On 11 November 2008, Commissioner Almunia gave a speech to the second Brussels International Economic Forum titled ‘A recipe for recovery: the European response to the financial crisis’. Almunia was explicit in identifying the crisis and its causes, arguing that
after the period of excess and risk accumulation in the financial sector, we are now living through a painful market correction. The financial system is enduring a phase of severe deleveraging, characterised by dysfunctional credit markets, unprecedented write-downs in asset valuations, generalised risk aversion, and threats to the stability of the banking sector.
He went on to state that ‘from the beginning’, Europe had taken ‘decisive action’ with an injection of capital into credit-starved banking institutions and cutting interest rates and the unprecedented level of coordination across Europe in the response. The commissioner also argued (and perhaps pre-empted comments about hindsight and lack of action) that ‘the last months have exposed the weaknesses in our financial systems’.
In terms of the proposed management of the crisis, Almunia echoed many of the commission president’s stated priorities and argued for long-term reforms in increased research and development, projects for a green economy, energy efficiency and a strong and coordinated European response. Almunia, however, also had another priority and argued for the preservation of the free-trade area in Europe and an aggressive international campaign against protectionism and barriers to global trade:
We also need to work together to prevent protectionism from taking hold. In developed and developing countries alike, economic nationalism is on the rise and the benefits of globalisation are being questioned following the crisis. This is understandable. But history tells us that it is a dangerous tendency, one that can turn a downturn into a protracted and more severe problem…It is vital that we in Europe reaffirm our commitment to the principle of openness and lead by example. We must uphold the competition rules that underpin the Single Market and come out strongly against trade barriers.
In general, Almunia framed the crisis as one with exogenous causes (inadequately regulated international financial institutions), but accepted (as did Barroso) responsibility to address the underlying factors and treat the symptoms of the crisis. These were to be achieved with European cooperation and increased supervision, but avoiding protectionist measures.
On 25 February, Commissioner Almunia granted a wide-ranging interview with The Financial Times (see Atkins and Barber 2009). He did not discuss the crisis or its causes specifically but rather assessed the European management of the crisis and some of the challenges it presented. He was more circumspect than the commission president on the effect of the European stimulus and noted that the ‘degree of co-ordination could be seriously improved…I don’t say the present fiscal stimulus is useless at all. But the efficiency of the stimulus will be increased if the degree of co-ordination is improved’.
Almunia made the inference that the poorly regulated finance and banking sector (including tax havens) was to blame and expressed his support for stronger and ‘broader’ financial regulation:
The financial system will be more regulated. This will mean less leverage, less flexibility in the financial system, and less influence for the financial system in the aggregated results of our economy…Either we accept that our growth will be lower than in the past because the stimulus from the financial sector will be smaller.
He also noted, however, that the present level of direct state intervention in banks would be temporary and that, in time, ‘capitalism’ would return to business as usual: ‘I don’t think we’ll go back to the high level of state intervention and public regulation in industry or other sectors’. The commissioner seemed to be striking an almost apologetic tone, clearly regretting the changes that were being made and the increased level of government intervention in the economy, but still supporting the necessity of the measures being put in place.
On 4 May 2009, Almunia delivered his spring forecast on the economic and financial state of the union and its key institutions. The forecast opened with a ‘nutshell’ summary that provided a neat synopsis of the commissioner’s frame of the crisis:
Intensification of financial crisis and sharp contraction in world trade drove global and EU economies into recession; Financial markets gradually stabilising, but remain fragile; Ambitious EU and government action key to achieving stabilisation towards end 2009 and moderate growth in 2010; [and] Leading indicators provide some positive signals.
The commissioner called the financial crisis Europe’s ‘deepest and most widespread recession since World War II’, but he attributed a gradual stabilisation to the ‘swift and massive intervention’ of the European Community through the European Economic Recovery Plan. Almunia noted that the projections were for a recovery in the coming quarters thanks to the fiscal stimulus measures, the bank rescue plans and monetary easing. He also argued that the fiscal stimuli should continue into the future in order to effectively manage the crisis over time. Essentially, the framing sought here was that the crisis had exogenous causes, but was being dealt with effectively by European authorities.
Overall, explicit and systematic coverage of Almunia’s speeches was poor; his public visibility when addressing the European Union’s handling of the global financial crisis outside Brussels was largely eclipsed by that of Commission President Barroso. In response to Almunia’s ‘recipe for recovery’ speech on 11 November 2008, The Financial Times called into question the commission’s claim to be pioneering the proposed measures. Though Almunia (like Barroso) claimed much of the credit for the European response, The Financial Times noted that:
Economists said some governments were already proceeding along the lines suggested by Mr Almunia. The ruling coalition in Germany, for example, wants to offer tax incentives for the installation of energy-efficient home heating systems or the purchase of cars emitting lower levels of carbon dioxide. (Barber 2008)
The Financial Times journalist also suggested that the individual EU governments had taken the lead in drawing up the main emergency rescue measures for the banking sector, though the commission had been responsible for some of the subsequent specific details (Barber 2008). The contest here appeared to be over whether the commission had in fact been providing leadership in the crisis or whether it had just adopted measures already being undertaken and claimed them as its own.