Olli Rehn - European Commissioner for Economic and Monetary Affairs HARDtalk

its independence in 20th August 14. Now if it is time for HARDtalk. --

20th August 14. HARDtalk is in Brussels to talk to the men with

the unenviable job of finding the way out of Europe's financial

crisis. He is the commissioner of the euro. It is over two weeks

since the Greek crisis blew up. Seven heads of eurozone governments

had been replaced. They have been 15 different European sub mats and

a number of department plans -- summits. Greece is still on the

edge of defaulting. Angela Merkel said that next year will

undoubtedly be harder than the last. What is the way out of Europe's

crisis? We have a lot of challenges ahead of us. We were warned in

November of a risk of recession unless much is done in the member

states. There needs to be structural reforms and enforcing

the financial firewalls. That is ongoing in several member states in

Europe. New governments have taken substantial action to reduce the

financial risks. They are also finalising their plans of firewalls

to contain the problems. You warned at the end of last year that they

were ten days to save the euro. fact, I said the next ten days

would be the critical period. days to complete and conclude the

crisis response of the EU? Correct, this crisis and level of

persistence was necessary. We need a practical implementation of these.

The European summit came up with, in December, was that enough?

would not say that that was enough. It was a significant step in the

right direction. Now, we have to complete the vote in order to

reinforce the discipline of Europe. That is why there is a new treaty

on fiscal conduct. We have to reinforce that financial backstop

to contain the contagion in Europe. The member states have to take

further action in order to ensure fiscal improvement and financial

reforms. 26 members signed up for something Britain used its veto.

Did the vetoed damaged the chance of saving the euro? Of course, I

regret the British Road veto. I do not think it was constructive in

order to contain the crisis in the eurozone. On the other hand, let's

not cry over spilt milk. It is more important to focus on the future.

The UK have entered into talks to focus on the treaty on fiscal

matters and meanwhile they would do everything that needs to be done

concerning the market. At the time, you said that she regretted it. I

wonder if it did damage the chances of saving the euro? It is important

that Britain should be at the centre and not on the sidelines of

Europe for the sake of Britain herself and for the sake of Europe.

Certainly I hope that it can bridge that gap and the UK will be

involved in the negotiations. say they are involved in the

negotiations, how much difference has that made? The inter-

governmental in agreement that will be reached, will that be faulted

into the existing treaty anyway? -- will that be faulted. The fiscal

conduct of the inter-governmental agreement to which you refer to

will ensure fiscal discipline in the eurozone. I believe and I know

that the UK government is very strongly in favour of ensuring

fiscal discipline and economic stability in Europe, because that

is in the fundamental interests of Europe. It is logical to expect

that they will be supportive of this to help get out of the crisis.

Even France, which is at the heart of it and the presidential election

coming up, we know that the opposition candidate is in the lead.

He says that he will no renegotiate if he gets into power. I believe

that I trust that in the coming weeks that we can make some

progress in order to conclude the new treaty. Most of the content of

the new treaty, in fact, can be implemented for secondary

legislation under the current treaty framework. That is what we

have been doing in the Six Pack, the six pieces of legislation to

reinforce economic governance in the European union. We are working

at delivering it very sown. This legislation is applied to several

countries who have already taken effective action in order to reduce

their fiscal debt. They have been all sorts of things as to which

agreed at the summit. Some very notable, very serious commentators

have questioned the value of what you have achieved. They said that

you have agreed many things and by the time you took it there was not

enough time to manage the crisis? They appreciate his experience and

insight but I believe that we have a chance to overcome the debt

crisis still. We require very urgent assistance and we come back

to the issue of how to ensure fiscal improvement. That's why it

is important. We need action to boost economic growth and job

creation, that is what the new governments of Mario Monti in Italy

and the government in Spain are doing. Other countries are doing

the same thing. We should not underestimate the concrete action

that is going on in several parts of the. That goes to the heart of

what people have criticised. There is too much focus on austerity.

There are no plans to fix the floors of the, apart from fiscal

austerity, there is no plan for growth? In fact, that is not

correct. There are a contract -- there are concrete plans for growth,

steps to implement single market's and the effective implementation of

the services and the directive. Yes, the member states need to take

action in a connected way. They should boost economic growth by

different measures to release the growth potential in the member

states. It is to wobble but it will take some time. It is not

necessarily the beginning of the end. This is the end of the

beginning. We are on the right track. By you on the right track?

The critics say that you have this problem which is, Germany has these

massive current account surplus, bigger than China, it is such a

good exporter, so competitive. You are trying to keep it in this union

with the likes of Greece and Spain and they are unable to compete.

However much you can set-up which you already have set up is not a

problem that is being addressed. fact, this has been addressed. This

was addressed as part of the new economic governance that we need to

address macro-economic imbalances inside the eurozone. This means

that both countries who suffer from account deficits, and loss of

competitiveness, like Greece, or Portugal, or to an extent Spain or

Italy. It also means that we have to address the issue of current-

account surpluses. How are you proposing to address that? There

are basic means to enhance the demand within the country's with

current account surpluses. I do not believe that that kind will go

across the board for recommendations. Rate increases or

fiscal stimulus in Germany would solve Europe's problems. Germany

also has public 80 debt of 82%. We have to be careful that we are not

making such kinds of recommendations that would create

another problem. So there is no solution to back? In the context of

the fiscal consolidation and the high public debt we cannot assume

that we can solve the problems of Europe by fiscal stimulus. No

amount of fiscal stimulus will solve Europe's economic problems.

Unless we solve the crisis of confidence. This is, in the first

place, a crisis of confidence. It is a crisis of trust and the way to

solve it is, in the first place, to resolve the severely intertwined

sovereign debt crisis has been banned in the bank sector as well.

Such measures will boost sustainable growth in the member

states. Let's look at another issue. What was devised at the summit in

December was a situation where there were a lot of stricter rules

brought in. That could mean that the commission, the unelected

bureaucrats, could be in a situation making a judgement on a

country that does not have a good enough budget. They could impose

sanctions on an elected government. They could be difficult for the

I have to correct at least one of the points. The commission

president is elected in the European Parliament. Its

commissioner candidate is appointed by the governments. Do the people

of Europe you're happy about that? They have decided on the political

governance of the European Union. It has been ratified. I agree that

we have to insure that we are governed not only effectively, but

fairly. We are reinforcing our capacity to assess the member

state's economic voices and the assumption and rules imply that we

can assess their peaceful economic policies. You will want to better.

-- monitor. Also, introduce sanctions. Looking at a country

that has breached its issues, Greece. It has not had its bailout.

What if it? -- will it get it? are reaching the final stage

trickery. -- shortly. When will that be? What sort of time friend?

In the coming weeks. Are we talking more than 50% of the debt? I will

not go to any number. It is based on the agreement of October. That

was 50%. It depends how you define it. It will be based on the October

agreement. You are confident a deal will be reached with the private

sector and a bailout will follow? Subsequently the second programme

will be renegotiated by the EU and the IMF. In the coming weeks we can

work out a new programme for Greece. Should Greece be in the row? --

Euro. Greece did not reveal the truth of its fiscal situation.

what should not? It is in member of the euro and it will be a member of

Europe. Should it be? That was my response. This goes to the question

of trust. At the heart of this whole problem is one of confidence.

People need confidence. Politicians are saying things that they do not

believe. I mean what I say. Under the Roser. That did to this up to.

This was based on information. That was ten years ago. Now the Greek

authorities have a reformed politics. They have stated that the

statistical data... It is something to be trusted. Moving on to another

issue. We have these tensions as a result of different country's views

on how to resolve the problem. We have been asking about safeguards.

Britain is discussing a financial transaction tax. any financial

transaction would be taxed. Will it happen across Europe?

discussion is now going on on this proposal for all the member states,

including the United Kingdom. The citizens of Europe have had to

carry heavy burden for the financial crisis. The financial

sector was at least partly to blame. It is only right that the financial

sector carries its part of the burden. In terms of the way it

works, if there are two institutions conducting a trader in

euros, will there be subjected to the tax? It depends on the

technical details among the member states. We are discussing the

principles. It is not for granted. That is the way it would work. The

fear amongst those in Europe is you could have a London doing well out

of it. In that sense the cover of a famous financial magazine last week

was not misleading. It gave the impression that cities... That is

not the case. It would affect them at? A financial transaction tax

could be adopted in the European Union. The discussions are ongoing.

We should wait and see how the discussions go. You met George

Osborne this week. What did you say to him about the financial

transaction tax? The proposal is a public proposal. Our proposal is

that it would cover... I wonder what a conversation with him was

about. We always have a constructive conversations.

told him he was wrong on the tax. He believes that it is not the

banks and financial institutions that would be affected, it is the

pensions. From my point of view on the basis of the proposal, the

banking sector has to share the part of the burden. The way to do

that is with this tax. Can we turn to Hungary. Hungary is in danger of

going bankrupt. It wants more money. Yet you stopped negotiations with

the government, partially because of what is going on. Should they be

given another bailout? Hungary has recently taken some decisions that

seemed to be not in mind with its European law. We are currently

assessing the content and impact of decisions related to media freedom,

central bank independence and in the field of economic Affairs. We

have major concerns on the war on central bank independence. It is

one of the preconditions of a new rescue package. There have been

various comments of Hungary that they will change what every is

necessary to get that money. Will they? We will wait and see. We have

regular contact with the Hungarian authorities. Probably towards the