Gianni Pittella: “It’s time to turn the page on austerity”

On 29 November, the Commission on Economic and Monetary Affairs of the European Parliamentapproved the assembly's position on the supervision of the European banking system. This position will serve as the basis for negotiations with the Member States over the text on the banking union to be adopted by the Council of Finance Ministers on December 4th. It's an issue that the Vice-President of the Parliament, Gianni Pittella, has followed closely. In an interview on the eve of the Commission's vote, he shares his views with Presseurop.

Presseurop - Where are we at in the union and the banking supervision?

Gianni Pittella - Berlin had no desire at all to let the European Central Bank (ECB) exercise any control over the smaller banks, especially the almost 1,600 Landesbanken (regional banks) and savings banks in Germany. But we have reached a compromise: the supervisory committee of the ECB will be responsible for national banks and those whose failure would entail a risk to the whole system, as well as those struggling banks that have asked for financial assistance. The national banking authorities are to have oversight over the remaining banks. The ECB, though, will have the chance to look at the books of the latter if it considers that necessary, and on a case-by-case basis. Parliament will also ensure that there is no conflict of interests between the regulator and the banks being regulated. It's a sensitive issue, particularly because of the extreme permeability of the banking sector. Then, we have established that the president and vice-president of the supervisory committee are to be elected after having been approved by the European Parliament - like the President of the ECB, for that matter - to ensure democratic control over this organisation. We are also asking that the oversight committee be in constant contact with the Parliamentary Commission on Economic and Monetary Affairs. As for putting it into force, we hope that the Council approves it at the summit on 13 and 14 December, so that supervision can gradually get underway in early 2013.

Once this Banking Supervision Committee has been adopted, what steps remain before a true banking union is achieved?

There are still a few steps ahead of us, including the harmonising of bank deposit regulations. But the most important thing is the supervision. It's even a revolution: to go from 27 national supervisors from the 27 states - something absolutely contradictory in a Europe of supra-national banks, a real handicap - to a sole supervisor. If we stick with the current system, we won't be able to prevent new banking crises.

Bringing in the single banking supervisory authority also has the advantage of being a virtuous circle: if we create the banking union, we can also create the economic and fiscal union. And then political union, because it makes no sense to share only the economic and financial aspects at the EU level, and not the political aspect too.

Do you believe in a political union?

Yes! Even if there is resistance that we must strive to overcome. And I hope that from 2014, when the next European elections are to be held, we can set up a new European Convention, which will offer the Union new rules on the political agenda and set the framework for the political union to come.

Do you think Parliament has a role to play in the economic life of the Union and in the search for solutions to the economic crisis?

With the Lisbon Treaty, the Parliament became an equal in the decision-making. I think that within a few years it will become a genuine legislative chamber. Eventually, it will have to become THE legislative chamber of the European Union. Today we want to make our voices heard on how to manage the crisis. We are fighting to make those who preach austerity understand that all the analyses confirm that the effects of a policy based solely on austerity are devastating: public debt is not declining, the recession is entrenched, unemployment is growing, domestic demand is falling, Europe is losing international competitiveness and forecasts of a return to growth say we'll have to wait until 2014.

Do you have alternative proposals?

We must turn the page on austerity. The time for investment has come. We want a European plan for growth, social cohesion and sustainable development. A plan based on the financing of tangible and intangible infrastructure networks. The first in line are the rail networks, energy networks, telematic networks and renewable energies. The second part is education, training, research and youth mobility. It is a programme that will cost hundreds of billions of euros, and we must put it in place as quickly as we can.

And where do you expect to find these billions, while member states are facing budget cuts, which in some cases are massive, because they are running out of money?

We must bring in European treasury bonds - the famous eurobonds - to collect some 3,000 billion euros. It's not me who made up this sum: economists led by [former President of the European Commission] Romano Prodi and [Italian economist] Alberto Quadro Curzio came up with it. Of that, 2,300 billion euros would be earmarked for a pooling of European debt, and thus to reduce it; the remaining 700 billion would be used to finance the investment plan. We could tell Merkel and the citizens of Germany: “Look, launching these eurobonds will not cost you a penny, because they will be backed by the gold reserves of the Member States and their public assets.”

The states can back both their own debt and a possible European public debt?

Their gold reserves and their public assets are enough. We could decide that states would guarantee eurobonds with that part of their GDP exceeding 60 percent [that portion of public debt allowed by the convergence criteria for the eurozone]. Technically it's feasible. We must acknowledge that this is the correct solution. After that, if to support the eurobonds Merkel demands moving towards fiscal union, i.e. the eurozone Member States will meet the criteria set by the fiscal compact and there are stricter controls [by the EU] on their balance sheet policies, I say “OK”. Provided that at the same time we also move ahead with political union.

You mentioned the assumption that Parliament becomes the Legislative Chamber of the EU. Currently, this role is played by the Council. In this scenario, how do you envision the relationship between the two institutions?

I imagine a bicameral legislature - the Council being the second chamber, a sort of Senate - where the two chambers have equal powers. The President of the Council would be considered equivalent to a President of the Senate. Unless we want to imagine turning the Council into an executive organ, but that would raise the question of the role of the Commission.

In the future, do you imagine instead a federal EU, or a union of two or even three speeds, or a more intergovernmental union?

My wish is to achieve a federal union. The intergovernmental union has not produced brilliant results, because the intergovernmental logic is that all negotiations are governed by national interests. And it is clear that these diverge.

A reform often mentioned in the articles we have published is that the President of the Commission and the European Commissioners be elected by universal suffrage. What is your view?

I'm for the direct election of the President of the Commission. And it could be done even by 2014, without wreaking havoc on the current rules governing the European elections: if the parties belonging to a political grouping in the European Parliament state during the campaign who their candidate for the presidency of the Commission will be, the voters will also be voting for the latter. If the Party of European Socialists chooses the current President of the Parliament, Martin Schulz - whom I support, because he has all the necessary stature for this position - all the affiliated parties will declare Schulz their candidate.

What do you think of the hypothesis of transnational candidate lists, with candidates who campaign in countries other than their own?

I'm in favour of it. I'm also all for electing Commissioners from among the MEPs, as it would let us get away from having them nominated by governments. And that would help us resolve the democratic deficit, which is one of the evils afflicting Europe today.

Interview by Gian Paolo Accardo