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EU Ready to Shore Up European Currency

  • Stefan Bos

European Council President Herman van Rompuy speaks during a final media conference at an EU summit in Brussels, Dec 17, 2010 (File Photo)

European Council President Herman van Rompuy speaks during a final media conference at an EU summit in Brussels, Dec 17, 2010 (File Photo)

European Union President Herman van Rompuy said the bloc is prepared to do more to ensure stability in the Euro Zone, amid concerns over the future stability of the European single currency. Van Rompuy spoke in Hungary, which takes over the rotating six-month E.U. presidency on January 1.

Van Rompuy told a conference organized by the Hungarian Academy of Sciences that Europe's economic crisis has underscored the importance of stability in the Euro Zone. He urged all E.U. member states to adhere to strict financial criteria aimed at reducing budget deficits.

"All governments, all governments, must keep up the efforts in budgetary measures and economic reforms," said van Rompuy. "All must work in the continuity to restore credibility. It is the only way to deal with our long-term challenges."

Van Rompuy said European leaders have introduced what he described as the biggest reform of economic and monetary union since the euro was created. They agreed last week to set up a permanent financial safety net beginning in 2013 to handle future crisis in the Euro Zone, which will expand to include Estonia next year.

Van Rompuy said all 27 E.U.-member states are ready to take further steps, but he made clear he is not seeking to help create a European super state.

"We need a strong economic governance," said van Rompuy. "There is no need for a singe European state. Nor for a single political-economic authority. We have to coordinate, we have to converge, we have to cooperate."

The remarks were welcomed in Hungary. The country's recently elected center-right government insists on what it calls "financial sovereignty" for the country. It even broke off talks with the International Monetary Fund on extending multi-billion-dollar loan arrangements, which were agreed to by the previous Socialist-led administration.

Hungarian Foreign Minister Janos Martonyi made clear his country views stabilizing the Euro Zone as a key priority for Hungary's E.U. presidency. He criticized calls from Britain, France, Germany, Netherlands and Finland for a freeze on the bloc's spending at a time when post-communist countries, such as Hungary, still heavily rely on E.U. aid.

"In the last couple of days there is an idea that perhaps we should first freeze in the overall amount of expenditures," Martonyi. "This is not the right approach. We shouldn't put the cart before the horses. Let's discuss how we can increase the cohesion in the European Union, how we can reduce disparities, which still exist between various member states, and which very much impedes our competitiveness."

European money also will be needed for the policy priorities of Hungary's E.U. presidency, including the enlargement of the border-free Schengen zone to Bulgaria and Romania.

Martonyi made clear that Hungary attaches great importance to a May summit in Budapest between the E.U. and its Eastern neighbors. He said among other key issues is creating an E.U. strategy for the inclusion of Roma people, one of Europe's most impoverished communities and a sizable minority in Hungary.

Hungary's E.U. presidency will come with challenges. The country is being criticized internationally for introducing a strict media law that allows a government appointed media council to hand out fines of up to $1 million dollars for broadcasters, and more than $100,000 for websites and newspapers if their news coverage is deemed unbalanced or unmoral.