Javier Solana

Europe Should Take On More Important Role

Secretary General of the EU Council Speaks at IESE Continuous Education Session

Javier Solana, Secretary-General of the Council of the EU and the High Representative for the Common Foreign and Security Policy, was the guest speaker at a Continuous Education session held at IESE on Feb. 14. Solana, who is also the former NATO Secretary General, discussed "The Role of Europe in the World After the European Constitution."  

In his talk, Mr. Solana stated that "the constitution does not close doors, it leaves doors open.  It opens them wide for many other opportunities."

Solana highlighted the role of today's unified European countries and the pool of resources that the Euro Zone offers in terms of helping out other countries politically, socially, and economically.

Solana accentuated what he believes to be two key benefits of the constitution.  One is the creation of the position, Minister for Foreign Affairs.  This seat will conduct the union's foreign and security policy, chair the foreign affairs council and serve as the VP of the commission.  The link of these institutions, Mr. Solana believes, will improve and solidify foreign policy.  The second is the consolidation of foreign and security policy. This is also a strong addition to the constitution resulting in an increase in military capacity, diplomatic capacity for problem-solving and increased deployment capacity.

Stepping aside from the benefits of the constitution, Solana emphasized the overall benefits of a European Union.  The union of 25 countries boasts a population of 500 million inhabitants, four times the population of Japan and almost twice that of the U S.  These 25 countries are the main importer of goods from developing countries as well as a major contributor to humanitarian aid in the world.  "A group of countries with such parameters can't turn a blind eye to what is happening outside our borders" he said. "We have to take an important role."

Solana also addressed world issues such as peace in the Middle East, and threat of widening nuclear proliferation. He said Europe should not only be concerned with problems in close proximity but outside European borders as well.  "We must do something" and he believes the path forward includes engagement, diplomacy, and dialogue.

European consolidation is significant in every industry, stresses Solana.  In today's modern world, the technology industry is one of the most important.  Using the development of the company Airbus as an example, Javier Solana points out the benefits of joint European technological research and development.  Airbus was originally created in 1970 as a European consortium of French, German and later Spanish and U.K. companies.

Solana also stressed that that working together with the U.S. and other world powers can make a critical difference in world affairs.  

"We need to stop talking about us, and start talking between us and amongst us to solve problems past our borders," Solana concluded.

José Manuel González-Páramo, Member of the ECB’s Executive Committee

The Stability Pact is Indispensable

“The reforms of the stability pact should not serve as a way of concealing the difficulties being encountered by some countries.” This is the view of José Manuel González-Páramo, member of both the Executive Committee and the Governing Board of the European Central Bank, who spoke at the Continuous Education Program session held in Madrid on February 7 chaired by Professor Jordi Gual.

As the guest speaker explained, the ECB remains firm in requiring that countries in the Euro Zone adhere to their undertakings, modifying some of the points that ensure compliance but refusing to adopt any measures to relax the rules.

Pact Not at Fault

As González-Páramo explained, “without these rules, the countries in the Euro Zone would never have agreed to the creation of a single currency,” recalling the 3% limit that some countries have exceeded and half the members of the euro club have come very close to.

He indicated that one of the reasons for failure to comply with the pact was an absence of budgetary control during periods when the economic cycle was on the way up. “The European Union’s fiscal regulations were not properly applied when the cycle was favorable,” he remarked. The consequence, in some cases, is that the margins that were left in order for the automatic stabilizers to act during the deceleration phase were not sufficient to prevent the appearance of excessive deficits. In other words, according to the ECB, the pact is not the cause of imbalances in certain countries. Quite the contrary. It is a failure to comply that has taken some governments out of bounds.
Proposed Reforms: Maintain the Pact, Improve its Application

The ECB’s position is clear, and González-Páramo passed it on to those present. “There is no need to change the Stability and Growth Pact. It must be applied in its entirety and in its actual form.” As a result, following the proposals made by the European Commission some months ago, the ECB has only agreed to make improvements to the pact’s application, not to its rules.

González-Páramo agreed with the strengthening of incentives to encourage compliance with the pact during favorable economic periods, the review of the multilateral monitoring timetables with the aim of ensuring that the stability and convergence programs have an influence on national budgets and the standardization of statistical models.

At the same time, however, he said that the ECB rejected the proposal to modify the 3% limit, and did not accept the idea of relaxing the criteria governing exceptional circumstances or the application of broader or individual correction periods in specific cases.