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EU Envoy Explains Europe's Stimulus Concerns

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EU Envoy Explains Europe's Stimulus Concerns


EU Envoy Explains Europe's Stimulus Concerns

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  • <iframe src="" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
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And we're joined now by the European Union's ambassador to the U.S., John Bruton. He's a former prime minister of Ireland. Thanks for coming in.

Mr. JOHN BRUTON (Ambassador to U.S., European Union): Thank you.

BLOCK: The U.S. is calling on Europe to boost stimulus spending, and Europe has been pretty cool to that idea, if not outright cold. And in fact last week we heard the EU's current president, Mirek Topolanek of the Czech Republic, call President Obama's economic plan the road to hell. What do you think is at the heart of European objections?

Mr. BRUTON: Well, there are 27 different countries in the European Union, and some of them are in a position to stimulate their economies and are doing so. Germany, for example, has a stimulus in the region of between one and half and two percent - France a little less so. And then there are number of countries -Ireland, Latvia, Hungary - who clearly cannot stimulate their economies at all. It's much easier for the United States to borrow and stimulate than it is for a country smaller than the United States, either trying to defend a new currency, the euro, or a very small currency like those of most of the smaller members who are not yet in the euro.

BLOCK: We should add in here that the EU president, Mr. Topolanek, later went on to say that the words that he chose, the road to hell, may have been influenced because he had heard the AC/DC song "The Highway To Hell." They just played in the Czech Republic, so if that's not globalization on a grand scale...

(Soundbite of laughter)

Mr. BRUTON: Possibly. Someone else said that he didn't actually use that word in Czech, but my Czech isn't up to checking that out.

BLOCK: Nor mine. But this notion of stimulus versus regulation has become such a hot-button issue, it seems. We heard the French president, Nicolas Sarkozy, threaten to walk out of the summit - la chaise vide, the empty chair - if he's not satisfied. Why is that such a controversial idea right now?

Mr. BRUTON: Well, obviously in the lead-up to summits like these people will tend to take positions to maximize the perceived influence that they have on the eventual outcome. But the truth is that none of us can afford to leave an empty chair. We have created, over the last 25 or 30 years, a globalized world but we haven't created any system of global governance. And the G20 is designed to fill that vacuum. And it's very important for the confidence of the economy that people have the sense that there are 20 people who have a plan or who are working on a plan, that's very important.

BLOCK: How far apart do you think the U.S. and Europe are on this question of international regulation, of tighter controls on the economy?

Mr. BRUTON: They're approaching one another more closely all the time. The United States has announced that it is prepared to move forward regulating hedge funds, rating agencies. Europe is a bit further on on that road, we've done a bit more. It's very important that we have regulations that we each recognize as adequate for one another's purposes and we don't have to duplicate. And I think that that's where we're heading in the G20. But regulation and supervision in and of themselves - unless they're the right, well-designed regulations - are not going to resolve the problem.

Another vitally important thing is to put more money into the International Monetary Fund. If we're transferring the debts of private sector banks to the taxpayer and to governments - because we need to keep banking going, not because we love bankers - there may be the risk that the governments will themselves get into financial difficulty. Who's going to help them out? The International Monetary Fund. Does the International Monetary Fund have enough money to do that at the moment? No, it doesn't. So that's one of the other decisions I think will be made here, to recapitalize, strengthen the balance sheet of the IMF.

BLOCK: We heard a few minutes ago in Don Gonyea's report about the question asked in London today of both president Obama and Prime Minister Brown if the U.S. is to blame for this crisis. Do you think the perception in Europe is yes, the U.S. is to blame for what's going on?

Mr. BRUTON: I think there is a sense in Europe that piling more debt on top of debt and borrowing more, and leverage and all the goodness that leverage is supposed to give us, there is a sense that that type of financial engineering was pioneered here. But it was also embraced by Europeans. Nobody forced any of the European banks who bought securitized assets, based on mortgages here in the United States, nobody forced them to do so.

So we all have to take responsibility. And I think blaming one country is completely misplaced and a waste of time. All we've got to do now is deal with the problem going forward into the future. And here we have a mutual interest.

BLOCK: Ambassador Bruton, thanks very much, thanks for coming in.

Mr. BRUTON: Thank you.

BLOCK: That's ambassador John Bruton. He is the European Union's ambassador to the United States.

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