The systematic Eurosceptics and prophets who declared that the project of European unity had failed have not been having an easy time of it recently! Progress in economic governance and consolidation of Economic and Monetary Union (EMU) has been patently obvious this week (see our publication yesterday) and we can already take it as read that: a) the first European budgetary semester will begin at the beginning of next year; b) that reform of the Stability and Growth Pact will be in force a year later. France and Germany have also jointly called for the Lisbon Treaty to be reviewed quickly in order to introduce a permanent crisis management mechanism and allow for the possibility of suspending the voting rights of member states that seriously violate the basic EMU principles.
The refrain, which readers of this column know only too well, remains pertinent: such innovations would have been unthinkable just a few months ago. The European Union is being transformed because developments in the economic and monetary spheres will lead to similar developments in other areas: energy, foreign policy and “own resources” etc. The most recent results that have occurred require a number of comments:
1. Heads of state and government must decide. The results from the “Van Rompuy group” must be approved next week by the European Council. It is true that the negotiating group was of a very senior level (finance ministers, the president of the Eurogroup, the European commissioner for economic and monetary affairs and the president of the European Central Bank). It was also chaired by the president of the European Council but the debate or a number of aspects may re-emerge, particularly in light of the joint Franco-German position.
2. The joint Franco-German position does not entirely correspond to the results of the Van Rompuy Group. At least two aspects, in my opinion, ought to be underlined:
a) the Merkel /Sarkozy statement( published in the annex to our publication yesterday) does not contain a single reference to “ inverted majority voting” (the way in which Commission-proposed sanctions would be approved in the absence of a majority opposed at the Council). It does, however, still mention decisions by the Council on qualified majority voting and then, after a vote indicating that a state has failed to take necessary corrective measures within the six-month period allowed, sanctions would be automatic. This is a compromise between Germany, which supports automatic sanctions, and France, which defends the prerogatives of the Council;
b) France and Germany are calling for an accelerated treaty revision procedure with a twofold goal in mind: introducing possible political sanctions (suspension of voting rights for states failing to meet the criteria); creating a permanent and robust mechanism for tackling possible future crises. This would replace the mechanism set up to tackle the Greek problem (which Germany does not intend to pursue beyond its deadline) and which would include appropriate private sector participation ( banks) in helping to solve any possible crisis situation.
The speeded up revision of the treaty (ratifications to be completed before 2013) raises a number of concerns and reservations. Eurogroup president Jean-Claude Junker pointed out that, “having taken part in several treaty revisions, my enthusiasm for the idea of recommencing this exercise is very limited”.
Will the European Council come to any decision on these aspects next week? The Franco-German statement calls for Mr Van Rompuy to be charged with presenting concrete options on the new robust crisis resolution mechanism, next March. We will see.
3. The principle of regarding the overall debt of the country as being as important as the annual budget deficit has, in principle, been agreed but the Van Rompuy report does not include the robust reduction timetable proposed by the European Commission. It has been effectively admitted that debt must be evaluated in a macro-economic context, taking account not only of gross figures but also other elements such as private debt, the level of savings, pensions system in place and the solidity of the banking system. The principle, nevertheless, still remains valid: overall debt should be reduced to the level of 60% of GDP.
Excessive flexibility? The results achieved by the Van Rompuy group have, on the whole, been given a positive welcome, as a solid base for revising the Stability Pact. These results have also been criticised by those who consider that certain aspects of the European Commission proposals have been over-relaxed. The Commission has not officially responded and is maintaining its proposal. It will defend it at the European Parliament. In brief, the result is important because it introduces indispensable rules and discipline but, according to certain players, it is, in some areas, insufficient. (F.R./transl.fl)