open discussion whether we want a federal Europe, but that’s a completely different discussion. There is no such discussion on the table.”
Mr Fenech said that in an emergency situation a eurozone member state which has blatantly ignored its responsibilities has to be brought into line and that country “as what happened with Greece” has to act.
He downplayed the possibility of a two tier Europe with Germany and some other northern states in a core eurozone and other countries out of it.
“I don’t believe that will happen and it is in our interest to remain in the euro. The discipline mechanism will change. National governments will no longer only be responsible to their Parliament and electorate but also to the other countries sharing the euro,” he said.
If a euro member state is acting responsibly it should be given full flexibility with no intervention. But if a country is beyond that then I’m sorry that country has to pull its socks up and politicians have to assume that responsibility- Tonio Fenech
Mr Fenech said the markets were “obviously” expecting solutions to be found at today’s summit. “There are agreements which have been reached which are being implemented but that implementation needs to be speeded up to restore stability to the European economy,” he said.
Asked whether the government was making contingency plans for the possible break-up of the eurozone Mr Fenech said: “I think it is wrong to start debating the break-up of the currency. Such talk causes damage. The impact on the world economy and the European project as a whole of such a break-up would be so large that I am sure every EU member state is committed to ensure that the euro does not fail.”
He said the fact that Europe took long to implement some of the agreed upon measures to solve its debt crisis caused markets to be jittery.
“The markets expect measures to be implemented as soon as possible. We have taken some important decisions but sometimes the problem is of a technical nature, such as how the EFSF will operate,” he said.
Mr Fenech said the French proposal for the European Financial Stability Fund to be given a banking licence, thus making it a real financial institution was “very interesting”. He said Europe needs an institution similar to the IMF “in order to be able to act”.
Mr Fenech said he expects today’s EU summit to provide a road map for recovery “not the tools themselves”.