Everything should be allowed, even ignoring or contesting progress made in the eurozone, and in the EU as a whole, towards the new economic and financial management. In fact, more progress has been achieved in just a few weeks than over the past 20 years - even in areas that were previously so sensitive one did not even dare tackle them in any official capacity. Some of this progress will be submitted to heads of state and government next week. I would like to suggest that EUROPE 10155 be consulted for further details but I would also like to underline what they mean for European construction.
1. The “European Financial Stability Facility” (EFSF) is a fact. If this instrument had previously existed, it would have been possible to prevent the Greek crisis and the troubles accompanying it in Europe and the world. With the EFSF, such slippage will no longer be possible. Out of the overall amount of €750 billion in the fund, €60 billion will be covered by the Community budget, €250 billion by the IMF and €440 billion by member states. The way in which this last part functions has been explained: national guarantees, procedures for triggering intervention and interest rates etc. Parliamentary ratification in member states of the eurozone is expected to be swift, as well as the talks with the rating agencies so that the Triple A (AAA) is ensured for its bonds. The definition of Eurobonds has been used by a number of diplomats. According to Jean-Claude Juncker, the president of Eurogroup, the EFSF will be operational before the end of the month. Just a few weeks ago, this would have been unimaginable.
2. The economic governance of the EU is becoming a reality. After the second taskforce meeting that he presided (which included the majority of ministers for the economy and finance from member states, in addition to the president of the European Central Bank), Herman Van Rompuy announced that consensus had been reached on three essential elements in Europe's economic governance:
a) Preliminary joint discussion of member states' draft budgets. The most sensitive and, initially, the most controversial aspect of the new rule has been accepted. Every national draft budget will be subject to European analysis before its approval by the Parliament of the country concerned. Parliamentary competences are not affected because, ultimately, it is the national parliament that makes a completely autonomous decision in this respect, but this will happen in full knowledge of the European observations made on the credibility of the draft with regard to respect for the Stability Pact and specific commitments made by the country in question (deficit reduction, etc). The application measures will not be subject to European examination and each country will be able to determine its orientations as it sees fit, but the effects will be far reaching.
The taskforce also recognised that supervision will apply both to the annual deficit and the total cumulative debt, an aspect that had already been planned but ignored of late.
b) Review of the sanctions system. The current mechanism is inflexible and infringements are identified when the deficit goes beyond the 3% limit. In the future, warning lights will flash as a preventive measure and sanctions will be applied gradually. But what sanctions? For the time being, it is necessary to remain within the framework of the economic measures included in the Lisbon Treaty but Mr Van Rompuy did not rule out the possibility of taking a revision of the treaty into consideration when the time is right. This is the first time that he admits this hypothesis, thus taking the German orientation into account, even though he does not have much faith in it.
c) Supervision of member state competitiveness. The budgetary aspect is essential but it is not everything: genuine economic governance cannot leave out the necessity for all member states to tackle the competitiveness of their own economies. Mr Van Rompuy was quoted in EUROPE 10155 and there was nothing ambiguous about what he said: in some countries “belonging to the eurozone has been like a sleeping pill” and has led to falls in productivity. Indicators are necessary for sounding the alarm, as well as the possibility of imposing specific sanctions. These two orientations have, in principle, been maintained.
The key question. The taskforce called on the European Commission to clarify certain aspects, such as the panoply of economic sanctions in the event of budgetary slippage (“political” sanctions, such as the possible loss of voting rights, are linked to a revision of the treaty) and competitiveness indicators. The taskforce will give its position on the two other aspects of its task: the permanent crisis management mechanism and strengthened economic coordination. After this, it will be necessary to provide an answer to the key question: will all eurozone countries be able to agree to and respect the commitments and instruments that have been planned? This column will return to this issue tomorrow. (F.R./transl.fl)