The financial crash has afflicted the planet for over a
year. It has severely affected the real economy and the
worst impacts for ordinary people are still to come.

Unemployment is soaring everywhere, insolvencies
are reaching unprecedented levels, and social systems
are under extreme pressure. This crisis affects all humanity,
in particular the most vulnerable groups such
as workers, jobless, farmers, migrants and women. The
crises of the food and energy systems are other dimensions
of the malfunction of the current economic
system. People in the South are again taking the heaviest
brunt of these unprecedented crises.

The crises are the consequence of a system of production
and consumption based on free market
economies and laissez-faire, pushed by corporate
lobbies, resulting in unequal redistribution of wealth,
the transfer of income from labour towards capital,
an unjust trading system, the perpetration and accumulation
of irresponsible, ecological and illegitimate
debt, natural resource plunder, the dismantling of
social protection and the privatisation of public services
such as pensions, housing and health services.
This model must be overturned.

THE EU – PURSUING MARGINAL
REFORMS

EU governments and the European Commission
have not changed course in response to the crises.
EU financial reform proposals are so far limited, do
not tackle the root causes of the crisis, and fall short
of what is demanded to shape a sound financial system.
And as in the past, EU governments are passing
the costs of the crisis to taxpayers instead of implementing
the speculators pay principle.

The rescue and stimulus measures undertaken until
now are merely steps in the direction of avoiding total
economic collapse, but are not enough to ensure
a balanced system with stability in the long term.
Indeed the expenditure of public funding should
have been used to support other economic sectors,
committed to promote an environmentally and a
socially just economy. It is also doubtful whether the
support provided will be sufficient to prevent deflation
and a long lasting depression.

Whilst most countries in the Global South and also
many of the EU’s member states lack financial capacities
to appropriately support and transform
their economies, the EU fails to develop alternative
institutions to channel funds for public investments
in these countries. Rather, the EU is promoting a
strengthened role for the International Monetary
Fund and the World Bank. These institutions have
for three decades pushed developing countries into
poverty through structural adjustment plans using
conditionalities. Imposing such conditionalities put
additional constraints on the poor and drive recipient
countries into a new debt crisis.

Together with other developed and emerging countries,
the EU is aggressively promoting bilateral Free Trade
Agreements and the conclusion of the WTO Doha
Round as key measures to relaunch the economy. .
We, the undersigned civil society organisations demand
that European governments address the real
causes of the current crises. Tackling their symptoms
will not suffice. In Europe and globally we need a
comprehensive regulatory system which puts the
financial system at the service of people’s interests.

This should promote a new economic paradigm based
on the realisation of human rights, decent work,
food sovereignty, the respect for the environment,
cultural diversity, the social and solidarity economy
and a new concept of wealth.

EU FINANCIAL REFORMS: PARTIAL
AND PIECEMEAL

The current reforms promoted by the EC do not indicate
that public interest is at the heart of the EU’s
financial reform proposals. They fail to strictly regulate
and supervise all financial operators and products. The
directives and measures related to Hedge Funds, capital
requirements, credit rating agencies, derivative markets
and savings taxation fail to address the underlying
problems and to eradicate speculation that damages
societies and economies.

A few examples:

• The EC proposal to make derivative markets “effi-
cient, safe and sound”1 does not include a proper regulation
and supervision of risky financial products.

• The new supervisory structures agreed upon in
June 2009 including the European Systemic Risks
Council are insufficient to deal with the risks of
multi-country financial conglomerates.

• The current financial education and deposit safety
measures do not secure peoples’ savings in the event
of financial crises.

• The EC proposals on responsible lending and borrowing2
fail to include social and environmental criteria
that would help move the economy onto a more
sustainable footing.

• The EC proposals for the reform of the savings tax
directive are insufficient to achieve a real solution to
the problem of tax evasion.

• The EU actively promotes the conclusion of the
WTO Doha Round, including a further liberalisation
of financial services under the GATS Agreement and
in the FTA/EPAs negotiations which implies a reduction
of governments’ capacities to regulate financial
actors and products.

The proposals do not aim at ending speculation. As a
result the wealthy can continue to put their money in
the casino rather than in the real economy. Yet a socially
and ecologically sustainable economy can only be
achieved with a finance system that serves this purpose
rather than serving the interests of speculators and
a small minority.

We demand EU governments to

– Regulate all financial actors and institutions. All financial
operators must be regulated and supervised, and
operate in full transparency. The clear separation between
savings banks and investment banks should be
restored.

– Strictly regulate financial products. Off balance sheet,
offshore transactions, over the counter (OCT) trading
and high risk financial operations such as naked
short selling, structured investment vehicles (SIVs),
and collateralised debt obligations (CDOs) must be
prohibited. The EC should also ban speculation on
commodity futures by non-commercial traders, such
as hedge funds, index funds, etc. Operators who manipulate
the commodities market must be sanctioned
by a public authority.

– Close down tax havens under the jurisdiction of any
EU member state. Automatic exchange of information
guaranteed through a multilateral agreement,
with strong sanctions against non-compliant territories
and users are core elements to address this
problem.

– Promote financial institutions and products that meet
the needs of people and the environment.
Highly speculative and leveraged institutions and financial
practices have to be banned. More public and cooperative
banking is needed and better insurances to
secure people’s savings.

– Bind banks receiving state funds or guarantees to sustainable
investments. Banks receiving public support
in whatever form, e. g. recapitalisation and public
guarantees, should be bound to support sustainable
investments which promote socially and ecologically
sustainable jobs. They should also be bound to phase
out of speculation on food, and unsustainable big
infrastructure projects. Banks’ directors should be
made legally accountable for the impacts of their activities.
People affected by operations and investments
financed by EU based banks must be enabled to take
banks to EU courts.

MAKE THE ECONOMY SOCIALLY AND
ECOLOGICALLY SUSTAINABLE AND
CURB CORPORATE CAPTURE

The current measures undertaken by EU governments
to deal with the social and ecological crises are short
sighted and do not take into account the magnitude of
the crises. The belief in the market to solve the crises
remains intact.

A few examples:

• The EU promotes the further liberalisation of trade
– via concluding the WTO Doha Round and bilateral
and regional free trade agreements as a solution to
relaunch economic growth.

• The EU plans to promote further flexibilisation of the
EU labour market as an answer to increased unemployment.

• The EU further marginalises the productive participation
of migrants in the economy, de-stabilises the
flow of migrant remittances and intensifies criminalisation
of their communities through the EU Return
Directive.

• The EU promotes the expansion of emissions markets
within the ongoing UN climate negotiations, sustaining
the illusion of emission markets to be a key
solution.

The EU’s proposals do not tackle the root causes of
the social, ecological, hunger and energy crises, but will
allow EU corporations to further increase their profits
at the expense of farmers and workers incomes, and
the environment.

We demand EU governments to

– Initiate a process of “upwards” harmonisation of workers
incomes, social and labor rights in Europe, including
migrant workers. Pursuing the implementation
of the ILO decent work agenda, a process of social
convergence needs to be established, including setting
European minimum wages and an end to competition
between EU Member States through the
erosion of their tax and welfare systems. A coordinated
decrease of working hours in the EU needs to
be developed and implemented. Europe-wide regulation
which ends insecure labour contracts must be
developed, making permanent guaranteed working
contracts the employment standard in Europe.

– Invest in public infrastructure and the environmental
transformation of the economy. Seriously addressing
climate change requires a shift towards a post carbon
and low resource economy, which will create decent
green jobs for millions of people in the EU and globally.
Public funds generated by new taxes (see next point)
must be invested in the rebuilding and expansion of
public infrastructure (railways, local public transport,
sustainable local energy systems, education, health
etc.), ecological housing and jobs contributing to the
ecological conversion of the economy (e.g. energy
efficiency measures, localised food economies etc.).
Subsidies and aid packages for any industry sector
should be used to help the sector and its employees
to engage in the socially just transition towards a post
carbon and low resource economy.

– Finance the rescue packages with new taxes. Taxes
on financial transactions, increased income tax on the
wealthy and higher corporate taxes for large companies
are needed to help stabilise financial markets
and get public funds to sustain the socially just ecological
conversion of economies. Tax revenues should
be used to pay off the bank bailouts and to support
public investment for the socially just ecological conversion
of economies, with a particular emphasis on
developing countries and Eastern European countries.

– Stop promoting free trade and investment liberalisation
and reform EU external trade and investment
policy. EU governments and developing countries
need to retain policy space so that they can plan and
regulate their economies. Free trade agreements, as
promoted at the WTO or via bilateral negotiations
with other countries or regions, must be replaced by
trade and investment policies that put the interest of
farmers, workers, the environment and the respect
for all human rights first. Financial services must not
be liberalised via such policies and treaties.

– Put the European Central Bank under public scrutiny
and broaden its missions to the backing of jobs and
to support the transition towards a post-carbon and
low resource economy.

– Establish a new global reserve system. The stabilisation
of exchange rates should be ensured by introducing
a global reserve currency system, as promoted
by the recent UN summit on the global crisis.

ORGANISE A DEMOCRATIC PROCESS
WITH BINDING REGULATION ON
THE INFLUENCE OF FINANCIAL AND
ECONOMIC ELITES

The same people who have proved unable to run a
reliable finance system are still holding the political and
economic levers in their hands. Financial actors and
economic elites who have lobbied for the liberalisation
of financial markets and the economy have retained
privileged access to policy makers. The many consultations,
held by the Commission and the European Parliament
about the reforms, are dominated by the same
lobbies of financial companies which were successful in
achieving deregulation. The weak capital requirements
(5%) proposed for securitisation are an example of the
continuing deregulatory lobbying at work.

We demand EU governments to

– Cancel the privileged access of banks and other financial
actors to decision making processes at all levels.

– Put public consultations in place which include all sectors
of society and all relevant stakeholders. Dissolve
groups that are controlled by industry interests – as
the De Larosière Group was – or take steps to ensure
balanced representation.

– Support a multilateral process under the auspices
of the UN to deal with the crisis. The G20 is not
a legitimate body. Reforms have to be developed in
a democratic and inclusive way. All nations, not only
the richer nations have to be duly represented in the
development of sustainable solutions.

Signatories:

Africa Europe Faith and Justice Network (AEFJN)
Central and Eastern Europe Bankwatch Network
Eurodad
European Attac Network
European Coordination Via Campesina
European Marches against unemployment, insecure
labor and social exclusion
Friends of the Earth Europe
Reclaiming spaces
Seattle to Brussels Network
Terre des Hommes International Federation (TDHIF)
Women in Development Europe (WIDE)
European AntiPoverty Network
ActionAid
Organizations from EU Member States
Action Solidarité Tiers Monde, Luxembourg
AITEC, France
Asociacion Paz Ahora, Spain
Asociación Socialismo XXI, Spain
Association for the Development of the Romanian
Social Forum (AD ESR)
Attac Austria
Attac Catalonia
Attac Finland
Attac France
Attac Germany
Attac Hellas
Attac Hungary
Attac Poland
Attac Spain
Attac Sweden
Attac Vlaanderen
Belgian Social Forum
Campagna per la Riforma della Banca Mondiale
(CRBM), Italy
Centre national de coopération au développement
(CNCD), Belgium
Corporate Europe Observatory (CEO)
Ecologistas en Acción/Ekologistak Martxan/Ecologistes
en Acció/Ben Magec, Spain
El Observatorio de Multinacionales en América Latina
de la Asociación Paz con Dignidad, Spain
Federacion de Asociaciones para la defensa de la Sanidad
Publica, Spain
Forum anticapitalista de reflexion y Generacion de
Alternativas (FARGA), Spain
Intersindical Alternativa de Catalunya (IAC), Spain
Intersindical Valenciana, Spain
Observatorio de la deuda en la globalizacion,
SpainÖBV – La Via Campesina Austria
Pancyprian Public Employees Trade Union (PASYDY),
Cyprus
Plataforma de Solidaridad con Chiapas, Spain
Plataforma Rural - Alianzas por un Mundo Rural Vivo,
Spain
Romanian Social Forum
SETEM, Spain
Transnational Institute, Netherlands
Unidad Civica por la Republica, Spain
Union syndicale Solidaires, France
War on Want, UK
WEED – World Economy, Ecology & Development
Association, Germany
Zukunftskonvent, Germany
Foro Social de la Rioja, Spain

Notes

1. EC, Financial services: Commission outlines ways to strengthen the
safety of derivatives markets, Press release IP//09/1083, 3 July 2009

2. EC, Financial services: Commission launches consultation on how
to ensure responsible lending and borrowing in the EU, press release
IP/09/922, 15 June 2009 http://europa.eu/rapid/pressReleasesAction.
do?reference=IP/09/922&format=HTML&aged=0&language=EN
&guiLanguage=en and see also http://ec.europa.eu/internal_market/
consultations/docs/2009/responsible_lending/consultation_en.pdf