A high-level member of the European Commission has reassured Korea’s prime minister that the “doomsday scenario” of a collapse of the euro will not come to pass. 

EU Commission vice president Maros Sefcovic said that Prime Minister Kim Hwang-sik shared his optimism that the eurozone would weather the debt crisis.

Sefcovic met Kim in Seoul on Wednesday to discuss trade and cooperation on the same day that shares for the single currency hit a four-month low and Spain and Italy saw their borrowing costs rise. Fears that the single currency could collapse have mounted since political parties in Greece failed to form a government after elections there a fortnight ago.

Sefcovic, who fills Slovakia’s place on the 27-person executive body, said the EU had taken necessary action to stem the crisis and had the political determination to do “whatever it takes to preserve the euro.”

“All the European countries are now going through the process of implementation of very demanding structural reforms, which are very long overdue because they often are not easy to implement,” Sefcovic told The Korea Herald.

“The second thing is that we are going through a very significant process of consolidating public finances, so I am pretty convinced that the next year the EU budget deficit will be under 3 percent.”

He added that such a figure would compare extremely favorably to nations such as the U.S. and Japan, and said the eurozone was well equipped to deal with possible speculative attacks that drive up the cost of countries’ borrowing. 

“We have a very solid firewall built by the EU which is over $1 trillion strong. We have an agreement on the IMF beefed up contingency fund which will be over $500 billion. I think the combination of these two firewalls is so strong that I don’t think any speculators will see the possibility of how they can engage in some kind of speculatory attack against Europe,” he said.

Sefcovic, who also visited the Samsung complex in Suwon on his two-day visit here, described cooperation between the European and Korean authorities since the implementation of the Korea-EU FTA as “outstanding.” He said the benefits of the pact were already being felt, but there remained room for further cooperation.

“As one concrete example, I think both sides would benefit a lot if we would agree upon the standardization of electric cars. This is the next big thing and both Europe and Korea are very important auto manufacturers. … This is one concrete example that work doesn’t stop even once the FTA is adopted and implemented.”

Currently, 70 percent of all tariffs affecting trade between the countries have been removed. This will rise to 98 percent of tariffs within the next five years.

Sefcovic addressed comments made by European Chamber of Commerce in Korea president Jean Marie Hurtiger last year that non-tariff barriers to trade remained, among them the inconsistent and arbitrary application of regulations by Korean officials.

“Of course you would have in any relationship where the trade volumes are growing and the exchange of goods is so big, you have issues here and there, but what is very important is that you have mechanisms in place, if anything happens there is a platform on which you can solve the issues. Nothing was brought to my attention so I am absolutely convinced that everything works fine,” he said.

The two sides will hold twelve meetings this year to address issues regarding the implementation of the agreement.

Despite accusations that the EU is bureaucratic and lacking in transparency, Sefcovic said critics rarely appreciate how much worse Europe would be without the union.

He would recommend the EU model to other countries interested in deeper integration, including Korea, China and Japan, which are currently pursuing a trilateral free trade agreement.

“I would highly recommend any cooperation which can bring peace, which can help to overcome historic differences, which could help to create mechanisms for sorting out political differences and which could actually contribute to something that we really feel in Europe, the feeling of the family. … If they would be feeling and a assessment that this is doable in this part of the world, I would recommend it, but I would leave it up to them to that assessment because they know their neighbors and the situation in their countries much, much better.”

By John Power (john.power@heraldcorp.com)