BRUSSELS (MNI) – A “quantum leap” for economic surveillance in
Europe is closer to being achieved, European Economic and Monetary
Affairs Commissioner Olli Rehn said during a press briefing following
the Ecofin meeting on Tuesday.

Finance ministers’ agreement on economic governance reform “is
indeed a major step ahead towards agreeing with European Parliament by
the summer,” he said, noting that the Commission’s proposals on economic
governance a year ago had met with “plenty of scepticism and even
resistance.”

“Today the EU member states are endorsing the basic thrust of the
six legislative proposals by the Commission,” he said. “This is of
course a very important step indeed” and “will lead to a quantum leap of
economic surveillance in Europe.”

Participants in the meeting welcomed the Portuguese
government’s “far-reaching concrete measures” to ensure fiscal
sustainability, strengthen the banking sectors and boost
competitiveness, he reported.

The decisions to boost the effective lending capacity of the EFSF
to its full E440 billion and to give the ESM a capacity of E500 billion
“are a welcome signal and
demonstrate that the European Union is ready to safeguard the financial
stability of Europe with full determination,” he asserted.

Rehn stressed the “very strong automaticity” that would
characterize the enforcement of fiscal discipline in the future.

“In order to stop a sanction, you have to have a decision by the
Council with a reversed qualified majority and you also have to explain
the reason,” he observed.

Following the political agreement, the legal agreements should be
prepared in the following weeks “so as to allow national procedures to
be completed by the summer,” he said.

“I’m certain that we can achieve political agreement in the Council
next week,” Rehn affirmed.

Rehn reported having had “a very good and constructive meeting”
with Ireland’s finance minister, with whom he discussed that country’s
fiscal and banking challenges.

The stress tests of Irish banks would be completed by the end of
the month, Rehn said. If a need for further restructuring and
recapitalization is identified, the EU and the IMF stand ready to uphold
their side of agreements, he confirmed.

Rehn observed that a change in Ireland’s low corporate tax rate
“was a subject of discussion and one can even say controversy in the
Eurozone Summit, and there was some relation made between this and the
reduction of the interest rate” applied to Irish financial assistance.

“It is very important that the EU moves forward on tax coordination
on the basis of the current Treaty,” he said. “I would only encourage a
constructive approach by Ireland on policies related to taxation,
especially related to the Commission proposal.”

Turning to the Portuguese situation, Rehn said that additional
measures
announced by Lisbon “are intended to ensure fiscal sustainability of
Portugal and stimulate economic growth and job creation through
structural reform.”

“It is not going to be easy, but it is a necessary way for Portugal
to restore its competitiveness,” he said, calling on markets to show
some confidence in the measures.

–Frankfurt bureau tel.: +49-69-720142. Email: frankfurt@marketnews.com

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