European Commission President Jean-Claude Juncker took the floor of the European Parliament in Strasbourg to discuss the State of the Union. He addressed the Greek crisis, stating that he was “profoundly perturbed” by suggestions that Greece should leave the EU.
“It was absolutely essential for us to recognise and to say that Grexit was not an option. If we hadn’t said that loudly and clearly, Grexit could have happened,” he said, though that is clearly not what he had said a week before the Greek referendum that voted ‘No’ to harsh and crippling EU-enforced austerity measures on July 5.
The tide has turned and Juncker now states: “The European Union is delighted to have Greece as a member and I have been profoundly perturbed in recent months by comments that Greece should leave the EU. We have agreed on a program and I would like this program to be respected by all future Greek governments.”
Juncker warned that the reaction of the EU and eurozone would be different if Greece does not respect the rules.
The full statement on Greece:
Mr. President, Honourable Members,
I said I want to talk about the big issues today. This is why this State of the Union speech needs to address the situation in Greece, as well as the broader lessons from the fifth year of Greek crisis the impact of which continues to be felt in the Eurozone and in the European economy and society as a whole.
Since the start of the year, the talks on Greece have tested all our patience. A lot of time and a lot of trust was lost. Bridges were burnt. Words were said that cannot easily be taken back.
We saw political posturing, bickering and insults carelessly bandied about.
Too often, we saw people thinking they can impose their views without a wayward thought for another’s point of view.
We saw democracies in the Eurozone being played against each other. The recovery and creation of jobs witnessed last year in Greece vanished during these months.
Collectively, we looked into the abyss.
And it was once more only when we were at the brink that we were able to see the bigger picture and to live up to our responsibilities.
In the end, a deal was reached, commitments were adhered to and implemented. Trust has started to be regained, even though it remains very fragile.
I am not proud of every aspect of the results achieved. However, I am proud of the teams in the European Commission who worked day and night until late in August, relentlessly, to bridge the gap between far-flung positions and to bring about solutions in the interest of Europe and of the Greek people.
I know that not everybody was happy with what the Commission did.
Many Greek politicians were not happy that we insisted on reforms in Greece, notably as regards the unsustainable pension system and the unfair tax regime.
Many other European politicians could not understand why the Commission continued to negotiate. Some could not understand why we did not simply leave all the talks to the technicians of the International Monetary Fund. Why we sometimes also spoke about the social side of programme commitments and amended those to take account of the effects on the most vulnerable in society. Or that I personally dared to say again and again that the euro, and membership in the euro, is meant to be irreversible.
Mr President, Honourable Members,
The Commission’s mandate in negotiations with a programme country such as Greece has a very clear basis: it is the Treaty on European Union which calls on the Commission to promote the common interest of the Union and to uphold the law. The same law includes the Treaty clause, agreed by all Member States, that qualifies membership in the euro as irrevocable.
As long as Member States have not amended the Treaties, I believe the Commission and all other EU institutions have a clear mandate and duty to do everything possible to preserve the integrity of the euro area.
The Commission has also been explicitly entrusted by the European Stability Mechanism (ESM) Treaty, ratified by all euro area Member States, with conducting programme negotiations with a Member State. We have to do this in liaison with the European Central Bank and, where possible, together with the International Monetary Fund. But we have a clear mandate to do so.
Where the Treaties talk about the Commission, I read this as meaning the Commission as an institution that is politically led by the President and the College of Commissioners. This is why I did not leave the talks with Greece to the Commission bureaucracy alone, in spite of their great expertise and the hard work they are doing. But I spoke personally to our experts regularly, often several times per day, to orient them or to adjust their work. I also ensured that every week, the situation of the negotiations in Greece was discussed at length and very politically in the meetings of the College.
Because it is not a technical question whether you increase VAT not only on restaurants, but also on processed food. It is a political and social question.
It is not a technical question, but a deeply political question, whether you increase VAT on medicines in a country where 30% of the population is no longer covered by the public health system as a result of the crisis. Or whether you cut military expenditure instead – in a country that continues to have one of the highest military expenditures in the EU.
It is certainly not a technical question whether you reduce the pensions of the poorest in society or the minimum wage; or if you instead levy a tax on Greek ship owners.
Of course, the figures in what is now the third Greek programme had to add up in the end. But we managed to do this with social fairness in mind. I read the Troika report of the European Parliament very thoroughly. I hope you can see that we have drawn the lessons from this, that we have made, for the first time, a social impact assessment of the programme. Even though I admit frankly that the Commission also had to compromise sometimes in these negotiations.
What matters to me, is that, in the end, a compromise was found which could be agreed by all 19 euro area Member States, including Greece.
After weeks of talks, small progress, repeated setbacks, many crisis moments, and often a good dose of drama, we managed to sign a new Stability Support Programme for Greece on 19 August.
Now that the new programme is in place, I want it to be a new start, for Greece and for the euro area as a whole.
Let us be very honest: We are only at the beginning of a new, long journey.
For Greece, the key now is to implement the deal which was agreed. There has to be broad political ownership for this.
I had the leaders of all the mainstream Greek political groups in my office before the final agreement was concluded. They all promised to support this agreement, and they gave first proof of their commitment when they voted for the new programme and for the first three waves of reforms in the Hellenic Parliament. I expect them to stand by their word and deliver on the agreement – whoever governs. Broad support and timely delivery of the reforms is what Greece needs, so that confidence can return both among the Greek people and to the Greek economy.
The programme is one thing, but it is not enough to put Greece on a path of sustainable growth. The Commission will stand by Greece to make sure the reforms take shape. And we will assist Greece in developing a growth strategy which is Greek owned and Greek led.
From the modernisation of the public administration and the independence of the tax authority, the Commission will provide tailor-made technical assistance, together with the help of European and international partners. This will be the main task of the new Structural Reform Support Service I established in July.
On 15 July, the Commission also put forward a proposal to limit national co-financing in Greece and to frontload funding for investment projects short of liquidity: a €35 billion package for growth. This is urgent for recovery after months of financial squeeze. This is money that will reach the Greek real economy, for businesses and authorities to invest and recruit.
The Commission worked day-in, day-out to put this on the table. National Parliaments met several times throughout the month of August. I therefore hope that the European Parliament will also play its part, in line with previous commitments. Our programme for growth in Greece has been on the table of this House for two months. If adopted, it will still take several weeks until the first euro will reach the real economy of Greece.
I call on you to follow the example of the Council, which will agree on this growth programme by the end of this month. The European Parliament should be at least as fast as the Council on this.
I said I wanted the new programme to be a new start not just for Greece but for the euro area as a whole, because there are important lessons we need to draw from the crisis that has haunted us for far too long.
The economic and social situation speaks for itself: over 23 million people are still unemployed today in the European Union, with more than half without a job for a year or more. In the euro area alone, more than 17.5 million people are without a job. Our recovery is hampered by global uncertainties. Government debt in the EU has reached more than 88% of GDP on average, and stands at almost 93% in the euro area.
The crisis is not over. It has just been put on pause.
This is not to say that nothing is happening. Unemployment figures are improving, GDP is rising at its highest rate for years, and the financing conditions of households and companies have recovered significantly. And several Member States once severely affected – like Latvia, Ireland, Spain and Portugal – which received European financial assistance are now steadily growing and consolidating their economies.
This is progress but recovery is too slow, too fragile and too dependent on our external partners.
More fundamentally, the crisis has left us with very wide differences across the euro area and the EU as a whole. It has damaged our growth potential. It has added to the long-term trend of rising inequalities. All this has fuelled doubts about social progress, the value of change and the merits of belonging together.
