[Honourable Members of Parliament, Ladies and Gentlemen (in Greek: AGAPITI ELLINES VOULEFTES)]

I am very honoured for the invitation to speak in the Greek Parliament.

On the 1st of January, Greece will have been a Member of the European Community for 30 years. When the accession treaty was signed on 28 May 1979, the French President Valéry Giscard d'Estaing, who was also President of the Council at the time, said (in Greek!):

"Europe without Greece is simply not Europe. The European venture is not only about economics and social progress; it is also, and perhaps above all, about the spirit and culture of our continent."

Giscard continued: "It was here in Greece that the culture of Europe achieved its most vigorous expression, its admirable feeling for proportion and beauty. Our languages and our patterns of thought were all born in the culture of Greece."

These days, one may get the impression that the European venture is all about economics. And some observers like to believe that the economics now put the European venture in question.

I can, for the time being at least, agree with the first observation: fundamental changes will be ahead of us. But I strongly disagree with thte claim that the current economic situation inevitably puts the European venture in question.

The Cassandras are misguided, which I'll prove in a moment.

Let me turn to the economics first. During last decade, economic divergences were built up among EU member states. Some countries, Greece among them, have persistently been importing more than they were exporting. This may be regarded as a feature of an economy that is catching up.

However, at the same time, Greece’s competitiveness deteriorated by around 20%. Relative to its trading partners, production costs in Greece are thus now 20% higher than ten years ago. This made the export of Greek products and services increasingly difficult.

The euro allowed Greece to get better access to international capital markets. But already in 1992, when the EU created the monetary union with the Maastricht Treaty, it was a conscious decision to ease the burden of adjustment for catching-up countries, and hence the Cohesion Fund was created for the Union's redistributive policies, precisely to help with structural adjustment.

However, the economic divergences were at a peak when the financial shock came in 2008. Although governments across Europe reacted swiftly with counter-measures, the deep financial and economic crisis exposed – and is still exposing – our failures of the past.

We are taking fundamental measures for reform and we are making good progress. But it is clear that European politicians, central bankers and national politicians must prove common and decisive leadership.

If the 1990s was the decade of constructing the Economic and Monetary Union and the 2000s the decade of turning it into reality, we are now at the beginning of the decade of its fundamental reform. And this fundamental reform has to take place both at European and at national level.

At the European level, we have collectively not been alert enough when economic imbalances were building up, and we had no tools to recommend corrective measures. Moreover, the Stability and Growth Pact, which should be the European anchor to sound national fiscal policies, did not perform as it should have. Mutual review processes among Member States, based on Commission analysis and recommendations, proved not strong enough.

There is no other way than to make the Pact stronger and stricter, with wider surveillance and rules-based enforcement.

With this in mind, in September the Commission proposed the economic governance reform package. There are three core elements:

A strengthened Stability and Growth Pact to prevent unsustainable fiscal position from emerging and to correct such positions promptly, should they nevertheless emerge,

A new procedure for surveillance of macroeconomic imbalances with corrective actions recommended if excessive imbalances are identified, and

For euro area members, a more effective enforcement mechanism with earlier and more automatic sanctions in the case of violation of the rules.

At the level of financial markets, we need to address the fact that the banking system in the EU has become so closely interconnected that distress in one country can have serious repercussions in others. From my discussions with bankers, I know that even the financial community itself is recognising the need for reform. Together with its global partners, the EU is drafting a comprehensive reform programme, both on tougher regulatory standards and on the European architecture for supervision.

Ladies and Gentlemen,

Greece is obviously part of this fundamental reform programme. It is today well on track.

Sometimes, events leave little time for action. As we know now, for a long time, neither markets nor politics reacted to the growing indebtedness. But in spring this year, the Greek people faced the gravity of the situation, as lenders rapidly started losing confidence in your country, asking for higher and higher interest rates.

In order to continue servicing its debt at sustainable rates, Greece turned to seek European and international financial assistance. The assistance provided by euro area countries and the IMF in May includes a loan of up to 110 bn euro, to be disbursed over three years, effectively taking Greece out of the capital markets over this period.

After the funding from this loan ends, Greece will need to return to financial markets. You have gained three years to win again the trust of private investors.

The government, in cooperation with the European Commission, the European Central Bank and the IMF, drew up a comprehensive reform programme geared towards rebuilding Greece’s credibility.

This is built on the three pillars of the programme:

The fiscal policies pillar,

The financial sector pillar,

The structural reform pillar.

Since May, you have achieved a lot. We have just concluded our second review, and the international community has recognised that you have made much progress and that you are broadly on track with the reform programme. I congratulate you for your resolution and determination.