Friday, February 20, 2009

EU's Klaus Slams Move to Centralize Oversight

Marc Champion, Brussels,

Nathalie Boschat and Gabriele Parussini, Paris

The Wall Street Journal

February 20

President Vaclav Klaus of the Czech Republic, which holds the European Union's rotating presidency, assailed the organization Thursday as undemocratic and said it should halt any further centralization of powers.

The global financial crisis and this week's acute turmoil in Eastern Europe have prompted calls across Europe and around the world for charting the opposite course, with many leaders -- and economists -- prescribing more centralized authority to help nations weather the crisis. However, the notion of establishing central oversight bodies also has run into resistance.

[Vaclav Klaus ] European Pressphoto Agency

Vaclav Klaus, president of the Czech Republic, before his address on Thursday to a formal session of the European Parliament in Brussels.

In the financial sector, French Finance Minister Christine Lagarde said Thursday that while tighter supervision of European cross-border banks is advisable, it should come not from the European Central Bank but through coordination among national supervisors.

ECB governors have repeatedly said that the zone's central bank would be prepared to take on greater responsibility in cross-border supervision.

In an interview Thursday, Ms. Lagarde said, "One of the options [to increase oversight on European banks] would be to entrust ... the ECB with this task. The problem is that the ECB doesn't have the authority on the whole of the EU."

"In particular," Ms. Lagarde added, "there would be a large chunk of the EU, namely the U.K., a large financial center, which would fall outside the remit of this institution."

ECB President Jean-Claude Trichet and Vice President Lucas Papademos said earlier in the year that the bank is mulling increasing its supervisory role to police the continent's largest banks.

Instead, the French finance minister said coordination between national regulators involved in the oversight of cross-border banking groups should be increased, with the supervisor from the bank's home country taking a leading role. At the same time, the lead supervisor should take into account the interests of the host country's watchdog, she said.

Mr. Klaus, a proponent of free-market economics, has long been hostile to the EU as an institution and has declined to fly the European flag over his office during the Czech Republic's six-month term as president of the 27-nation bloc. He denied that he is against the EU nations, but said fewer decisions should be made in Brussels.

In an address before the European parliament in Brussels, Mr. Klaus said he wasn't yet ready to say whether he would sign the so-called Lisbon Treaty. The pact would give the EU its first permanent president, boost the parliament's role, and make it easier to set common rules.

Mr. Klaus's speech came just a day after the lower house of the Czech parliament voted to ratify the agreement.

Proponents of the treaty say it would help redress a widely recognized lack of democratic accountability in the EU.

"The proposals to change the current state of affairs -- included in the rejected European Constitution or in the not-very-different Lisbon Treaty -- would make this defect even worse," Mr. Klaus said.

The Lisbon Treaty was vetoed last year by voters in Ireland -- the only nation to hold a referendum on the document. The pact still needs to be approved by the Czech Senate and signed by Mr. Klaus to be ratified.

The remaining 25 EU nations have approved the pact, which requires ratification by all members of the bloc. Ireland plans a repeat referendum by the end of October. In a poll released Sunday by the Irish Times, 51% of respondents said they would vote for a new version of the treaty, with 33% against. The balance were undecided.

See also:

The Full Speech of Vaclav Klaus

Vaclav Klaus - Profile

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