Brussels, 22/07/2010 (Agence Europe) - On Wednesday 21 July, France and Germany unveiled a joint suggested strategy to set up “economic government of Europe” (un gouvernement économique européen). Following the crisis that rippled through the eurozone in the spring of this year, the two governments make “tangible, operational” suggestions that are possible under the Lisbon Treaty and would make “significant advances” in the preventative and corrective arms of the stability and growth pact (SGP). The two countries argue for the setting up in the medium-term of a credible crisis solution framework that respects countries' budgetary powers.
On the preventative arm of the SGP, France and Germany suggest: - setting up a “European semester” to ensure better coordination of national economic policies before they are introduced without trampling on the national parliaments' budgetary powers; - introducing EU rules to formalise public finance correction plans; - paying much greater attention to the scale of debt and changes to debt; - expanding surveillance to examine differences in competitiveness, structural reforms, private debt and financial stability by means of a surveillance mechanism and using analysis provided by a group of independent experts and the new European Systemic Risk Council (CERS) to be set up in the EU's financial supervision legislative package, taking greater account of structural reform commitments (for example, reforming the pensions system or healthcare); - expanding the power of issuing warnings and recommendations in the event of failure to meet the Broad Economic Policy Guidelines or in the event of serious dangers to the functioning of economic and monetary union; - increasing the transparency of accounts and statistics and controlling them better (giving Eurostat greater powers of investigation); - and stricter examination of eurozone countries' stability programmes.
In order to increase the credibility of budgetary surveillance within the EU, the Franco-German initiative suggests that appropriate penalties should be issued “rapidly” on countries infringing the preventative and corrective arms of the SGP. The following penalties are listed: - the temporary introduction of a deposit paying interest to eurozone countries which prove unable to make sufficient budgetary correction to meet the medium-term targets; - proportionate restriction of EU funding depending on the seriousness of the infringement of the SGP measures and in connection with the cohesion policy; - speeding up the excess deficit proceedings against countries that are “regularly” subject to the excess deficit procedure; - and introducing “political penalties like suspension of voting rights” on member states contravening in a “serious or repeated manner” their common commitments. On the latter, France and Germany say that a detailed legal study of how the mechanisms would operate would be needed as the mechanism would be added to a review of the EU Treaty in the future. They argue that a more immediate alternative that would not involve legal restrictions would be a “political agreement” to enable eurozone countries to prevent a member state from voting or decision-making should that state be subject to repeated infringements of the SGP, or a political agreement to neutralise the impact of that member state's vote. (M.B./transl.fl)