I can remember many discussions with the Greek Prime Minister and the finance minister in which I repeatedly warned them that their situation was by no means sustainable. And although by mid-2007 Greece no longer came under the Growth and Stability Pact’s excessive deficit procedure, we the eurozone finance ministers again and again expressed our worries that the state of Greece’s public finances was unsatisfactory. The Council’s opinions on successive updates of the Greek stability programme are a matter of record, as are press conferences I myself held at that time after every meeting of the Eurogroup. What we didn’t and couldn’t know then was that the Greek authorities were submitting false figures to the European Commission, whose recommendations are the basis for decisions to be taken by the Council. Nor were we aware of the real dimensions of European banks’ exposure on the Greek sovereign debt market, and nor did we have access to information on Greece’s military spending. By the end of 2009, Greece was in dire straits, and combined with the often irrational but regrettably always decisive behaviour of financial markets, this led to a boost in the economic, financial and fiscal integration of eurozone countries that under normal circumstances would have taken years, perhaps even decades. The Greek facility, the European Financial Stability Fund (EFSF) and the future European Stability Mechanism (ESM) mean we now have a strong, co-ordinated and structured response to sovereign debt crises in the eurozone. These are instruments of solidarity between member countries in difficult times, and of solidity for the area as a whole since their ultimate goal is to rapidly enable members to stabilise their financial situation and regain access to financial markets. The message is clear; the stability of the eurozone is guaranteed once and for all. Market players should stand warned not to underestimate this. The limited treaty change and the global response formulated by the euro area, and later adopted by the EU as a whole, means that the strengthening of the Stability and Growth Pact and fiscal co-ordination through the European semester now represents a quantum leap forward. It is the first time that the eurozone has instruments at its disposal not only to watch over and co-ordinate economic and financial policies, but also to enforce them at an early stage when possibly excessive imbalances are first observed. But we have to go further still. The euro area is not the simple arithmetic of 17 states today and more tomorrow. In monetary, economic and financial affairs it is a single entity with regional variations. This has already been acknowledged by eurozone national leaders, and it was a good start that they themselves want to guide the process in essential areas of economic and financial governance. More has to be done. Italy’s finance minister and I have launched the idea of eurobonds that would be issued by a European debt agency, and while I realise that this idea doesn’t yet command unanimous support, I’m confident that its time will come. The eurozone’s teething troubles are long gone, and its turbulent teenage years are behind it too. Adulthood beckons, so now it should begin to behave like an adult – with maturity.
* Jean-Claude Juncker is Prime Minister of Luxembourg and President of the Eurogroup EUROPEANBUSINESSREVIEW
European Business Review (EBR) magazine, issue May - August 2011