€uroArea Solidarity Mechanism Director Regling to EuroFora:cautious Optimism for the Future (+Cyprus

 

*Strasbourg/EU Parliament/Angelo Marcopolo/- Speaking to "EuroFora" after a Hearing in EU Parliament's Economic Committee on the "Troika" issue,  Klaus Regling, Director of the European Solidarity Mechanism (ESM), the 1st New Body created in €uroArea, since its Heads of State/Governments' Summit, set up by the €uro-Treaty itself (comp. "EuroFora"s relevant  NewsReports, f.ex.: http://www.eurofora.net/newsflashes/news/euroareagovernancetreaty.html ), expressed a cautious but crystal-clear Optimism for the forseable Future, considering both the establishment of New EU Tools  (including ESM 's own role), and the Progress recently made by the Program Countries, (including Cyprus :  See infra)

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    * "EuroFora" had asked ESM's Director to make it crystal-clear for EU Citizens in what way  there might be a Hope that, in the Future, the existence of ESM could really make things Better than in the Past" (i.e. when the EU was notoriously cought unprepared by the Global Crisis ), in case of any eventual Crisis :

     - "Yes, of course" it will be Better "Now", mainly "because we (€uroArea) already have now  a System in place . While Three or Four Years ago (i.e. December 2009/January 2010) we hadn't" one, Regling replied Positively to "EuroFora"s Question.

     - In particular, "well, now, we have an ESM anti-Crisis' Facility, so when another Crisis might happen, (i.e.) may be 20 Years from now, we don't have first to spend all Days and Nights in setting up a Legal Framework and a Facility, and only then look at the (urgent) problems". On the contrary, from now on, "we can see them and tackle them at the same Time", contrary to what a previously unprepared EU had to hastily do in  the Past. So that things can, from now on, be done in a Faster and more efficient way.

     + Meanwhile, moreover, "....the Bail-in, which is the main New Feature (1st used in the case of Cyprus),  ....will Reduce substantially the need for Public Resources, be it from National Budgets or of the ESM", he prognosticated.
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    => - "For the Future, ... there is No New Country (EU Aid) Programs, and that's certainly my Base-line Scenario",  optimistically anounced ESM's Director.

     + "Then, More things may happen, but only in the Longer-term Future", he estimated.

     + But it is also because .."because, "National efforts, together with better Economic Coordination at European level, added to ECB Actions, and the creation of the ESM, as well as the Progress in building a Banking Union, (etc), are making €uroArea much more Resilient against an eventual other Crisis in the Future", Regling resumed earlier.

    - Even if "certain Instruments that we (EU) have developed now, .....are still not (completely) in place, but we are now Actively Working on these, (which) were not available 3 Years ago. If they were, certain things could have been done Differently", he replied to MEPs' Questions, indicating a wish to Reinforce even further the €uroZone's defence

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Meanwhile,     

      - Until now, already "out of the 5 Countries that were under an EFSF or ESM Program, Ireland and Spain ... had a clear Exit". Thus, f.ex., "both Countries were very Succesful in issuing Government Bonds last Week".

    - " Also in the "3 remaining Countries under  Assistance - Portugal, Cyprus and Greece - Cautious Optimism is warranted", he estimated : .. It's too early to claim Victory, and Reform efforts must be continued. But, ...the Accomplished Progress should be acknowledged , and the National Reform Efforts ...should be applauded", he found.

F.ex. :
    

     - (1) "Last week, Portugal succesfuly issued a 5 - Years Bond".   

     - (2) "The Programme in Cyprus is very much "On Track""....

+ Questioned by "EuroFora", later-on, ESM's Director appeared upbeat : - "For Cyprus, it (the current EU Program) started on March (2013)", but, already now, this €uroArea Programme is indeeed "on Track"", he confirmed positively.

 - "I think that what was set up (by €uroGroup's new Ministerial direction) was a very Difficult process for the Country", estimated the experienced Klaus Regling.

- "But, so far, they (Cyprus' Authorities) are Moving through as Fast and Good as possible", the Executive Director of €uoZone's 1st body : the European Solidarity Mechanism, stressed in conclusion to his replies to "EuroFora"s question, Carefuly but Optimistically.

      - (3) "Even in Greece, (where "the Starting point was undeniably by far the most Difficult one"), the country is making Progress" : "The Country had a Deficit of more than -15% in 2009", while "this year (2013) the Deficit is estimated to be Down to around - 2%", he noted.

    + For Greece,  "as you know (i.e. particularly after German Finance Minister Schëuble's confirmation : See relevant "EuroFora"s NewsReport : http://www.eurofora.net/newsflashes/news/schaubleoneumedia.html ) , there might be, perhaps, a 3rd Program, if it's necessary, we shall see". But, even "if it's necessary, it will be substantialy Smaller than the first two".

    => So, "for the (foreseable) Future,  we (ESM) will have still a few Disbursements to do, for Portugal, and Cyprus, in the context of the Current Programs, also for Greece", he resumed, as things stand today.
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    Replying earlier to a MEP's Question on whether there was a possibility for Ireland to "consider a direct  recapitalisation of Banks which are solvent", taking also into account the fact that the Irish case was "differend", and many of Today's (EU) instruments did not exist then, Regling appeared cautious :

    - Already, "one should keep in mind that Ireland has received particularly Generous Financing from the ECB, of Government Bonds issued in the contect of Band ReStructuring, so that, already, it goes some way in breaking the link between Banks and Sovereigns, because, without that (ECB's) operation, the Pressure on the Budget would have been Bigger". + Also the fact that the ESM Maturity Loans for Ireland was Extended, a few Months ago, from 15 to 22 Years, at the very Low Interest Rates that we do charge the means Extra Relief for the Irish Budget", he reminded. "So, there are some Benefits (already) given".

    + However, 'it's true" that, "on June 2012 there was a general Agreement to break the link between Banks and Sovereigns". But there is No Consensus to this".  "€uroGroup has said that this "Could" happen in Exceptional circumstances. But .. it required an Unanimous Decision, and I don't see that Consensus to be there".

    => "Whether More can happen, I don't know, (because) that's a Political Decision for the €uroGroup, and requires Consensus", and "I see that there is great Reluctance to use this Instrument in a Retroactive way", he pointed out.

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+ Other ESM's Activities :
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    + Meanwhile, moreover, "we  (ESM) are setting up something that we call as "Early Warning system", as it's even mentioned in the ESM Treaty", which "is designed so as to make Sure that we'l be Repaid", (always "according also to the €uroArea Treaty" itself), Regling added.

    - "So, we will be in contact with the Borrowng Countries Long After the Last Reimbursement happened" : "Because", f.ex., "our Loans to Portugal and Ireland take 22 Years, in the case of Greece it's 30 Years, so, it's a Long Period of Time"...

    - Therefore, "we will Monitor the particular developments, in order to Protect our ShareHolders, which are all  €uroArea  Countries", he announced.

    - Currently "we (ESM) are Setting up the System", but, already "we work together with the (EU) Commission, which has the Expertise of Monitoring these Countries anyway, so that "we don't want to overlap, nor to double-work".

    - "However, we (ESM) have a Special Perspective, because we want to make Sure that Re-Payments and Engagements are Honored", he underlined.
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 + "Then, we (also) have to Manage our Outstanding Claims, which is a Particular Task on our Liability side. Because our Lending extends to 20 or 30 Years, while the average Maturiy on our Liabilty side, the Bonds are issued for only 6 Years. So, we (ESM) do issue Bonds with a Maturity from 6 to 25 Years, which means, that we need to continue to Roll-over for the Next 25 Years,  be at the Market to issue Bonds, (in order) to Re-Finance the Existing Loans".

++ "At the same time, we are Investing the 80,8 Billions € in Capital, that Member States have paid into ESM : That's another Major Task, that we have to fullfil, of course very Conservatly, (since) the Money is here to Protect our Bond-Holders, (and) it's Crucial for a Goor Rating. So, we not making any Losses, but it needs to be done".

    In consequence, "we are Busy with these Activities" too, ESM's Director concluded.

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+ No IMF/EUC om/ECB "Troika" in the Future ?
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    + At any case, concerning the current Controversy on the (EUCom/ECB/IMF) "Troika" , speaking later to Journalists in Strasbourg, including "EuroFora", EU Parliament's co-Rappoteur  and vice-President Othmar Karas stressed that, "the Final (EU) Instrument is Not the Troika", and "we are Proposing a Future Project".

    In this regard, Karas had already stressed, during a joint Press-Conference in EU Parliament with his collegue, the other co- Rapporteur, French Socialdemocrat MEP Liem Hoang Ngoc (Comp Hoang's statements to "EuroFora" f.ex. in : http://www.eurofora.net/newsflashes/news/truchetongreece.html ), that finding a way to link that to EU's Community Law was important also in order to be able to use EU's "Charter on Fundamental Rights" and Freedoms.

    - As things stand, still Today, EU "Member States (have) opted for an InterGovernemental appoach to resolve the Crisis". Thus,  "Political Decisions are taken by Democratically elected €uro-Area Governments", claimed earlier Today ESM's Presiident Regling.

    - F.ex., "the Memorandum of Unerstanding (MoU), that define the Conditionality under which the Loans are granted, is discussed and granted in the Group of €uro-Finance Ministers, who are all part of Elected Governments". + And, the "Troika" gives Advice", but "it does not take Final Political Decisions. ... All ESF and ESM Programmes were Decided, Unanimously, by the €uroArea Finance Ministers".

    + But, in no more than "about a Third of €uroArea Countries, the Finance Minister could agree to the Programme only once his, or her National Parliament had given authority to do so". In general, "the Political and Democratic control via National €uroArea Governments and (in certain Countries also) Parliaments, and not the EU Parliament, reflects the fact that our Financing of the Programmes ... is backed by National Budgets, of €uroArea Member States, instead from the EU", he explained.

    - Naturaly, it's not excluded that "this could be Reconsidered in the Future",  Regling concluded in an open way.
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