December 02, 2011

Sarkozy outlines euro crisis stance

France's President Nicolas Sarkozy sings the national anthem after he delivered his speech on the euro zone financial crisis in Toulon, south eastern France, December 1, 2011. REUTERS/Jean-Paul Pelissier

TOULON, France | Fri Dec 2, 2011 1:20am IST
(Reuters) - Following are highlights of French President Nicolas Sarkozy's televised speech from the Mediterranean port of Toulon outlining his stance on the euro zone crisis as Paris and Berlin discuss plans to ramp up euro zone governance.
The European Central Bank has a determining role to play. There is a debate on its statutes. I don't want to enter this debate. The ECB is independent and will remain so. I am convinced that facing the risk of deflation that threatens Europe, the ECB will act. It's up to the ECB to decide when and in what way. It is its responsibility. Nobody doubts that it will assume its responsibility.
There cannot be a single currency without economic convergence. If the gap between standards of living, productivity and competitiveness increase between countries, the euro will prove in the end to be too strong for some and too weak for others. And the zone will collapse.
Convergence must be the key word of the euro zone. It will be a long and difficult process.
The crisis is the biggest challenge that Europe has ever experienced. We aren't hiding it. Europe could be swept by the crisis if it doesn't pull itself together and change.
At the heart of the European crisis is the euro crisis. That is the worst crisis and it can sweep everything away. What will happen to Europe if the euro disappears, if the economic heart of Europe collapses?
The disappearance of the euro would have dramatic consequences.
Europe is no longer a choice. It is a necessity. But the crisis revealed its weaknesses and its contradictions. Europe must be rethought. It must be reestablished.
There is urgency. The world will not wait for Europe. If Europe does not change quickly enough history will write itself without it.
Europe needs more political responsibility.
Europe in auto pilot that just blindly applies the rules of free trade and competition is a Europe that cannot face a crisis. It is a Europe that is disarmed. It is a Europe that is condemned to suffer. We don't want this Europe.
Europe needs more democracy because Europe is a project that cannot work without its people.
The reform of Europe is not a march towards supra-nationality. The integration of Europe will go the inter-govermental way because Europe needs to make strategic political choices.
France and Germany, after so many tragedies, have decided to unite their destiny and to look to the future together. Going back on this would be unforgivable.
France and Germany united means all of Europe that is united and stronger.
I will meet Chancellor Merkel next Monday in Paris and together we will make proposals to guarantee Europe's future.
There is a reality that everybody must understand, that everyone has to accept. Sovereignty is only possible with others.
Europe does not mean less sovereignty, but more sovereignty because it means more capacity to act.
We defend ourselves better with allies. That is the big lesson of the 20th century.
We will not re-take control of our destiny alone. We will not tame the world of finance alone. We will not change the rules of globalisation alone. We will not find the path of growth alone.
We must find solutions to create jobs. The crisis must not make us give up and it's not because there is a presidential election that we should wait.
To reduce our deficits we must end our bad spending, the spending that is useless, the spending that we can get rid of without reducing the quality of our public services.
For decades, we have spent too much and often badly. This can no longer continue. The habit the state developed of being a counter that always said "yes", not to those who needed it most, but to those that protested and blocked the most, cannot continue.
We must avoid becoming a target for speculation by ending all doubts over our ability to control borrowing and repay our debts. Because doubts make us pay more for our debts.
By reducing our deficits, we are reducing the grasp that the markets have on us. We keep control of our own destiny.
There will another possible choice. To respond to the crisis with work, with effort and by managing our spending. It's a choice that preserves our way of life. Between reducing pensions and working longer, I pick the second solution. Between earning less and working more, I believe the second solution is better than the first.
Today fear has come back. This fear that destroys confidence and paralyses consumers and stops investors investing, entrepreneurs from being entrepreneurs, bosses from hiring and bankers from lending. This fear has a name, the fear that France loses control of its destiny.
The only way to fight this fear is to tell the truth.
The reality is that the crisis is not finished.
The euro zone debt crisis is the same crisis that has been chasing us. It is the same crisis that hit banks and is now hitting states. It is hitting all developed countries whether left-wing or right-wing.
This new (economic) cycle is different to the previous one. The next cycle will be a cycle of debt reduction which will shift the balance of the economy towards work and production, things that developed countries have tended to sacrifice.
This transition from a cycle of indebtedness to a cycle of debt reduction will force all developed countries to adjust their economic policies.
(Reporting by Catherine Bremer, Vicky Buffery and John Irish)

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