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Speech of the Prime Minister to the 20th Congress of the European Popular Party, in Marseille, France

Dear colleagues,

Let me start by congratulating Mariano Rajoy for his impressive victory. Your victory is a sign of renewed hope and confidence, not only for Spain and our EPP family, but for the whole European Union. I wish you all the best, Mariano!

The European Council will meet tonight and tomorrow. The eyes of the world will be upon us.

Never before have we faced such a difficult test. Everyone is expecting from us a robust, credible and resolute answer. And it is not only the expectations of financial markets which should be worrying us. More importantly, I am thinking about our citizens' expectations. We cannot fail them. We owe them that.

All in all, this might be the most crucial Summit in European Union history.

The time for tentative approaches, the time for halfhearted measures, the time for incomplete decisions is over. Recent experience has given us such a warning.

And I believe that all European leaders have listened to this warning.

This crisis is no longer only about financial markets. It is not even only about our economies. It has become a political crisis and we must face this fact at once and act accordingly.

We are now facing some clear choices: either we move forward together, take our political integration one step further and decidedly pool our strengths for one common endeavor, or we will fall back into economic, social and political decline.

We do have a crisis to overcome.

This crisis is also a crisis of confidence.

Confidence in our true political will, in our economic strength, in our ability to pay our debts, in the responsiveness of our political institutions.

And we ask ourselves how could this happen here in Europe? How could this be possible in this great Union of freedom, innovation, culture, and ideas, where apparently we have all the necessary conditions for prosperity and stability?

We do not have an identity crisis.

We should not forget that we are both the largest single market and economic bloc in the world and the biggest donors in the world. We set world standards in such matters as human rights, tolerance and good governance as well as professional, scientific and artistic excellence.

The EU is a powerful and attractive force worldwide.

So what is wrong with us?

We make our decisions, but then due implementation is found wanting. We discuss and debate, but then we fail to act accordingly. We come to an agreement, but thereafter we forget to speak with one single voice.

Let me now share with you some thoughts on my own country.

In Portugal, we deeply believe in the future of Europe and we want to participate in the solutions for our current difficulties. The fact that we are fully implementing our economic and financial adjustment plan, as positively assessed already twice by our EU and IMF partners, is good news, both for Portugal and for Europe.

But we are doing more.

We are more ambitious than the Plan itself, as far as structural reforms are concerned. In order to increase competitiveness, we are reforming some of the main elements of our economic system, such as the labor market, economic regulation and competition, housing, state owned enterprises and Public Administration.

We are opening our economy, with an ambitious privatization program and attracting foreign direct investment.

But we don't lose sight from the absolute imperative of budget consolidation.

Last week our Parliament approved the most ambitious and demanding State budget ever proposed in the history of Portuguese democracy.

I won't pretend that it won't be difficult for everyone, but at the end of this adjustment, Portugal will be far more competitive and will have a far more balanced economy.

However, I am aware that the evolution of the financial crisis may, in the end, be the great determinant. It may either crown our huge effort with success, or it can condemn it to failure.

That is to say: without a successful collective European response to the present challenges and threats we will not be, internally, strong enough to succeed.

Therefore, in my view the European response should be two-fold:

First and foremost we need to restore credibility and withstand market pressure with short term and convincing measures.

• To make it happen we need to implement, strictly and rapidly, previous Summit decisions. We need a credible and strongly capitalized EFSF and, of course, the ECB and IMF involvement in this would be most welcome. This is not about solidarity. It is about credibility.
• The ECB should not jeopardize its independence and it should continue to play its role according to its single mandate - maintain price stability. But the ECB should also remain faithful to its task of being a stabilizing force for the Eurozone financial system as a whole.

These short term measures are essential to respond in the short term to the current pressures and to gain the time required to tackle the fundamental roots of our problems, thorough a comprehensive structural reform program and the establishment of a budgetary Union.

We have to act now on those two fronts: a short term one with immediate impact and a long term one with a far reaching ambition.

I believe in a stronger and ambitious Union, with increased institutional surveillance going beyond control and prevention of debt and deficit excesses, and involving also other correlated upstream excesses, such as abnormal external imbalances.

We must not ignore the progress we have made thus far, but we cannot rest on it. We must reinforce our will and action to move further down the road in our EMU, strengthening the Economic pillar by means of binding fiscal and budgetary discipline.

Economic convergence is an objective we all share. It is a demanding and far reaching objective which has been presiding over our common European endeavor ever since it began, more than fifty years ago.

I trust we will lead the Summit to respond positively to our citizens and the outside world expectations and hopes.

This summit should unveil a clear and effective path for a reinvigorated economic growth, based on our unabated confidence that Europe will emerge from this crisis stronger and united.

Years from now people will look back to these days in which we were put to the test. I am confident they will say that we rose to the challenge and opened a new path of prosperity and freedom for our common good in our common home.