Upcoming summits must produce solutions

On Monday, European Council President Herman Van Rompuy announced a surprise one-week delay to the highly anticipated summit of 27 member states, previously scheduled to take place on Oct 17 and 18.

He said the new timing will allow the union members to finalize "a comprehensive strategy" to tackle the sovereign debt crisis in Europe, which is still deteriorating.

The European Union, still a vital global player, is planning to make the rescheduled European summit on Oct 23 a platform to not only solve its own problems but also to coordinate the European position at two other high profile gatherings, as the delayed summit will now take place two days ahead of the China-EU annual summit and 10 days before the G20 gathering in Cannes, France.

The EU's two-fold purpose is evident, because on the same day he announced the summit delay, Van Rompuy started a note-comparing process by unveiling a letter for the G20 summit in Cannes.

In the letter, the EU said it is determined to do whatever is necessary to overcome the current difficulties, but declared it also needs a balanced discussion of the various risks of global economic downturns, including undervalued exchange rates in key emerging surplus economies and insufficient domestic savings in some advanced economies.

From these words, it is clear that EU is starting to respond to the perception that if Europe does not solve its sovereign debt crisis, there will be dangerous knock-on effect on the global economy.

However, if the EU uses the extra week before the summit merely to prepare a message to answer its critics, rather than agree on concrete actions, the fears and anger that are growing around the world will continue to accumulate and the economic outlook will deteriorate even more.

This is the scenario that not only European politicians, but also politicians worldwide, cannot afford to let happen. The protests in many countries, such as the "Occupy Wall Street" protest in the US, demonstrate that people are becoming fed-up with the greed of financiers and the inefficiency of governments in solving the global financial crisis and creating jobs.

So, starting from European leaders, politicians worldwide should stop their finger pointing and focus their time and energy on solutions.

Only with this spirit can Van Rompuy and his colleagues work out a comprehensive strategy that can strictly implement fiscal and financial governance among member states, properly deal with bank recapitalization and the situation in Greece and ensure the efficiency of the European Financial Stability Facility, the European bailout fund.

The EU still needs time to figure out a mature countermeasures package and the markets need to have patience. It is understandable that difficulties are mounting as the EU tries to mobilize resources from member countries to intervene in the crisis in an individual country given the current legal framework.

The EU should draft strict standards to regulate the use of bailout resources and ensure their efficient use. The EU has focused its attention on avoiding government and bank defaults. It has limited room to maneuver and this mission will occupy most of its resources, so the EU authorities should be cautious in allocating the resources available because the banks and indebted countries may fail to make proper use of the lifeline.

This is based on the fact that the Greek government will continue to run well despite the fact that the next tranche of 8 billion euros ($11 billion) will only be available in early November, while the Greek government warned earlier that the government would have no money to pay civil servants by the mid of October.

The EU is a big market of 500 million residents in countries of various development stages. The EU should encourage large-scale flows of labor and technology and help the member countries to rebuild their real productivity and real economies. With such a large total population it is strategically necessary to comprehensively arrange agricultural, industrial and service sectors within the union and reallocate the elements of production.

Both the EU and other parts of the world need summits that are well prepared and able to produce concrete solutions, not just talk and empty promises.

The author is chief correspondent of China Daily based in Brussels.

(China Daily 10/13/2011 page8)