2012 ORDINARY SESSION

________________________

(Fourth part)

REPORT

Thirty-second Sitting

Wednesday 3 October 2012 at 10 a.m.

In this report:

1.       Speeches in English are reported in full.

2.       Speeches in other languages are summarised.

3.       Speeches in German and Italian are reproduced in full in a separate document.

4.       Corrections should be handed in at Room 1059A not later than 24 hours after the report has been circulated.

The contents page for this sitting is given at the end of the verbatim report.

Mr Rouquet, Vice-President of the Assembly, took the Chair at 10.10 a.m.

1. Written declaration

THE PRESIDENT (Translation) – The sitting is open.

Pursuant to Article 53 of our rules, a written declaration on Detained MPs, No. 532, in Document 13044, has been tabled. Any Representative, Substitute, Observer or Partner for Democracy may add his or her signature to this written declaration in the Table Office.

2. Joint debate: (a) For More Democratic Elections; (b) Political Parties And Women’s Representation

THE PRESIDENT (Translation) – Our first item today is the consideration of two reports: the first entitled “For More Democratic Elections”, on behalf of the Committee on Political Affairs and Democracy, and the second on “Political Parties And Women’s Representation”, presented by the Committee on Equality and Non-Discrimination. We will consider the first report, entitled “For More Democratic Elections”. The Committee on Political Affairs and Democracy has submitted a draft resolution to which 18 amendments and two sub-amendments have been tabled. I understand that the chairperson of the committee wishes to propose that nine amendments concerning the draft resolution – 3, 4, 16, 17, 10, 11, 18, 12, and 13 – which were unanimously approved by the committee should be declared as adopted by the Assembly under Rule 33.11.

Is that so, Mr Marcenaro?

Mr MARCENARO (Italy) – Yes.

THE PRESIDENT (Translation) – Are there any objections? That is not the case.

The following amendments have been adopted:

Amendment 3, tabled by Lord Tomlinson, Lord Anderson, Ms Brasseur, Mr Marcenaro and Mr Mota Amaral, which is, in the draft resolution, paragraph 5, first sentence, to replace the words “The Assembly is in particular concerned that the following election-related violations still persist in a number of member States:” with the following words: “On the basis of election observation reports and other Council of Europe sources, the Assembly is concerned that a number of election-related violations still persist in a number of individual Council of Europe member States, such as:”.

Amendment 4, tabled by the Committee on Equality and Non-Discrimination, which is, in the draft resolution, paragraph 5, after “vote buying”, to insert the following words : “, family voting”.

Explanatory note: Family voting is a rather common irregularity, which affects in particular women’s right to their individual vote. It has raised concerns in the Assembly and the Congress. It deserves to be mentioned.

Amendment 16, tabled by the Committee on Culture, Science and Education, which is, in the draft resolution, to replace paragraph 8.1.8 with the following paragraph:

“ensuring freedom of political debate in the media and guaranteeing that electoral campaigns are open and accessible and allow genuine debate that is not only of interest to voters but also informative for their choices. This requires, inter alia, transparency and pluralism of all media as well as equal access of all candidates and political parties to, and impartiality of, the public service media. Any national regulations on election campaigns should strike a fair balance between freedom of expression and ensuring equal opportunities;”.

Amendment 17, tabled by the Committee on Culture, Science, Education and Media, which is, in the draft resolution, after paragraph 8.1.11, to insert the following paragraph:

“consolidating overall democratic culture through the implementation of the Council of Europe Charter on Education for Democratic Citizenship and Human Rights Education;”.

Amendment 10, tabled by the Committee on Legal Affairs and Human Rights, which is, in paragraph 8.2.3, to replace the words “domestic or international observers should be facilitated, in line” with the following words: “international observers should be facilitated in line with the Declaration of Principles for International Election Observation and”.

Amendment 11, tabled by the Committee on Legal Affairs and Human Rights, which is, in paragraph 8.2.3, after the words “National observers, including from civil society, should be authorised in all member States”, to insert the words: “, in line with the Declaration of Global Principles for Nonpartisan Election Observation and Monitoring by Citizen Organizations and the Code of Conduct for Nonpartisan Election Observers and Monitors”.

Amendment 18, tabled by the Committee on Culture, Science, Education and Media, which is, in the draft resolution, paragraph 10.3, after the word “organisations”, to insert the following words: “and non-governmental organisations”.

Explanatory note: Election observations benefit greatly from the work of non-governmental organisations. Prominent examples are the International Foundation for Electoral Systems (IFES) and the European Network of Election Monitoring Organizations (ENEMO). It is therefore important for the Assembly to increase its co-operation with those organisations in order to achieve synergies.

Amendment 12, tabled by the Committee on Legal Affairs and Human Rights, which is, in paragraph 10.4, after the words “notably the Assembly”, to delete the words “the European Court of Human Rights”.

Amendment 13, tabled by the Committee on Legal Affairs and Human Rights, which is, in the draft resolution, after paragraph 10.4, to insert the following paragraph:

“expresses its support for the Declaration of Global Principles for Nonpartisan Election Observation and Monitoring by Citizen Organizations and the Code of Conduct for Nonpartisan Election Observers and Monitors;”.

We come to Amendment 15, tabled by the Committee on Culture, Science and Education, which is, in the draft resolution, at the end of paragraph 2, to add the following sentence:

“In this respect, member States must fulfil their positive obligations under Article 3 of the Additional Protocol to the European Convention on Human Rights (ETS No. 9).”

Explanatory note: Over a period of nearly 50 years, the European Court of Human Rights has established case law on the right to free elections under Article 3 of the Additional Protocol to the European Convention on Human Rights (ETS No. 9). This norm is the yardstick for free democratic elections throughout Europe. Therefore, it is important to recall expressly this Article 3 in the draft resolution, which aims at more democratic elections in Europe.

I call Ms Postanjyan to support Amendment 15. You have 30 seconds.

Ms POSTANJYAN (Armenia) – There is established case law on the right to free elections under Article 3 of the first part of the European Convention on Human Rights. It is therefore important to mention the article expressly in the resolution.

THE PRESIDENT (Translation) – Does anyone wish to speak against the amendment?

Mr GARDETTO (Monaco) said that the proposed amendment was not so much erroneous as vague and that it introduced positive obligations which weakened the resolution.

THE PRESIDENT (Translation) – What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is against.

THE PRESIDENT (Translation) – The vote is open.

Amendment 15 is rejected.

We come to Amendment 2, tabled by Mr Sakovskis, Mr Cilevičs, Mr Plotnikov, Ms Strik, Mr de Vries, Mr Strässer and Ms Cramon-Taubadel, which is, in the draft resolution, after paragraph 2, to insert the following paragraph:

“The Assembly reiterates its views expressed in Resolution 1617 (2008) and calls upon member states to grant the right to vote and to stand in elections at local and regional level to resident non-citizens.”

I call Mr Sakovskis to support Amendment 2.

Mr SAKOVSKIS (Latvia) – The reason for the amendment is the situation in my country, Latvia. Almost a third of the inhabitants of Latvia were given the status of non-citizen at the beginning of the 1990s, and did not have the right to vote in local elections. More than 20 years have passed since Latvia renewed its independence, but still 300 000 people have no right to vote in local elections. That is a completely abnormal situation that is in total contradiction to Resolution 1617 of 2008. It is particularly abnormal if we consider that the citizens of any EU country can vote in local elections in Latvia if they have lived there for six months, even if they then leave, but people with the status of non-citizen, who have lived in Latvia for more than 20 years – their whole life – do not have such rights. That is the motive behind the amendment, and I ask you to support it.

THE PRESIDENT (Translation) – Does anyone wish to speak against the amendment? I call Ms Čigāne.

Ms ČIGĀNE (Latvia) – I ask the Assembly not to support the amendment because this is a typical non sequitur situation; the proposed text of this paragraph does not lead to this conclusion. The text talks about the general principle that the vote of citizens and their choice has to be translated into a logical, visible and legitimate outcome. The amendment, however, refers to a country-specific situation, and I ask the Assembly not to support it.

THE PRESIDENT (Translation) – What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is against.

THE PRESIDENT (Translation) – The vote is open.

Amendment 2 is rejected.

We come to Amendment 7, tabled by the Committee on Legal Affairs and Human Rights, which is, in the draft resolution, paragraph 5, after the words “threats, pressure, violence and intimidation carried out against candidates or voters”, to add the words: “, arbitrary detention of opposition candidates and supporters”.

I call Mr McNamara to support Amendment 7.

Mr McNAMARA (Ireland) – The amendment would strengthen the resolution by pinpointing the specific and grave electoral violations in member states mentioned by Mr Gardetto in his report in paragraph 112.

THE PRESIDENT (Translation) – Does anyone wish to speak against the amendment? That is not the case.

What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is in favour.

THE PRESIDENT (Translation) – The vote is open.

We come to Amendment 8, tabled by the Committee on Legal Affairs and Human Rights, which is, in the draft resolution, to delete paragraph 8.1.3.

I call Mr McNamara to support Amendment 8.

Mr McNAMARA (Ireland) – This amendment would bring the resolution in line with previous resolutions of this Assembly, which recognise the freedom of choice of member states with regard to the electoral systems that they choose. Those previous resolutions are referred to in Mr Gardetto’s report in paragraphs 167 and 168.

THE PRESIDENT (Translation) – Does anyone wish to speak against the amendment? That is not the case.

What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is against.

THE PRESIDENT (Translation) – The vote is open.

Amendment 8 is rejected.

We come to Amendment 5, tabled by the Committee on Equality and Non-Discrimination, which is, in the draft resolution, to replace paragraph 8.1.5 with the following paragraph:

“opting for an electoral system which ensures that the final results are representative of the electorate in terms of political views, gender, geographic distribution and the existence of national and/or linguistic minorities”.

Explanatory note: This amendment aims to clarify the original text. It also puts gender as the second element to be taken into account. It refers to national or linguistic minorities as, in civic states, their existence should be relevant in the design of the electoral system and not mere ethnicity.

I call Ms Pourbaix-Lundin to support Amendment 5.

Ms POURBAIX-LUNDIN (Sweden) – The amendment aims to clarify the original text. It proposes that gender be a second element to be taken into account. It refers to taking account of national and/or linguistic minorities in civic states in the design of electoral systems and not their ethnicity. We just wanted to clarify the paragraph.

THE PRESIDENT (Translation) – Does anyone wish to speak against the amendment?

I call Mr Gardetto.

Mr GARDETTO (Monaco) said that the original draft was clearer and less polemical. The amendment would give rise to difficulties, and he therefore opposed it.

THE PRESIDENT (Translation) – What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is against.

THE PRESIDENT (Translation) – The vote is open.

Amendment 5 is rejected.

We come to Amendment 6, tabled by the Committee on Equality and Non-Discrimination, which is, in the draft resolution, to replace paragraph 8.1.6 with the following paragraph:

“introducing in their electoral legislation mechanisms to promote the balanced representation of women and men in elected bodies at all levels as well as encouraging political parties to introduce internal regulations, policies and affirmative actions so as to promote women’s participation and representation in politics”.

Explanatory note: States have a responsibility in the area of legislation but only in exceptional circumstances should they interfere with party internal regulations. However, states can encourage political parties to introduce voluntary measures, as described in Ms Stavrositu’s report.

I call Ms Pourbaix-Lundin to support Amendment 6.

Ms POURBAIX-LUNDIN (Sweden) – The amendment seeks to clarify the fact that you should not mix what you can legislate for in parliaments and what parties can do. We are talking about what parties can do to encourage more women to take part, so we should use the word “encouraging”. We seek to clarify the difference between these two things.

THE PRESIDENT (Translation) – Does anyone wish to speak against the amendment? That is not the case.

What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is in favour.

THE PRESIDENT (Translation) – The vote is open.

We come to Amendment 1, tabled by the Committee on Migration, Refugees and Displaced Persons, which is, in the draft resolution, after paragraph 8.1.6, to insert the following paragraph:

“facilitating access to nationality as advocated in the European Convention on Nationality (ETS No. 166) and granting migrants voting rights and/or other possibilities for political participation as proposed in the Convention on the Participation of Foreigners in Public Life at Local Level (ETS No. 144). Democratic legitimacy is not served by excluding large numbers of migrants from political life and democratic elections.”

I call Mr Santini to support Amendment 1, on behalf of the Committee on Migration, Refugees and Displaced Persons.

Mr SANTINI (Italy) said that the proposed amendment recalled declarations and resolutions previously approved by the Assembly, including Resolution 1618 (2008), with regard to the concept of facilitating access to nationality and granting migrants the right to vote.

THE PRESIDENT (Translation) – We come to Sub-Amendment 1 to Amendment 1, tabled by the Committee on Political Affairs and Democracy, which is, in the proposed amendment, to replace the words “granting migrants” with the following words: “granting legally-recognised migrants”.

I call Mr Gardetto to support Sub-Amendment 1 on behalf of the Committee on Political Affairs and Democracy – the sub-amendment has been unanimously adopted by the committee. I believe that he wishes to correct the English version of the text.

Mr GARDETTO (Monaco) said that the amendment sought to specify that the provision would apply only to people who were in the country legally. The English text of the amendment should be corrected to read “legally resident”; no change was necessary to the French text of the amendment.

THE PRESIDENT (Translation) – Does anyone wish to speak against the sub-amendment? That is not the case.

What is the opinion of the mover of the amendment?

Mr SANTINI (Italy) –In favour.

THE PRESIDENT (Translation) – The committee is in favour.

The vote is open.

The sub-amendment is adopted.

Does anyone wish to speak against Amendment 1, as amended? That is not the case.

What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is in favour.

THE PRESIDENT (Translation) – The vote is open.

We come to Amendment 14, tabled by the Committee on Legal Affairs and Human Rights, which is, in sub-paragraph 8.1.11, after the words “citizens living abroad”, to add the following words: “, subject to reasonable restrictions in accordance with the law, such as duration of residence abroad,”.

Explanatory note: Amendment proposed at the committee meeting on 1 October 2012 to reflect the fact that, for example, in certain countries a citizen's right to vote expires after a certain specific period of time.

I call Mr McNamara to support Amendment 14, on behalf of the Committee on Legal Affairs and Human Rights.

Mr McNAMARA (Ireland) – The amendment recognises that there is no guaranteed right in law for citizens living abroad to vote. Furthermore, it recognises that a wide variety of practices exist across member states and that certain states have large populations living abroad – they may even have a great number of citizens residing abroad who have never resided in the member state itself. So the automatic granting of votes to those citizens would very much change the nature of elections in Council of Europe member states that contain large diasporas.

THE PRESIDENT (Translation) – We now come to Sub-Amendment 1 to Amendment 14, tabled by the Committee on Political Affairs and Democracy, which is, in the proposed amendment, to delete the word “reasonable”.

I call Mr Gardetto to support Sub-Amendment 1, on behalf of the Committee on Political Affairs and Democracy.

Mr GARDETTO (Monaco) explained that the committee wished to remove the word “reasonable” so as to be in line with domestic legislation, since the word could have a variety of specific meanings in different jurisdictions. The committee wanted this provision to be applicable universally.

THE PRESIDENT (Translation) – Does anyone wish to speak against the sub-amendment? That is not the case.

What is the opinion of the mover of the amendment?

Mr McNAMARA (Ireland) – Clearly the term “reasonable restrictions in accordance with the law” is used in a wide variety of areas. It is possible, of course, for unreasonable restrictions still to be obeyed in accordance with the law, so this position is against the sub-amendment.

THE PRESIDENT (Translation) – The vote is open.

The sub-amendment is adopted.

Does anyone wish to speak against Amendment 14, as amended? That is not the case.

What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is in favour.

THE PRESIDENT (Translation) – The vote is open.

We come to Amendment 9, tabled by the Committee on Legal Affairs and Human Rights, which is, at the end of paragraph 8.1.11, to add the following words: “irrespective of the nature or gravity of their offences”.

I call Mr McNamara to support Amendment 9.

Mr McNAMARA (Ireland) – The purpose of the amendment is to bring the resolution into line with the jurisprudence of the European Court of Human Rights, specifically in Hirst v. United Kingdom.

THE PRESIDENT (Translation) – Does anyone wish to speak against the amendment? That is not the case.

What is the opinion of the committee?

Mr MARCENARO (Italy) – The committee is in favour.

THE PRESIDENT (Translation) – The vote is open.

We will now proceed to vote on the whole of the draft resolution contained in Document 13021, as amended.

The vote is open.

We will now consider the draft resolution presented by the Committee on Equality and Non-Discrimination, Document 13022, to which one oral amendment has been tabled.

I have received an oral amendment from Ms Acketoft on behalf of the Equality and Non-Discrimination Committee, which reads as follows:

After the word “gender-related”, insert the word “legal”.

I remind the Assembly of Rule 33.6, which enables the President to accept an oral amendment or sub-amendment on the grounds of promoting clarity, accuracy or conciliation, and if there is not opposition from 10 or more members to it being debated.

In my opinion, the oral amendment meets the criteria of Rule 33.6. Is there any opposition to the amendment being debated? That is not the case.

I call Ms Acketoft to support the oral amendment.

Ms ACKETOFT (Sweden) – This is just to clarify what we mean. Of course states should impose sanctions when parties do not comply with the law, but if we are talking about voluntary obligations, that does not apply.

THE PRESIDENT (Translation) – Does anyone wish to speak against the oral amendment? That is not the case.

What is the opinion of the committee?

Ms ACKETOFT (Sweden) – The committee is in favour.

THE PRESIDENT (Translation) – The vote is open.

The oral amendment is adopted.

We will now proceed to vote on the whole of the draft resolution contained in Document 13022, as amended.

The vote is open.

(Mr Mignon, President of the Assembly, took the Chair in place of Mr Rouquet.)

3. The activities of the Organisation for Economic Co-operation and Development (OECD) in 2011-12 (enlarged debate)

THE PRESIDENT (Translation) – The next item of business at this sitting is the enlarged debate on the activities of the OECD in 2011-12. This debate will take place under special rules which enable delegations from parliaments of non-European member states of the OECD to participate, with voting by show of hands, and we welcome the participation of our colleagues from Canada, Chile, Japan, the Republic of Korea and Mexico.

We begin with the presentation by Mr Bockel, on behalf of the Committee on Political Affairs and Democracy, of its report on the activities of the OECD in 2011-12, Document 13019.

We shall then hear an opinion from Mr Braun on behalf of the Social Affairs Committee, Document 13040, which will be followed by an address by Mr Angel Gurría, Secretary-General of the OECD. I welcome him to our proceedings again. I have just had a long talk with him in my office. It was a very fruitful, interesting and relaxed discussion which allowed us to cover a number of topics that he will develop in a moment.

The rapporteur has 13 minutes to introduce the report and reply to the debate. Committee contributors and participants in the general debate have three minutes.

I now call Mr Bockel to present the report of the Committee on Political Affairs and Democracy. You have 13 minutes in total, which you may divide between presentation of the report and reply to the debate.

Mr BOCKEL (France) said that the reform of the Assembly’s structures had made possible the transfer of responsibility for the report on the activities of the OECD to the Political Affairs Committee. The economic and financial aspects of the OECD’s work was important, but could not be the only aspects considered; the addition of a political dimension to the report had been justified by, among other things, developments in the Arab world. The report addressed the impact of topics including the sovereign debt crisis, the role of credit-rating agencies, taxation of financial transactions and the co-operation of the OECD with Arab countries, as well as economic prospects more broadly. He wished to speak about the consequences of the economic crisis, and secondly, OECD activity in the Mediterranean basin. The consequences of the economic crisis had affected all countries, with notable exceptions. The desire to implement the “golden rule” was praiseworthy. However, it was vital not to submit to dogma: investment in infrastructure was also important. The committee had argued that rigour should not be to the detriment of growth.

He wanted to encourage growth and employment and it was welcome that the OECD was also in favour.

Austerity was indispensible but it should not be applied equally to all. Vulnerable groups needed to be protected. Although states were in difficulty, social justice should be maintained. It would not be wise to add rigour to an already precarious situation. Flexibility was necessary but not at the cost of insecurity. The pain had to be fairly shared.

It was necessary to give governments time to implement the measures needed. It was crucial to protect investment for the future in order to protect the diseased body of the economy.

The Assembly was trying to develop closer ties around the Mediterranean basin, for instance through the Partnership for Democracy programme. There was a new thirst for democracy, and after the revolutions in the Middle East and North Africa the countries there needed to consolidate. However fundamentalism was on the rise and there were economic problems in those countries: it was important not to allow the economic situation to remain in the shadow of the political situation. The rise of fundamentalism might also constrain economic development.

It was vital to support economic development in the Mediterranean basin. The OECD had put in place measures to help which were not ultra-liberal measures such as those put in place by the International Monetary Fund. The measures were coherent and would strengthen the economy. They focused on improving local government, tackling corruption and encouraging regional development.

The EBRD had allocated €1 million to foster democracy in North Africa and this would be key to the success of those revolutions.

He called on the Assembly to accept the resolution and to accept the amendments which the committee had unanimously accepted. He pointed out that the text of the resolution would change the procedure on debating the OECD in the future.

THE PRESIDENT (Translation) – Thank you, Mr Bockel. You have five minutes and 30 seconds remaining for your contribution to the debate.

I call Mr Braun to present the contribution of the Committee on Social Affairs, Health and Sustainable Development, Document 13040. You have three minutes.

Mr BRAUN (Hungary) – Thank you, Mr President. Secretary General, dear colleagues, on behalf of the Committee on Social Affairs, Health and Sustainable Development, I would like to welcome the work of the rapporteur, Jean-Marie Bockel. The Committee on Political Affairs and Democracy is responsible for presenting the report. The Assembly wanted to make the debate more political, so as rapporteur I want to concentrate on the economic and social aspects of the report.

There is a very close connection between politics and the economy. Political decisions affect the economy, and vice versa. The state of the economy has a strong influence on politics. We politicians tend to blame ourselves for the crisis, especially because newspapers tend to suggest we should. The operation of the market is perfect, of course, it is only we politicians who respond late to the conditions of the market. That is the best-case scenario. The worst-case scenario is that we react badly.

Right here and right now we should point out to each other that that is not completely true. It was principally human greed and irresponsibility that led to the current crisis. The decision makers of the market – in this case the managers of the big banks – are not acting like owners who think about the long term; they are following their special short-term interests. If there is something we politicians can do, it is locking out and preventing these possibilities. The individual decision-makers must carry the consequences, not just the shareholders or the millions of taxpayers.

Our committee absolutely shares the opinion of Mr Bockel that “rising inequality began long before the financial recession”. Our committee is convinced that such inequalities damage the socio-economic cohesion of society and tend to undermine not only social development, but economic development and social stability. More unequal societies experience greater poverty, a rise in populist movements, shrinking political participation and a weakening of the middle-class social base that underpins liberal democracy. That was the reason why our committee suggested that we change the wording of the last sentence in paragraph 6 and express the strong support of the enlarged Assembly for national reforms of taxation, welfare systems and labour markets. Futhermore, in reference to the former work of the Assembly, we suggest that two new paragraphs should be inserted into the resolution. One concerns the tax evasion and tax avoidance that deprive state budgets of essential revenue, and the other concerns the sustainability of pension systems and adequacy of pension levels. We hope that the Committee on Political Affairs and Democracy and the rapporteur will support our amendments.

THE PRESIDENT (Translation) – Mr Gurría, I am very happy to welcome you in this hemicycle for the first time – for me, although not for you! I am also happy to welcome the parliamentary delegations from Canada, Chile, Korea, Japan and Mexico, who participate in this annual debate with the same rights as the members of our Parliamentary Assembly.

As you know, this debate is being held in a form that is slightly different from that of previous years. I myself have been rapporteur on reform of the Assembly, which led to the Committee on Political Affairs and Democracy being given the task of preparing the debate, the main reason being that the Assembly wanted to have a more political view of the work of the OECD.

I emphasise that we always appreciate this debate, and that we are going to try to make it more interactive this year, since you will have the opportunity of intervening several times, and that we appreciate just as much the participation of the non-European members of the OECD.

It is now four years since Europe – and, to different degrees, other continents – has unfortunately been in crisis. After the property sector and the banks, it is now the turn of states. In many of our countries, the people have difficulty in accepting the sacrifices imposed by their governments and the project of building Europe is itself brought into question. The OECD has the necessary expertise to give the advice that will help governments to take more appropriate decisions.

Next to us, on the other side of the Mediterranean, the people are asking for more democracy and greater respect for human rights. Our two organisations have expended resources and put in place programmes to help them. Even if our interlocutors may be different, it will certainly be useful for us to look for synergies in our activities.

Mr Gurría, we are keen to hear your views and the OECD’s advice.

Mr GURRÍA (Secretary-General of the Organisation for Economic Co-operation and Development) – Mr President, Mr Bockel and Mr Marcenaro, I thank you and all the Assembly for agreeing to hear me speak today.

It is a great pleasure to be here again and to be able to address the Parliamentary Assembly of the Council of Europe. Thank you for the invitation and for the change to the format. Last year, we suggested that perhaps we could make the process a little more useful for everybody and I thank you for the modifications you have made.

I thank Mr Bockel and the Committee on Political Affairs and Democracy for their commitment and engagement in preparing the report on the activities of the OECD. We welcome the report and its more political perspective. This year, I want to use most of my time with you for an open and interactive debate, so I look forward to your questions and hope that you have plenty in store for me.

First, let me reflect on some of the issues addressed in the report. Are we out of the woods yet? Not yet, I am afraid. We are now in the fifth year of the crisis. As we reported in our September “Interim economic outlook”, continued developments in the euro area have led to a weakening in the global economy over the summer. We expect activity to be particularly weak in the euro area in the near term, and to pick up somewhat in the United States and Canada.

Some 48 million people remain unemployed in the OECD area alone, which means that 14 million jobs would need to be created to bring the employment ratio back to pre-crisis levels. That is where we are now compared with where we were in 2007 and 2008. The length and depth of the crisis is now being felt on the streets of our countries, where social stress is high.

Important steps are now being taken to deal with the euro area banking and sovereign debt crises, including the European Central Bank’s outright monetary transactions programme, the banking union and the fiscal compact, but challenges remain in putting Europe back on a sustainable growth path, restoring its public finances, putting its people back to work and rejuvenating the global economy. I must also say that although we have taken a lot of important decisions, action has not yet been detonated. The markets continue to punish countries that are performing like Spain and Italy – countries that are doing their homework.

We have a very good system to punish those who do not perform well, but a very bad system to reward those who do their homework. We have no way to support them or protect them from the onslaught of the markets, so where is the incentive? How is it possible for us to leave European countries that are making policy decisions at the mercy of 7% or 7.5% rates, simply because we cannot agree about the purity of the Central Bank or about the question of whether there should be a link between the programme, the Central Bank, the European financial stability facility, the European stability mechanism and so on? I do not want to go too far into this question, because it is rather frustrating. We are stuck and time takes its toll – time issues a very expensive invoice, because inaction is very expensive.

Structural reforms remain key. We say “go structural, go social, go green, and go institutional”. I know that those words have been criticised by some of your members, but I think they give you a good road map and, thinking in the long term, they can get us out of the hole if we are consistent. We must keep working on structural reforms and implementing them firmly as they are fundamental to the restoration of lasting prosperity. All our countries have much to gain from reforms to improve educational attainment and performance, encourage innovation and entrepreneurship, enhance competition in product markets and services, and make labour markets more adaptable.

Believe me, that is not just a long-term solution. The fact that the reforms are structural does not mean that you have to wait five years to see the results. We have run out of room on the monetary policy side, and on the fiscal policy side, so, paradoxically, structural measures are the best short-term policy we can adopt. Results come much sooner than one would expect. Structural reforms can deliver results faster and more efficiently than generally expected, and we have clear evidence of that.

We must also address the social crisis. We have documented the question of rising inequality; we mentioned it to you last year as well as two or three years ago. We have now produced two large reports on the matter, and they are covered on the USB keys that we handed out. Income inequality in OECD countries is at its highest level for the past half century, and it continues to rise. This is an unsustainable path. We called for action with our publication “Divided We Stand” and we continue to do so. Social cohesion is the glue that holds society together, and it is at risk worldwide. Addressing inequality is thus critical. It is also critical to improve competitiveness and productivity.

We are advancing powerful proposals for a more inclusive growth agenda. One decisive dimension is to improve education and upgrade skills. In May this year we launched the OECD skills strategy. The employment outlook is very bad, as I mentioned, and we are trying to address that by looking at skills, with a combination of labour, market and education measures. The section on women in business concerns the MENA region – Mr Chairman, you mentioned the Middle East and North Africa – and supports women in entrepreneurship, referring to some of the issues that were mentioned here. The skills strategy is a powerful instrument for policy makers and I invite you to look at it closely; again, it is on the USB key that we gave out.

Promoting inclusive growth is also an underlying principle of our newly adopted development strategy, and we are about to launch our report on gender equality in education, employment and entrepreneurship. We will also develop specific recommendations to our member countries in this regard for our next ministerial meeting. Last but not least, the groundbreaking work that we are doing on global value chains and measuring trade in value-added terms will have powerful implications in terms of job creation. It shows that trade and market openness have become potent tools for generating better-quality jobs. Once again, this requires adequate supporting policies, inter alia in terms of education, skills training and safety nets to ensure that all segments of the population benefit from it. We have to continue defending open markets, open trade, open investment regimes and open foreign exchange regimes. Protectionism is rising, both its discourses and now its practices. The recession is causing this, and we have to raise our guard against it.

You have asked us to reflect on our own policy advice in the lead-up to the crisis. We have done so and we thank you for that. This was the place where you questioned whether the OECD had given adequate advice to its members and whether it could have done better in terms of at least attenuating the impact of the crisis. We have now launched a strategic initiative called “New Approaches to Economic Challenges”, the NAEC. We want to promote serious reflection on what lessons can be learned from the crisis and how we can produce effective policy recommendations. The objective is to build a more solid path for inclusive and green growth. This is indeed a very challenging exercise. It requires a good understanding of the relationships and the trade-offs, the likely side-effects and the spill-overs of different policy options. For example, we need to examine closely how growth-enhancing policy reforms impact income inequality. We also need to identify new sources of growth and competitiveness, including innovation, green growth, knowledge-based capital and skills. However, all of this will not be enough if we cannot rebuild trust.

I conclude by focusing on the confidence crisis. With this protracted recession, citizens have lost faith and trust in their institutions and their governments. Without that confidence, there will be no growth. That is why we need to maintain a focus on sound policies that can put an end to the crisis, restore growth and create jobs. We also need to vigorously fight corruption, tax evasion and bribery. It is our duty to design and put in place better policies for better lives. That is why we at the OECD are developing and deepening our work in these areas. On many of these issues we have a lot to share with our key partners – Brazil, China, India, Indonesia and South Africa – as well as our partner countries in the MENA region and Russia, which is in the negotiation stages to join the OECD. I see significant scope for further co-operation with the Council of Europe in the area of governance, including with these very important partners, and the emphasis that you have put on the MENA is fully shared; we are working with them on the Deauville partnership, as well as on our 10-year-old MENA/OECD programme on questions of the business environment, investment, governance and, as I said, the role of women, education and so on. I look forward to your questions.

THE PRESIDENT (Translation) – Thank you, Mr Secretary-General, for that particularly interesting statement. I will now give the floor to the spokespersons from the various political groups, and you will have the opportunity, if you so wish, to reply to them. I call Mr Elzinga from the Group of the Unified European Left.

Mr ELZINGA (Netherlands) – This must be my fifth debate in Strasbourg with the OECD’s Secretary-General, Mr Gurría, who we know as an eloquent speaker. I welcome his invitation to have a truly interactive debate. I will direct three questions to him and I expect some good answers. First, though, I compliment the rapporteur on the political focus on the eurozone crisis in the MENA region that he brought to the report. However, some elements in the report are to be contested. For example, it endorses the EU’s new economic governance – the ESFS, the ESM – but those issues met a lot of opposition, which I do not see reflected in the report at all. Although the report recalls our resolution, “Austerity measures – a danger for democracy and social rights”, it also puts a lot of emphasis on bolder consolidation measures.

That brings me to my first question to Mr Gurría. Nobel prize winner Paul Krugman, among others, speaks of Europe’s austerity madness, and only last May the OECD itself warned that strict austerity measures risk derailing the global economic recovery. However, in its country reports, the OECD praises the fiscal consolidation measures. So what should we do, Mr Gurría? Should we be careful with austerity –the OECD has even downgraded its own outlook for the world’s economy since May – or should we put fiscal consolidation first?

The second question relates to the first. In general, I see more disparities between the OECD’s global economic analysis and the policy advice in the country report. I praise the OECD for wanting to be a learning organisation but, while it does pioneering work towards new approaches to economic challenges and stimulates out of the box thinking, its country reports often exude old economic thinking. What can the Secretary-General do to stimulate new insights to trickle down in the organisation?

That brings me to my last question. One example of old thinking as I see it regards the emphasis that the OECD puts on competitiveness. A competitive environment certainly stimulates private companies to innovate and help economic recovery, but countries are not companies. Competition between countries potentially harms recovery. Think of the regulations necessary for competition – labour conditions, social security and other automatic stabilisers, such as corporate taxes. The OECD is the organisation for economic co-operation, not competition. Does Mr Gurría see this contradiction as well?

THE PRESIDENT (Translation) – Thank you. I now call Mr Schneider, on behalf of the Group of the European People’s Party.

Mr SCHNEIDER (France) thanked Mr Bockel for his report and said that he would focus his remarks on the need to develop a green economy, with a real strategy for achieving sustainable growth. Part of this would include limiting the expansion of individual nations’ energy footprints, in addition to driving growth and meeting the targets set by all at the Rio conference. The value of natural capital should not be under-estimated, and the OECD ought to encourage greater efficiency. The adoption of a green growth strategy would not be achieved without significant effort and this would include new investment in infrastructure projects. A price should be set for pollution and natural assets, such as clean drinking water, should have their costs fully recognised. He urged the Assembly to realise what was at stake and looked forward to the rest of the debate.

THE PRESIDENT (Translation) – Thank you, Mr Schneider. I call Mr Voruz, who will speak on behalf of the Socialist Group.

Mr VORUZ (Switzerland) said that he was puzzled by elements of the OECD report, in spite of its analysis of the causes of the current economic crisis. Europe was experiencing difficult economic times and facing the scourge of widespread unemployment, particularly among young people. The drift towards neo-fascism in Greece was a very worrying development, and the link between economic difficulties and a drift to the right had not been identified in the report. In Switzerland any new treaty would automatically lead to a referendum, and the cantons would not stand for any interference by central government. The time had come for Europe to move towards federalism, even though Switzerland was not yet a member of the European Union. Why, if the financial crisis had been caused by the actions of 50 individuals, should not those people bear the cost of the crisis rather than the population of Europe as a whole?

THE PRESIDENT (Translation) – Thank you, Mr Voruz. I call Ms Fiala, who will speak on behalf of the Alliance of Liberals and Democrats for Europe.

Ms FIALA (Switzerland) said that she had listened closely to the statement made by Mr Bockel. The Council of Europe liked to style itself as the parliamentary conscience of the OECD, but this debate had only been given one and a half hours of time, which was unsatisfactory. This was especially the case since many of the social and institutional problems were interrelated. There was a connection between economic difficulties and the rise of the political right, and she was sorry that this had not been made clearer. There was a contrast to be drawn between the example of Finland, where education was of a very high standard but youth unemployment remained high, and Austria, Germany and Switzerland which were successfully reducing unemployment among the young. This was being achieved by reducing regulation and cutting red tape. Greater use should be made of part-time working for people aged 55 or older. The OECD did not want the Assembly to just be a talking shop and the Assembly should pay heed to this.

THE PRESIDENT (Translation) – Thank you, Ms Fiala. I call Mr Liddell-Grainger, who will speak on behalf of the European Democrat Group.

Mr LIDDELL-GRAINGER (United Kingdom) – I am glad that the voice of reason has arrived in this Chamber, in the shape of the Secretary-General. The overall goal of the Organisation for Economic Co-operation and Development is vital: to help governments to implement far-reaching reforms in order to promote equality and ensure the strong, established economies that we all need. Surely, for all of us, structural reform is the key rebalancing economic demand that must be met if we are to make sure that the deficits in our economies are turned into surpluses in years to come.

The Secretary-General made the point that we need to create 14 million more jobs just to get back to where we were. One of OECD’s key strengths that we all often overlook is its breadth of experience, which allows it to carry out its cost-cutting analysis, to make recommendations to governments across Europe and the world, and to have international access to policy areas. Every government across the world should draw on OECD’s statistical analysis in developing policies for economic regeneration. OECD should and must have a strong role to play in the external debate. In recent years, it has had an increasing role to play in the G20, and thank the Lord for that. That is very positive and must continue. It is important that maximum support is given to the institution so that it can bring together the review of perspectives, and further policy and development across all areas.

I am delighted with OECD’s “New Approaches to Economic Challenges”, which highlights the need to ensure that in this difficult economic climate, governments, policies and policy makers have access to the best advice and know the options that are available to them. Mr Braun asked, “What can politicians do?” They can start listening to the people who know, and put their prejudices aside. If NAEC is to be as useful as possible to policy makers, it is important that deliverables are concrete and operationally possible.

Given the weak state of the public finances in all our countries, in many advanced deficit economies, public policy advice should reflect the broad range of factors that influence good governance. It would therefore be right to include a consideration of social, environmental and fiscal issues when determining whether a policy or reform is economically appropriate. That is where OECD comes in. I am absolutely delighted that the Russian Federation has become part of OECD, and that the key partners – India, China, Brazil, Indonesia, and South Africa – are here. This is a world crisis that affects not just the President of France, but all of us. Unless we start to listen to bodies such as OECD, we will let ourselves and our nations down.

THE PRESIDENT (Translation) – Thank you, Mr Liddell-Grainger. Would Mr Bockel like to respond at this stage? No. In that case, Mr Gurría, you have the floor.

Mr GURRÍA – Thank you, Mr President. First, I shall briefly respond to Mr Elzinga, whose first question was about austerity versus recovery. This is the big issue; it is the big balancing act that needs to be achieved, and this is the big secret. There is no one-size-fits-all answer. Some countries ran out of time and the markets ran out of patience. They started to hit these countries very hard because it was perceived that they did not have the right policies or perhaps that they did not have the required political will. Let me discuss the example of the United Kingdom. It put in place a strong programme – it seems like a long time ago now. It was a credible programme and the markets bought it because it contained enough detail, there was enough determination behind it and because it was thought that there were the political conditions to take it through. Lately, the same thing has happened in more and more countries. They have now joined the fray, but I gave the example of the UK because at the beginning it was said, “It is not possible. This cannot be done. It is too tough. It is not going to be credible.” However, it has now proven to be credible and we are starting to see some of the results.

The great problem that I have is that those countries that took the difficult decisions, for example, Spain and Italy, which have a systemic importance, are not being supported by the institutions that we created here in Europe. They were put in place to support the countries and the people; we, the people, were not meant to support the institutions. So we are getting things wrong in terms of the causality.

Mr Elzinga’s second question was about our analysis versus our advice. This shows precisely why we are taking these new approaches to economic challenges. You were the one who challenged us by saying, “Don’t you think that you give better advice to countries?” This is what we are doing now and we are going to have the first meeting on the 24th. We have invited thinkers from all over the world. Members, experts and all our committees are joining together to see how we can update our analysis so that we can produce better advice. You rightly say that our advice seems to lag behind cutting-edge thought, but that will always be the case. We have to be sure that any advice we give to a country really is the best practice and that we are not being a little adventurous. We have a lot of responsibility vis-à-vis our members.

Lastly, Mr Elzinga raised the competitiveness issue and I must disagree with him on this. Countries are not companies, but if countries lose competitiveness they lose their market share, they lose jobs, they lose exports, they lose welfare and they lose taxes. The competitiveness problem basically has to do with productivity, unit labour costs and so on. Let me describe the graphs for you because this is important. The unit labour costs for Greece, Italy, Ireland and even for France are steadily increasing, whereas those for Germany have remained low. The difference is large and when these countries have a single currency, that is reflected in competitiveness and productivity.

What is happening today? The Germans are now catching up and are now talking about wage increases that are higher than inflation and so on. However, because they created the space the others have to adjust, because in a monetary union they have lost competitiveness in relative terms within the European Union. So this is about not only labour costs, but the way investment, innovation and technology are dealt with. Competitiveness is like motherhood and apple pie; it is a broad concept. Multi-factor productivity – labour productivity – is a crucial issue, on which countries have to do their best.

I thank Mr Schneider for his comments and support on our green growth strategy. Our emphasis here is on green growth. Some people say it should be on green growth. They ask us to put the emphasis on growth because “growth” is politically correct whereas “green” is perhaps less so in the current circumstances. We do not think that that is the case. We think that the two things go very well together; they are very important and go hand in hand. We think that we should absolutely base our growth strategy on being green, because we have an intergenerational responsibility in that regard. Today, we are on a collision course with nature and we are not going to meet the target on having only 2°C of warming if we continue on the current course. We have to change course and reduce our emissions, but we are not doing a great job. We are talking too much but not doing enough about it.

The issue of costing is important. The price question that Mr Schneider mentioned is crucial. We know who the enemy is. It is the carbon emissions and we have to put a price on those. Some people say, “Green jobs? Give me black jobs, check jobs, striped jobs, yellow jobs. Give me any kind of jobs as long as they’re jobs.” I say no to that. That may be expedient but if we fall into that trap, we will have a very bad outcome in a generation’s time. So this is about how we deal with environmental issues; it is about water and biodiversity, rather than just about climate change. As has been said, it is about the natural capital that we have. So I say, “Pense en vert.” I think Mr Schneider said it very well.

Mr Voruz brought us back again to the issue of how much austerity there should be. I agree that there can be too much austerity. The Greeks are now saying that they need more time, and we should give them more time. The problem is that they are also saying that they may need more money, but there does not seem to be a lot of money around to support them. We have to be consistent. I do not think that anybody is going to leave the euro, and nor should they. The euro should have a long life, and I think that more countries are going to join it. Your country, Mr Voruz, has already linked itself to the euro, although it has not adopted the currency. When a country does its homework, it needs to be supported. Greece has a new government and its adoption of the austerity measures means that it should receive the necessary support.

On the question of referenda, how decisions are taken democratically and publicly changes from country to country. Referenda are common and popular, and in Greece a relatively low threshold is required to trigger a referendum. In other countries, it is an instrument that is not used so widely because of the peculiar issues of democracy in Switzerland, with the cantons and the way they work. In others, people should participate more generally in the decisions about economic strategy, social strategy and environmental strategy, whether through referenda or through parliament.

Fifty people did not provoke the crisis. I am afraid that is too simple. There were hundreds and thousands. Millions bought houses. Taxi drivers thought that they could have two or three apartments, because they were told it was possible. They were offered mortgages of 110% of the value, without a down payment, and it did not matter because, they were told, the house would be worth more every day. We need massive financial education and massive consumer protection as part of the public policies of our countries in order to avoid falling into such traps again. Unfortunately, it was not just 50 people, but many, many more. It is not about pointing fingers or hanging anyone: it is about ensuring that it does not happen again, and that will mean a lot of hard work.

Ms Fiala, you say that the Council of Europe is the parliamentary conscience of the OECD. I appreciate that concept and I would like to think so. I also think that one and a half hours is too short. Poverty, unemployment and inequality are happening. Inequality is rising. Unemployment is rising and becoming structural and long-term. It is hitting the young two or three times harder than other groups, and it is a very important challenge. The paradox in Greece is good education, bad jobs – but that is not only happening in Greece. It is a problem all over the OECD and in many more countries in the world. That is why education should lead to the skills we need, not just to obtaining a diploma. In Tunis, for example, the greatest problem is that we were successful in increasing the number of people with diplomas from universities, but they are all without a job today. It is a question of coherence between education policy and the needs of growth and investment. The OECD is described as a think tank, but we like to describe ourselves as a “do tank”. In that regard, we welcome the parliamentary conscience of the Council of Europe.

Mr Liddell-Grainger, I invite you to come to the OECD and repeat to our members what you just said about our role. We are taking a hard look at the way we have been doing things and how we will do things in the future, precisely because we think we can do better. We also think that conventional wisdom no longer applies. We have to take a hard look at ourselves. I like to say that we need to look at ourselves in the mirror naked – we probably will not like what we see very much, but that is how we will see what we want to change. That applies to our institution, notwithstanding its 51 years of policy advice to our members. We owe it to our members. I am grateful for everybody’s reassuring words.

(Ms Woldseth, Vice-President of the Assembly, took the Chair in place of Mr Mignon.)

THE PRESIDENT – The next speaker on the list is Mr Tilson, Observer from Canada.

Mr TILSON (Canada) – I begin by thanking you for this opportunity to participate in the debate on the activities of the OECD. The Canadian delegation attaches great importance to this debate, as it gives non-European OECD members an opportunity to examine the activities of the OECD and its role in addressing the key issues facing us today. I thank the rapporteur for incorporating many of the suggestions made by the Canadian delegation.

I will focus my remarks today on Canada’s response to the global recession and its position on a global financial transaction tax. As has been noted by the OECD, Canada’s economy withstood the global economic recession due to a timely macroeconomic policy response and a solid banking sector. From 2009 to 2011, the government of Canada’s economic action plan provided over $60 billion in support of measures aimed at stimulating the economy. As a result, Canada has more than recovered all of the output and all of the jobs lost during the recession, and real GDP is now also well above pre-recession levels.

According to the Canadian Department of Finance, almost 770 000 net new full-time jobs have been created in Canada since July 2009, the strongest job growth among G7 countries over the recovery period. In Canada, the unemployment rate has dropped 1.4 percentage points lower than at the peak of the recession in August 2009. According to the OECD, employment rates among Canadian youth now stand 4 percentage points higher than in 2008. By international comparison, Canadian youth are faring well in terms of employment, which has been attributed at least in part to Canada’s relatively rapid recovery.

As the worst of the recession begins to pass, government policy is now shifting towards returning to budgetary balance. The OECD expects that Canada will have one of the fastest growing G7 economies from 2012 to 2013. However, the sovereign debt crisis in Europe continues to pose a risk to global economic recovery, and the Canadian economy is no exception.

I shall now outline Canada’s position on the introduction of a financial transaction tax. The government of Canada has maintained its opposition to the introduction of a financial transaction tax for several reasons. First, such a tax could disadvantage the Canadian financial sector and the jobs it provides, and could eventually lead to distortions in global markets. We also have concerns over the administrative complexities and inefficiencies involved in such an initiative. Moreover, without universal participation, some jurisdictions could reap large benefits from non-co-operation. Canada’s position is in line with that of the United States, the United Kingdom, Australia, Turkey, Mexico and China.

Last year marked the OECD’s 50th anniversary. Our debate today illustrates the continued importance of this organisation as it provides us with guidance and advice in meeting the challenges of today, while preparing us at the same time for those to come.

THE PRESIDENT – Thank you, Mr Tilson. Mr Omtzigt is not here, so I call Mr Dişli.

Mr DİŞLİ (Turkey) – I, too, thank Mr Bockel for his extensive report, which provides us with in-depth information on the activities of the OECD in 2011-12. As we all know, the global economy remains in a difficult phase and downside risks are still significant. Growth is slowing in both advanced and emerging economies. In the advanced economies, debt problems, financial systems stress and deleveraging pressures increase the tensions in the euro area.

As mentioned by the rapporteur, one of the most important results of the current economic crisis is the sharp rise in unemployment. In addition, austerity measures adopted by governments, based on further budgetary cuts in social expenditure such as pensions or health services or on a decrease in the number of public employees or on tax increases on consumption, have great potential to affect those members of society who are most vulnerable to its consequences, especially the young, the old, the disabled and lower-income earners.

Of course, the problem is that if people do not see the light at the end of the tunnel, they will not participate. We should understand the psychology of these people. Politics and economics are important, but so too is psychology.

With its immense capacity for objective analysis, the OECD is one of the most respected institutions of the global economic system. Turkey believes that the OECD has many comparative advantages over other international economic institutions. In this context we find meaningful the OECD’s “new approaches to economic challenges” initiative, which should analyse the root causes of the crisis and draw lessons from it, and we support the initiative. We welcome the OECD’s dialogue efforts with a view to promoting global economic growth, and not only with member states, but with non-member states that hold prominent positions in the world economy. We also welcome the OECD’s strategy on development, which sets the basis for the OECD to define a common agenda for global development.

Finally, as we are benefiting from the presence of the OECD Secretary-General today, I ask him to inform us of the organisation’s plans for further developing its relations with emerging economies and key partners. Thank you.

THE PRESIDENT – Thank you, Mr Dişli. The next speaker is Ms Ohkawara, from Japan.

Ms OHKAWARA (Japan) applauded the work of the committee.

On 12 September the German Constitutional Court had ruled that the European Stability Mechanism was constitutional. It was to be hoped that the ESM would be established in October. The stability of financial systems was very important, both for Europe and for Japan. It was essential that all countries underwent drastic fiscal reconstruction. The ESM would provide support in the short term, but countries also needed to improve their competitiveness.

Japan was analysing the cause of the European crisis in order to learn from it and to help prevent it from recurring. The crisis in Japan in the late 1990s and the crisis caused by the collapse of Lehman Brothers were not due to the same causes, but lessons learned from all crises could be applied in the future. It was also important to develop appropriate social systems in order to allow people to lead humane lives and states needed to make further efforts to fulfil their obligations.

THE PRESIDENT – Thank you, Ms Ohkawara. The next speaker is Mr Geraint Davies.

Mr G. DAVIES (United Kingdom) – Colleagues, Mr Gurría, the Council of Europe’s main demand to the OECD should be that it evaluates and influences the changes to democracy, human rights and the rule of law arising from the forces shaping our global economy and our shared environment. For example, in Greece the policies of economic austerity in the aftermath of the 2008 financial tsunami are fuelling a growth in fascism and communism in response to the failure of democracy to stop poverty sweeping across the county. Democracy, the rule of law and the human right to economic survival are all at risk. Natural utilities are being privatised, the Greek Government spends disproportionately on defence and Europe sells it arms. Instead, we should guarantee Greece support against any perceived threat from Turkey, reduce the interest rate on its loans, extend its repayment times and build its productive capacity to safeguard its economy and our values of democracy, human rights and the rule of law.

We need growth, not just austerity, to defend our values. In the UK, the new coalition government destroyed consumer confidence in 2010 by announcing 500 000 job cuts, so fragile growth became zero growth and the deficit grew to £156 billion, rather than falling. In the United States, a rejection of Obama and the adoption of austerity would hit the global economy and threaten our values. The correct balance between growth and saving is necessary, but it is not sufficient to defend our values.

Globally, the challenges include population growth – from 6.5 billion to 9 billion people by 2050 – global warming, reducing land space, with Bangladesh and elsewhere underwater, shortages of fresh water supplies, changing habitats and shifting agricultural capabilities. That all means growing needs, shifting populations and changing supply capabilities. If we add to that commodity prices being pushed up by growing demand and restricted supply, often restricted by commodity speculators, and resources concentrated in the hands of a few countries, we have a dangerous cocktail that threatens democracy, human rights and the rule of law. The OECD needs to predict and influence these changes.

Meanwhile, the growth in the economic power of China, India and South America, which have a growing share of population, graduates and resources, comes alongside strategic investment in global resources and productive assets by countries with trade or oil surpluses. Therefore, the OECD must raise its game, be inclusive and factor in our values of democracy, human rights and the rule of law in its assessment, in the knowledge that these values, more than anything else, will be instrumental in determining whether the world becomes a poorer, less sustainable and dangerous place or a better place for all our children to share.

THE PRESIDENT – Thank you, Mr Davies. The next speaker is Ms Fataliyeva from Azerbaijan, but she is not present. I call Mr Yoo, from the Republic of Korea.

Mr YOO (Republic of Korea) – It is a great pleasure to participate in this part-session of the Parliamentary Assembly of the Council of Europe. Indeed, it is our first time taking part with a voting right. The Korean delegation would first like to praise the hard efforts of those committee members who prepared the two reports adopted today; they were well balanced and well organised, so we offer the members our compliments.

In these days of economic crisis, the role of the Council of Europe is even more important, because only through international co-operation will we overcome the worldwide economic crisis. The role of the OECD is also important. One example of this co-operation is on the financial transactions tax. As our colleague from Canada, Mr Tilson, appropriately pointed out, without international co-operation such a measure could lead to a very harmful result. That tells us how important international co-operation is.

Korea, as a member of the OECD and the G20, is actively participating in international efforts to overcome the economic crisis. I believe that we have done our best so far. One instance is the hosting of the G20. We have also increased our effort in co-operating with many countries. We are also assuming a leading role in green growth. At the same time, I believe that we are doing our homework domestically by continuing structural reform. That is important not just for us, but throughout the world, as one country’s action affects another.

We will continue our efforts. International co-operation might not be the only way out, but I believe that it is a major way out.

THE PRESIDENT – Thank you. I call Ms Anttila.

Ms ANTTILA (Finland) – I congratulate the rapporteurs on their interesting and excellent report. Reports on the OECD make it possible for us to debate the enormous challenges we face all over the world. Many countries are confronted with high unemployment, growing inequality, high budget deficits and high public debt and at the same time, we all face climate change and greater shortages of food, clean water and energy.

The report describes very well the main reasons for the economic crises. Low interest rates and easy access to credit led households, private companies, the banking sector and governments to become over-indebted, whereas the lack of regulation in the financial markets meant that banks neglected to manage their risks and became over-extended over the past 20 years. Now, the eurozone must try to find a common solution to resolve the problems of over-indebted banks and states.

Our main target should be for every country to take full responsibility for its own state debts. Owners of the over-indebted banks, as well as their home states, must take the same responsibility. It is not fair for countries that have taken into account the common EU budget rules, and which therefore have better economic situations, to be required to take on more of the common responsibility.

The main question is how to find new sources of growth and implement measures to strengthen competitiveness. I fully agree with Secretary-General Gurría about the importance of competitiveness, as the competitiveness of a country is key to its markets and trade. The report recommends innovation, green growth and knowledge based on assets and skills to put OECD economies back on a strong, inclusive growth path. We need business confidence in the markets and many new jobs – particularly for young people, as there is a high youth unemployment rate.

Dealing with the economic crises will take a long time. In Finland, we had a deep economic recession at the beginning of the 1990s and our main tools for resolving it involved increasing exports, cutting the state budget and increasing innovation, building new enterprises and creating new jobs.

THE PRESIDENT – Thank you. I call Mr Ivanovski.

Mr IVANOVSKI (“The former Yugoslav Republic of Macedonia”) – I support the report of the rapporteurs and the eloquent, economically and politically precise statement made by the Secretary-General of the OECD, on which I congratulate him.

The debate is one of several in the Parliamentary Assembly that mean that the Council of Europe is on track in turning all its attention to the ongoing financial and economic crisis and its possible solutions. It is good that we should continue to work more closely with the OECD. As the debate is ongoing, I think that we should continue to refer further to other aspects of the crisis. In that context, I stress the importance of the OECD’s bearing in mind that other political or economical institutions, such as the International Monetary Fund, the European Commission, the World Bank and the European Central Bank, are focusing mainly on financial stability measures, austerity measures, debt and the value of currencies. The OECD should concentrate on concrete corrective mechanisms to offer solutions to the crisis and suggest how they can be implemented.

The OECD should be the driving factor in real on-time and long-term reforms. Early warning systems and crisis management should be used not just to cope, but to detect and prevent crises. In some European countries, the crisis should have been prevented. As my colleague from the UK, Geraint Davies, mentioned, when Greece was spending billions on weapons, everybody was allowing them to take that money to pay for the weapons, which, in my opinion, they did not need. That is the dilemma. If austerity measures are the only priority of the international institutions, what will be the anti-cycle policies? How will the austerity measures answer the problems with the recovery, and what about growth?

I support the fact that the OECD is striving to restructure the economy through its initiatives. We should implement new official financial indicators alongside GDP growth and credit ratings, which should not be the only main indicators for global and national crisis policies. Employment, social cohesion and employment structures, particularly for the young, should also be indicators of a solution to the crisis.

I want to ask the Secretary-General for his opinion on what policies should be adopted by countries outside the OECD zone. They suffered not only domestic crises, but influenced crises on our side. The economic measures he proposes would take effect over the four-year political term of any government, so does he think that the politicians – after all, it is all about the policies – would allow long-term reforms? Even if the crisis was not happening, we would still face the same dilemma.

THE PRESIDENT – Thank you. The next speaker on the list is Mr Recondo from Chile. He does not want to speak, so I will call Mr Gurría to respond to the debate so far.

Mr GURRÍA – Mr Tilson, I want publicly to congratulate Canada on its performance, which, I would like to think, can be explained – or at least partially explained – by Canada’s abiding by the advice of the OECD. It has done an outstanding job. On the question of fiscal competitiveness, they have kept wages moderate, which has produced rewards. This is no time for complacency, however. You get a pat on the back and then you must move on as the effort is permanent. I am from Mexico and we have a common neighbour between us – a complicated neighbour that feels the need to be competitive with the whole world, so we need to keep on our toes.

Let me briefly mention the so-called financial transactions tax. Some people want it to pay for past losses and others want it to pay for future losses. Some want it to pay for the establishment of a guarantee system and others want to have 27 different funds at a national level. If it is not applied universally, there will be no level playing field. Taxation has a role to play. From our point of view, for example, the taxation of over-the-counter derivatives transactions might be better because we want them to be registered rather than kept outside the realm, but that is more of a regulatory concern than a matter of raising taxation. We can understand why mention is made not only of Canada and Korea but of every emerging economy in the G20 countries, and many others. This has been a very European issue, and mostly it is related to revenue and the banking crisis rather than necessarily to the fact that this may be the best way to go.

Mr Dişli, thank you for your comments. Remember, we said, “Go structural”, but we also said, “Go social.” Some 14 million people need to be employed just to get back to where we were, and millions of jobs need to be created every year. However, there is the separate problem of the long-term unemployed – people who are unemployed for six months, one year or even two. When someone has been disconnected from the labour market for more than one year, there is stigma attached to that and it becomes more difficult to get a job. When an employer is looking at a candidate and says, “You have not been working for more than one year?”, they choose the next man or woman because they are more connected to the labour market. That is a big problem which is expensive for treasuries and dangerous for the dignity and the future of the people who are being disconnected from the labour market. So, go social in order to have effective policies for jobs, vocational training, taxes that can support the creating of net new jobs and so on – all these are justified under the present circumstances, even with tight budgets.

I shall answer a general question. The seeds of future growth can be preserved within tight budgets. Even with a tight budget, you can protect the most vulnerable. It is not true that because we have tight budgets and we are trying to bring down deficits and debts that we have to pull the rug out from under the most vulnerable – that should not be the case.

You ask how we are dealing with emerging economies and key partners. We are now generating our economic outlooks for Latin America, south-east Asia and Africa. We are negotiating with Russia over accession. We are dealing with Brazil, China, India, South Africa and Indonesia. Colombia has just asked to join the OECD, as have Costa Rica and Latvia, and we understand that some other countries are considering that possibility as well. The OECD is a forum where people can join members to talk, discuss and negotiate. Whether or not you are a formal member is becoming less and less important, when you add up the experience of everyone involved.

Ms Ohkawara, the progress that is happening in Europe is important. The fiscal union that has been signed is unprecedented; it will mean a dramatic change and it will take some time. The inevitable banking union – it is going to happen; even if some countries today think that it is going too fast, the discussions between the leaders are about when, not whether – is absolutely indispensable. The problem is that when we created the single currency, we skipped a couple of stages – the creation of a banking union with a single regulator and a single supervisory system – and we skipped the question of fiscal union. So we have had some bad surprises, but have we had too many of them? No. The problems in Greece were mainly on the budget side because basically it was not transparent; it said that it had a deficit of 4% or 5% when in fact it was 15%, so really this was a rounding question. The main question is about structural issues and how to ensure that this does not happen again, and I think that fiscal union will take care of that. The only problem today is that we are not activating the instruments that we have created in order to solve the problem.

Mr Davies, I agree that this is about values, the future of 9 billion people, food and energy sufficiency and speculation, but it is also about human rights and the rule of law. To your question about whether the world is going to be a more dangerous place or a better one, I say that we are trying hard to make it a better place in future.

Mr Yoo, Korea has been exemplary again, with a great performance, green growth and green jobs. The challenge for Korea today is social cohesion. We have made reports and delivered them to its parliament and ministers. There is some homework to be done, and you are aware of that and addressing it.

Ms Anttila, thank you reminding us that competitiveness is crucial, but of course innovation and green growth and knowledge-based assets will also build confidence. As I have said, when we talk about “structural” everybody says, “That’s going to take three or four years”. That relates to Mr Ivanovski’s question: are politicians going to wait? If they do not see immediate short-term results, are they willing to pay the political price for short-term measures that can sometimes be difficult and then wait until the results come? Our opinion is that leaders today who are not willing to go in that direction will pay a more immediate price; people will see that there is no action, leadership or decision making and say, “We are not being led in the right direction.” Today there are two dangers: the first is taking the right decision, but the greater danger is not taking the right decision because that is expedient. Those who take the latter path will pay a high price.

THE PRESIDENT – Thank you, Mr Gurría. I call Mr Sasi.

Mr SASI (Finland) – It is a pity that we have not been able to solve the economic crisis in the euro area. I ask whether it would have been more sensible to use the IMF from the beginning and whether it would have been better if the Commission had not been involved with the crisis at all. In fact, the euro rules were good: the rules for public debt were excellent but they were not followed, and the no-bailouts rule for all euro countries was good but it is not clear today whether it has been followed. The problem is that there is a commitment to help other countries, but no one knows how strong that commitment is. The fact is that we in Europe have conducted the wrong policies for a long time. Some countries have become too indebted and corrections must be made in those countries.

It has been mentioned that interest rates are not fair. I think that interest rates are always right, because they show the condition of a country very precisely. The problem within the euro is that when interest rates in Italy and Germany were very close, that gave politicians the false perception that both countries were safe. Now that interest rates are at the right level, they reflect the economic conditions of those countries, so we should respect them. They do not take into account the work done in those countries, as I have tried to explain, and they still have a lot of work to do to regain confidence.

Let me tell you about the case of Finland. Finland had a very deep crisis between 1991 and 1994. Before then, unemployment was at 5% to 6%; it rose to 18%. One of the reasons for that was that Russian trade vanished overnight when the Soviet Union collapsed. We then made very deep cuts in our expenditure and had, from 1995, for more than 10 years, growth of more than 5%. Look at the cases of Latvia and Iceland: they both made deep cuts. The only thing to do is at once to take austerity measures that are strong enough, so that markets trust in you. Some countries take some measures, find that markets have no confidence in them, and then take more measures. They end up having to do much more. I say: do it once, and make it clear to the markets that you are serious. When that is done, there will be no more crises in Europe.

I understand that internal devaluation is quite difficult; one can devalue internally by 10% or even 20%, but what if the need is 40%, and you cannot do anything other than devalue? If you are in a common currency, you have to leave that currency and take up your own, and then devalue; that is the way out of the problem. Then you can put your economy back into shape.

As long as every country has a national budget, so that there can be no real fiscal union, and there is a banking union and the banks are capitalised, there are no problems. Well, I do not have great trust in the agreements of banking unions.

THE PRESIDENT – Thank you, Mr Sasi. I now call Mr Jáuregui.

Mr JÁUREGUI (Spain) said that Mr Gurría had spoken of a breach of confidence between northern and southern European countries, and he wondered whether the OECD would be in favour of an extension of the timeframe for economic recovery. He was concerned that a whole generation of young people in many countries were becoming a lost generation due to widespread unemployment and asked what proposals the OECD was making to address this issue. The problem was that young people could not access jobs in other countries, and while there was a general reduction in inequality between countries, there was an increase in inequality within countries. The clearest example of this was the increase in the gap between the highest and lowest paid. Certain fiscal steps should now be taken, including the introduction of a tax on financial transactions and greater punishments for tax evasion and fraud. Furthermore, the time had come for the harmonisation of taxation across Europe.

THE PRESIDENT – Thank you, Mr Jáuregui. I call Ms Gastélum Bajo.

Ms GASTÉLUM BAJO (Mexico) congratulated the rapporteur on behalf of the Mexican delegation. What was needed was more political vision to tackle the economic difficulties at hand. The problems faced by some countries were undoubtedly severe but closer co-operation between international institutions could provide part of a solution. She asked Mr Gurría for his advice on what steps politicians could take to reach such a solution sooner.

THE PRESIDENT – Thank you, Ms Gastélum Bajo. I call Mr Beneyto.

Mr BENEYTO (Spain) welcomed the presence of Mr Gurría at this part-session of the Assembly. He had three points to make, on which he would welcome Mr Gurría’s comments. The first was that some countries were making good progress in tackling the deficit and achieving a measure of structural reform. He wanted to know what steps international organisations were taking to support their efforts. His second area of interest were the ratings agencies, which were not subject to any external control. He understood that many of the analysts at such organisations were quite young and lacked some of the wider knowledge and experience which would enable them to make better judgments. Finally, he suggested that any tax on financial transactions should be levied on derivative transactions, as this would be a more appropriate tax on speculation and risk.

THE PRESIDENT – Thank you, Mr Beneyto. I now call Mr Dzurinda.

Mr DZURINDA (Slovak Republic) – First, I should like to say that I appreciate the numerous activities of OECD, which have always been useful to our countries, especially in these times of crisis. I appreciate the statement and interventions from the Secretary-General. I must also thank the rapporteur, Jean-Marie Bockel, for a great draft resolution.

I am sure that we all realise that the current difficulties have led not only to depressed conditions for many people in our countries, but to many expressions of social unrest and even violence. We therefore face two main challenges today. The first is to find a way out of our difficulties. The second is to identify honestly the reasons for the present situation. The activities of OECD and the draft resolution mainly relate to the first difficulty – the need to find a way out. We see that in paragraphs 4 and 5 of the draft resolution. Yes, we need serious austerity measures, but we also need profound structural reform, which can serve as an impulse to, or a new accelerator of, economic growth. Speaking from experience, I can give witness that active labour market policies and taxation reforms aimed at reducing levies on labour and making a shift towards conservation or environmental protection can have relatively speedy effects on employment, and can help to support investment, as it says in the draft resolution.

I also agree with the need to go institutional – and not only within the EU. We are adopting new rules, and that is good, but it is not enough. We have to agree together, having maybe first decided individually, to stick to the rules – all of us, not only the small and new nations, but the bigger and older ones. We must be equal in rights and also in duties, and we all have to act responsibly.

That brings me to my second point, which is about what is missing from the draft resolution – mention of excellent and responsible behaviour in politics, and a challenge to fight populism, whether it comes from the left or the right. Our parliaments are filling with populists, and that is dangerous. We should repeat time and again, especially on political grounds, that it was moral hazard on the part of all of us – politicians and voters – that got us into our current difficulties. Thank you.

THE PRESIDENT – Thank you, Mr Dzurinda. The next speaker is Ms Bateman.

Ms BATEMAN (Observer from Canada) – I welcome the opportunity to participate in this important debate on the activities of OECD. As the report notes, the Canadian delegation does not support a financial transactions tax, and I echo the comments made by my colleague, David Tilson. As our Prime Minister, Stephen Harper, has highlighted on a number of occasions, the Canadian Government believes in lower taxes and so does not support the introduction of an additional tax on financial transactions. I say, with all due respect to Mr Gurría, that the Canadian Government views a financial transactions tax on over-the-counter derivatives to be particularly problematic. Our government supports and is actively participating in the work on regulatory reforms in respect of such derivatives, which have been agreed to by the leaders of the G20 countries. Given the advanced state of these reforms in G20 countries, we believe that it would be inappropriate to introduce this tax at this time – it could even be counterproductive to the G20’s current regulatory efforts.

To achieve long-term prosperity, we need to create jobs and true economic growth. We do not need to impose job-killing incremental tax structures on an economy that can make a difference. That is the Canadian Government’s position. As David Tilson said, the creation since 2009 of 770 000 net new jobs, 90% of which are full-time, value-added positions, shows that Canada’s approach is achieving positive results. We are not complacent and we remain keenly focused on achieving long-term prosperity. We do not want to mortgage the futures of our children, so we are working hard to get back into balance.

I thank the rapporteur for exploring this topic, and we very much welcome the OECD’s contributions to this important discussion.

THE PRESIDENT – Thank you, Ms Bateman. I now call Ms Clune.

Ms CLUNE (Ireland) – The work the OECD is doing in supporting governments is very welcome. The experience that the organisation has on a global scale, along with the breadth of its knowledge and research, needs to be used by governments to tackle the difficult challenges they face. As members know, Ireland is on a programme that is being supervised by what is known locally as the troika – the International Monetary Fund, the European Central Bank and the European Commission. Ireland is considered to be good at meeting its targets – we are doing that – but our country faces a lot of challenges and many people in my country are experiencing difficult circumstances.

This is an important time, as we need to introduce the important structural reforms that will be required. Ireland has gone through a history of an expansion of public services, which was based on income from developments and the property sector which was unsustainable. We now find that we just cannot afford our public services and we have had to introduce difficult measures. We face a difficult budget this December, as we will have to cut parts of our public services and introduce additional taxation, which is never easy. On a positive note, the government is talking about introducing a property tax – that is something we have never had. So we are introducing the kind of structural changes needed to expand our tax base, and that is welcome.

I thoroughly agree with the comments that have been made about youth unemployment, as my country faces a stark and worrying situation. We should concentrate on that issue in this Assembly, as should my government and OECD. Youth unemployment is a tragedy and we have a lost generation. We are losing young people to emigration; we are losing young people in their twenties. These are people who have energy and enthusiasm for work, particularly as many of them will be free from family commitments. That is a loss to our society, and we also need to deal with the long-term implications of the stigma attached to unemployment. A difficult situation is being created and that fact needs to be to the fore.

I strongly agree with Mr Gurría’s comments about the need to marry up educational establishments with industry. Time and again, we are finding that education is not responding to meet the needs of industry, be it in terms of IT skills, languages or the green sector that he mentioned. That message needs to be repeated and repeated, as we must bridge this gap. I am a member of our jobs committee and private sector people are constantly saying to us that they cannot get the skills that are needed among the unemployed. That area needs to be highlighted again and again.

THE PRESIDENT – Thank you, Ms Clune. The next speaker is Mr Flanagan.

Mr FLANAGAN (Ireland) – Like previous speakers, I congratulate the rapporteur on this report on OECD’s work in the past year and I support it. As we know, the world economy has suffered greatly because of the global recession and the worst economic contraction since 1929. Growth forecasts are modest to negative in a lot of European and OECD countries. Growth targets have even been lowered for the super-power that is China. The sovereign debt crisis has slowed down and stopped the flow of credit, which is the life blood of real business. Businesses are suffering because they are cash-starved – some are going out of business – and the unemployment level is rising.

Ireland is very much open for business. Our small, open economy in western Europe has suffered greatly economically in the recent past because of our previous reliance on the construction industry and the property market, which crashed spectacularly. As my colleague said, Ireland’s unemployment level is close to 15% – that is very high – with our youth unemployment level at 25%. Deep austerity cuts mean that our budget deficit will be reduced to 8.6% of GDP this year – our target is 3% of GDP by 2015. That target was set by the troika of the European Central Bank, the EU and the International Monetary Fund. The new government, which has been in power for 16 months, faces major challenges in helping to broaden the tax base and restore Ireland’s reputation. I am glad to report that it has improved in recent times with Ireland’s return to the international bond markets to fund day-to-day expenses, which is very much welcomed.

In Ireland, there are many courses, schemes and supports available to help those who found themselves unemployed, especially the youth. There has been a reskilling of former construction workers so that Ireland will be in a position to take full advantage of the upswing in the world economy, which will no doubt happen in the years ahead. However, emigration is a real issue in Ireland, with many young people leaving, in particular to go to Canada, the USA and the UK.

As stated in the rapporteur’s report, low interest rates and the lack of regulation of financial markets helped to create the bubble and the financial crisis in many countries, but especially in Ireland. As the Secretary-General stated, cheap credit provided an opportunity for the likes of taxi drivers, public servants and other workers to become speculators and purchase multiple properties. Now they are unable to make the repayments and face huge negative equity.

In conclusion, I welcome the report and congratulate the OECD on all the hard work it does to help OECD countries recover from this current economic crisis.

THE PRESIDENT – Thank you, Mr Flanagan. As Greece has been mentioned several times, it is only fair that a representative from the Greek Parliament has a chance to speak on this report, even though his name is not on the speakers’ list. I call Mr Markopoulos.

Mr MARKOPOULOS (Greece) thanked the President for the opportunity to speak. The Secretary-General of the OECD had been both generous and politically astute to describe Greece as a significant state buffeted by the storms of the economic and financial crisis, and the OECD was to be thanked for its analysis of the crisis. The Greek people were experiencing their fifth year of recession. GDP had fallen by 25% because of the plan that had been implemented to get the country out of the crisis. This extended recession had had significant consequences: over three years, unemployment had doubled. This problem was especially serious for the under-25s, among whom unemployment had now reached 50%. Young people were leaving Greece in droves to go to Europe, Australia and the USA, among other destinations. There was a “brain drain” of highly talented and educated young people who were voting with their feet.

This plan, which had been agreed with the European Union, the IMF and the European Central Bank, was also having an enormous impact on the property market. Real estate was losing value. There were very limited opportunities for companies to expand because of the big black question mark hanging over Greece’s membership of the eurozone. The majority of the population in Greece wished to remain in the eurozone, but as Mr Gurría had said, the country needed time. Greece also needed support in order to stabilise its membership of the eurozone, which would give confidence to businesses. Support was needed for the financial sector and for the real economy in order for growth to happen. Within Greece there were voices calling for reparations for damage suffered by the country during the Second World War.

THE PRESIDENT – Thank you. That concludes the list of speakers.

I invite Mr Gurría to make final comments on the debate.

Mr GURRÍA – Mr Sasi, let me just say that I do not agree that only the IMF should have been called in. In fact, I do not think that you needed the IMF: you could have done it just with the European institutions, and perhaps should have. The point is that you should use the institutions you have created here in Europe to the fullest. If you yourselves limit and push back from the use of these organisations because you stress their restrictions and limitations rather than capabilities – if you interpret those in a very restrictive way and do not agree on how far those organisations can go – you cannot expect very great results from them.

Countries were assumed to be safe just because they used the euro, but that was a great mistake. I advocated very strongly the restructuring of the Greek debt three years ago, but I was told repeatedly that I was being irresponsible. I was told, “If you use the euro, nothing can happen.” But one country that happened to use the euro was overindebted to the tune of 160%, and that was not feasible. Three years later, that became obvious, but in the meantime, contagion spread and damage and loss have accumulated because we let that happen and because we thought if they used the euro, nothing bad could happen to them. Obviously, we were wrong.

The euro is fine. It is not the euro that is to blame – it was bad management inside the particular country, which happens to use the euro. They have to make the adjustment, but do not blame the euro. Finland went through the pain and, yes, it worked, but it is a game of messages and signals. They did what they had to do, but it does not mean that every country will face the same level of pain. It depends on the level of welfare the society has when it starts turning the screws. But Finland did a very good job.

Mr Jáuregui, you asked three questions. We recommend to the EU that the time for adjustments should be lengthened, when that is necessary. Countries can gauge that better. In some cases, what they are asking for is financial support to bridge the problem period, but let me talk about Spain in this context. You are doing what you have to do. You have gone constitutional with a balanced budget amendment, you were flexible on the labour market and collective bargaining. You are reducing the deficit and recapitalising the banks, but still the markets are buffeting you, and there is no system to protect the countries that are doing that. That is a mistake. We did not have a mechanism to support Greece because that was expressly forbidden by the charter and we therefore had to use an exception clause. We have the same problem with regard to Italy. Italy is doing all the work and taking all the tough decisions, but it is not receiving enough support and the markets are taking a toll.

On youth unemployment, we have worked with about 20 countries here in Europe, offering analysis and recommendations, because it is one of our greatest concerns. The skills strategy and the gender strategy are about youth unemployment. That is critical, because youth unemployment, as has been said, is five times the average of other countries.

Inequality is growing. The income of those in the poorest 10% fits nine times into the income of those in the richest 10%. Is that too much or too little? Well, 25 years ago it was six times, so it has increased by 50%, which is a problem. The trend is very bad. It has increased 14 times in the United States, 25 times in my country, 50 times in Brazil and more than 100 times in South Africa. Obviously, that is unsustainable and unacceptable.

On operations against fiscal fraud and tax evasion, the OECD has created a global forum that now comprises 110 countries working together against tax evasion and tax paradises. They have signed hundreds of bilateral agreements – perhaps more than a thousand – that will allow them to give each other transparent tax information on request. We are making steady progress and signing agreements with member states of the Council of Europe and the OECD. We are now opening it up to non-member states, so they can all be part of it. For example, India has just joined. All the G20 countries, including developing countries, have signed against tax evasion and in favour of transparency in fiscal information. There should be no place to hide. That is the rule. We are doing that here together with the Council of Europe and the OECD.

With regard to Politics and Policies – both with a capital P – good politics leads to good policies. Without good politics, you cannot have good policies. You need good politics and skilful politicians in order to make the ownership of policies more widespread and better supported. Today, even if you have a majority in parliament, you cannot drive through decisions without spreading the word and having great ownership.

In response to Mr Beneyto, I agree that countries such as Spain are doing their job, as I mentioned a moment ago, but let me refer to the question of ratings agencies. Ratings agencies have been – I am going to be very elegant and careful – pro-cyclical at the very least, which means that they ignore the law of holes, which is that if you are in a hole you should stop digging. The problem is that the ratings agencies have made things worse by reacting late and then, once a country is in a crisis, starting to reduce its rating by three or four notches at a time. How is it possible that they can reduce it by three notches at a time? Why did they not identify the danger two or three years before? Suddenly, when a country tries to correct or justify its actions, a bad situation is just made worse. Unfortunately, that is what has happened.

I mentioned derivatives. Let me touch on what Ms Bateman said. I may have misspoken. Basically, I said that we had better deal with that through the regulatory system, but if we do not have one then let us tax them in order to push them towards that.

I do not have much more time, but let me say something to our Irish friends. Every time we talked about issues we were told that Ireland is the example, but now we are told that Ireland has a big problem. The Polish were emigrating to Ireland, but now everyone is emigrating to Poland. Things can turn around very fast, which is why we must always keep our guard up when it comes to public economic policy. Small and open economies are particularly vulnerable and can turn around for the worst very fast. Ireland is a very good example of that.

I will finish by responding to the Greek representative. Greece has done a lot, but the problem is not so much how quickly we have to correct the situation, but the fact that for so many years our systems and the European Union did not detect the problem. Suddenly, the danger was that 2% of the euro economy, which is the size of Greece, had been damaged, but many, many times the total debt of Greece has been lost in the world’s economic system because we did not see the problem coming and we did not put in place immediately the ring-fence to isolate the problem because of indecision. Unfortunately, we are still now in the third round of the Greek problem, together with the Spanish problem and the Italian problem, and, despite having the instruments, the bazooka power, the wherewithal and the muscle, we have not yet stopped the rot.

THE PRESIDENT – Thank you, Mr Gurría, for your contribution to this debate. I now call Mr Bockel, the Rapporteur of the Committee on Political Affairs and Democracy. You have six minutes remaining.

Mr BOCKEL (France) thanked contributors for the high quality of the debate. Speakers had come from all sides of the political spectrum and from countries in different economic circumstances but there had been a consensus that solidarity was needed.

He thanked Mr Gurría for his proactive stance towards the Assembly. He had spoken with enthusiasm. With his strong will the OECD could play a significant role.

Mr Schneider and Ms Clune had spoken earlier about the importance of green growth and education in stimulating economic growth. He was pleased to see those areas highlighted.

The Assembly had been described as the political conscience of the OECD and it had played a crucial role.

He thanked the members from the associate countries who had brought an interesting extra-European dimension to the debate. Other continents were not all in as deep a crisis as Europe but all economies were interdependent.

There had been some disagreements. It had been said that it was necessary to set aside a priori thinking. He agreed but pointed out that the risk was that others would instead seek to impose their ideas: nobody really had the answer. There had to be light at the end of the tunnel and it was important for politicians to make sure that there was hope.

People had spoken of a financial transactions tax, and there would be a separate report on that subject debated on Friday. The idea had been discussed in the committee with general agreement. It was a complex subject and there was a risk of unintended consequences. However the idea should not be taken off the table. A financial transactions tax would not work in isolation but concentrating too much on the difficulties would mean that it would never happen.

THE PRESIDENT – Thank you, Mr Bockel. I call the Chairperson of the Committee on Political Affairs and Democracy, Mr Marcenaro. You have two minutes.

Mr MARCENARO (Italy) thanked his friends from Korea, Mexico, Japan, Chile, and Canada as well as Mr Gurría for their contributions to the debate.

The Assembly was due to adopt a very import report and should recognise that fact. The climate had shifted. If delegates had made the same points that they had made today a few years ago, they would not have been listened to by international opinion makers. It was important to look at the reality of the situation. The economic crisis had been unexpected a few years earlier.

It was the first time that the Political Affairs Committee had been given the task of producing the report on the OECD. The quality of the debate proved that this had been the right decision.

THE PRESIDENT – Thank you, Mr Marcenaro.

The debate is closed.

The Committee on Political Affairs and Democracy has presented a draft resolution contained in Document 13019 to which three amendments have been tabled.

I remind colleagues that for this part of our proceedings voting will be by show of hands to allow delegates from non-European members of the OECD, who do not have voting cards, to participate. When voting, please ensure that your hand remains in the air until all votes have been counted. I should remind you that from among the visiting delegations only those who are members of the OECD are entitled to vote.

Two amendments have been agreed unanimously by the committee. I understand that the chairperson of the committee wishes to propose that Amendments 1 and 3, which were unanimously approved by the committee, should be declared as agreed by the Assembly under Rule 33.11.

Is that so Mr Marcenaro?

Mr MARCENARO (Italy) (Translation) – Yes.

THE PRESIDENT – Does anyone object?

As there is no objection, I declare therefore that Amendments 1 and 3 to the draft resolution have been adopted.

The following amendments have been adopted:

Amendment 1, tabled by the Committee on Social Affairs, Health and Sustainable Development, which is, in the draft resolution, in paragraph 6, to replace the last sentence with the following sentence:

“The enlarged Assembly believes that it is necessary to review national taxation systems, better to target support programmes for the most vulnerable population groups and to pursue reforms aimed at reducing labour market segmentation and ensuring more jobs of higher quality.”

Explanatory note: The amendment emphasises on the enlarged Assembly’s support for national reforms of taxation, welfare systems and labour markets.

Amendment 3, tabled by the Committee on Social Affairs, Health and Sustainable Development, which is, in the draft resolution, after paragraph 7, to insert the following paragraph:

“In the light of current demographic trends and repercussions from the financial crisis, notably in Europe, there is an urgent need to enhance the sustainability of pension systems and the adequacy of pension levels in many countries, not least as a result of austerity measures that have escalated social inequalities. Referring to the Assembly’s Resolution 1882 (2012) and Recommendation 2000 (2012) on decent pensions for all, the enlarged Assembly calls for the OECD and the Council of Europe to work together with a view to promoting good practice in this field and preparing practical instruments (such as guidelines) for advising member States in their ongoing or forthcoming pension system reforms.”

Explanatory note: The amendment underscores the pertinence of adjustments to national pension systems and seeks more collaboration between the Council of Europe and the OECD in this field.

We come now to Amendment 2, tabled by the Committee on Social Affairs, Health and Sustainable Development, which is, in the draft resolution, after paragraph 6, to insert the following paragraph:

“The enlarged Assembly is concerned about continued tax evasion and tax avoidance that deprive State budgets of essential revenue. Referring to the Assembly’s Resolution 1881 (2012) and report on promoting an appropriate policy on tax havens, the enlarged Assembly urges the OECD to intensify its work in these areas and to seek synergies with relevant international partners, notably the European Union and the International Monetary Fund, in order to help States eliminate harmful tax practices, narrow the gap between the taxation of income from capital and from work, and improve regulation of the financial sector so as to manage better international capital flows.”

Explanatory note: This proposal stems naturally from the Assembly’s ongoing work on tax justice and its co-operation with the OECD on tax-related and regulatory challenges and refers to previously adopted texts.

I call Mr Braun to support Amendment 2.

Mr BRAUN (Hungary) – The amendment concerns tax evasion and tax avoidance. Those two phenomena had a bad influence on state budgets. The wording of the amendment refers to our former text on promoting an appropriate policy on tax havens.

THE PRESIDENT – Does anyone wish to speak against the amendment? That is not the case.

What is the opinion of the committee?

Mr MARCENARO (Italy) (Translation) – The committee is in favour.

THE PRESIDENT – I shall now put the amendment to the vote by show of hands.

We will now proceed to vote on the whole of the draft resolution contained in Document 13019, as amended, by a show of hands.

The vote is open.

4. Date, time and agenda of the next sitting

THE PRESIDENT – The Assembly will hold its next public sitting at 3.30 p.m. with the agenda which was approved on Monday.

The sitting is closed.

(The sitting was closed at 1 p.m.)

CONTENTS

1. Written declaration

2. Joint debate: (a) For more democratic elections; (b) Political parties and women’s representation

Amendments 3, 4, 16, 10, 11, 18, 12, 13, 7 and 6 adopted.

Amendments 1 and 14, as amended, adopted.

Amendment 9 adopted.

Draft resolution contained in Document 13021, as amended, adopted.

Draft resolution contained in Document 13022, as amended, adopted.

3. The activities of the Organisation for Economic Co-operation and Development (OECD) in 2011-12 (enlarged debate)

Presentation by Mr Bockel of report, Document 13019, on behalf of the Committee on Political Affairs and Democracy

Speakers:

Mr Braun (Hungary)

Mr Angel Gurria (Secretary-General of the Organisation for Economic Co-operation and Development)

Mr Elzinga (Netherlands)

Mr Schneider (France)

Mr Voruz (Switzerland)

Mrs Viala (Switzerland)

Mr Liddell-Grainger (United Kingdom)

Mr Tilson (Observer from Canada)

Mr Dişli (Turkey)

Mrs Okhawara (Japan)

Mr Geraint Davies (United Kingdom)

Mr Yoo (Republic of Korea)

Ms Anttila (Finland)

Mr Ivanovski (“the former Yugoslav Republic of Macedonia”)

Mr Sasi (Finland)

Mr Jáuregi (Spain)

Ms Gastélum Bajo (Mexico)

Mr Beneyto (Spain)

Mr Dzurinda (Slovak Republic)

Ms Bateman (Observer from Canada)

Ms Clune (Ireland)

Mr Flanagan (Ireland)

Mr Markopoulos (Greece)

Mr Marcenaro (Italy)

Amendments 1, 2 and 3 adopted.

Draft resolution contained in Document 13019, as amended, adopted.

4. Date, time and agenda of the next sitting