Brussels, 15/04/2010 (Agence Europe) - Before getting down to more detailed discussion with EU finance ministers in Madrid on Friday (see related article), Economic and Monetary Affairs Commissioner Olli Rehn, on Thursday 15 April, went back over a number of points of the forthcoming Commission communication of improving coordination of economic policies. The communication, to be presented to the College of Commissioners on 12 May, pivots around three ideas: enhancing the stability and growth pact, deepening and broadening economic surveillance and setting up a permanent crisis resolution mechanism (see EUROPE 10118).
“20 years of consolidation have been wiped out in only two years,” he said during a European Policy Centre (EPC) conference in Brussels on Thursday 15 April. With the crisis, failure to comply with existing rules has also been thrown into sharp relief. “Peer pressure lacked teeth,” Rehn said and he suggested that “M is much stronger that E in the EMU (Economic and Monetary Union). It is high time to fill the E with life, as well”.
Seeking to strengthen the stability and growth pact (SGP) through ex-ante coordination, Rehn plans to create a “European economic semester”. “The cycle of economic policy decision-making is quite long” and, in practice, it is difficult to give guidance, the Commissioner stated. He wants to use the first half of the year to ask member states to submit their draft national budgets for the following year (in general terms, not detailing every budget line). If harmonisation of budgetary timetables is not possible, this move would allow the Commission and Eurogroup to make assessments and recommendations in time, and better integrate the European dimension in national budgetary procedures. Well aware that this remains a sensitive issue for national parliaments, he said that, “if you are serious about coordinating economic policy, then you should aim at coordinating your budget policy”.
A further possible improvement, which relates to the corrective chapter of the SGP, would be to make the adoption of sanctions more of an automatic process. “It is worth reflecting whether some of the incentives of compliance (with the SGP: Ed.) could be triggered automatically” or whether the Commission should have the legal responsibility for triggering them. “A certain automaticity could be helpful” in limiting log jam and ensuring that the rules are applied uniformly in large and small member states.
In the longer term, what form might a permanent crisis resolution mechanism take? The debate is open, though, “my personal preference is to create a euro area facility for monetary stability,” the commissioner said. He said that the use of a Community instrument in this context might be something to be explored, but did not rule out the idea, which finds little favour in some member states, of launching Eurobonds. Rehn, with his functionalist approach to European integration, has not forgotten that “the EU is the combined outcome of crisis responses”. (A.B./transl.rt)