Brussels, 04/02/2011 (Agence Europe) - The two main economies of the eurozone want to make the sovereign debt crisis into an opportunity to push Europe to take a further step in European integration. At the European Council on Friday 4 February, France and Germany presented their concept for a Competitiveness Pact, designed to reinforce economic governance in Europe, particularly in the eurozone. A number of the measures proposed have met with reservations. In order to set this pact to music, the balance between Community and intergovernmental methods has yet to be decided upon. A eurozone summit - which will take place sometime after 9 March, according to the German Chancellor Angela Merkel - will lay the foundations for the definitive decisions anticipated for the spring summit, to be held at the end of March.
“We are determined to make 2011 the year of renewed confidence in the euro”, declared Merkel. Alongside the solidarity measures in place or to come, we wish to make it quite clear that we want to see “close economic cooperation”, she added. According to Merkel, increasing competitiveness does not mean less competition between the states, but drawing examples from existing best practice. Germany and France, which work “hand-in-hand”, are in agreement over a “structural plan” which would make it possible to “move to the next stage”, said Sarkozy. This plan would make it possible to “show observers from the entire world that the European economies are moving towards convergence with the focus on competitiveness”, he added.
The president of the European Council, Herman Van Rompuy, welcomed the fact that the European leaders had decided to use the “impetus” generated by the improved economic situation to commit to boost the coordination of economic policies, even going “beyond” what the taskforce which tackled this issue recommended. He reiterated that work is underway which will constitute the exhaustive response of the EU to the crisis: carrying out “ambitious” stress tests on the banks; the economic governance package, which should be ready by June; development of the existing European rescue fund; the creation, in mid-2013, of a permanent crisis management mechanism; the implementation of economic adjustment programmes in Greece and Ireland.
Are you not concerned about undermining the Community method in favour of the intergovernmental method? The president of the European Commission, José Manuel Barroso, read out the conclusions of the meeting, which stated that any initiative would have to comply with the European Treaty. “No competencies are being withdrawn from the institutions of the EU” but, in the areas which come under national competence, there will be coordination between the member states, he said. Van Rompuy announced that he had been given a mandate to make concrete proposals, working together closely with Barroso. But according to Chancellor Merkel, the Competitiveness Pact will indeed constitute “intergovernmental cooperation with no transfer of competencies”, the Commission's role limited to assessing national performance. According to the conclusions adopted by the European Council, “the additional stages” to be started on by the countries in the eurozone to reinforce economic coordination and improve competitiveness will be “in line with the Treaty”, will respect the single market and will not exclude the countries which have not adopted the single currency.
Van Rompuy and Barroso stressed that at this stage, there were no concrete proposals on the table. That said, “we have a few ideas”, said Sarkozy, although Berlin and Paris have no wish to impose “the same thing on everybody” The Franco-German measures concern budgetary discipline, social and fiscal policy (EUROPE 10307). Many of them were already put forward by the Commission in early January, in its annual growth examination (EUROPE 10292).
Some of the measures are aimed directly at certain countries, which reacted immediately. The proposal to put an end to regimes which track salaries on inflation provoked fury from Belgian Prime Minister Yves Leterme, who expressed his “total disagreement”. Luxembourg Prime Minister Jean-Claude Juncker, who is also “entirely against” the removal of such a rule, takes the view that talks on this subject should include a reflection on the minimum wage and working time. Ireland, which is opposed to any tax convergence at European level, takes a dim view of the Franco-German willingness to harmonise tax. During negotiations on the economic adjustment programme negotiated with the IMF and the Commission in exchange for financial aid, Dublin steadfastly refused to raise its corporate tax base (12.5%), the lowest in Europe. Austria is believed to have stated objections over creating a link between retirement age and increased life expectancy. “We can agree a calculation method”, said Sarkozy. As for the recognition of professional qualifications, this will be one of the vital challenges for Greece to meet.
EFSF. European leaders also discussed the evolution of the European rescue fund, the European Financial Stability Facility. They call upon the Eurogroup to finalise concrete proposals by March, to allow this intergovernmental instrument to be able to provide adequate support effectively. At this stage, there is no question of suggesting available amounts or competencies which could be earmarked for the Facility. (M.B./A.N./G.B./A.By/H.B./F.G./transl.fl)