Brussels, 09/02/2011 (Agence Europe) - The president of the European Commission, José Manuel Durão Barroso, commented on Wednesday 9 February at a BEPA conference on application of the Lisbon Treaty (see EUROPE 10309) that he had witnessed some “vagueness in the method” used to draw up the Competitiveness Pact being mooted by France and Germany, and yet it was clear that the best way of ensuring the measure was fully coherent (even for non-eurozone member qtates) was to make use of the Community method (rather than the intergovernmental method that had actually been used). Barroso said that any measure from the member states to boost eurozone economic governance was welcome but should respect the fundamental principles of the European project, namely equality among member states, loyal cooperation, solidarity and cohesion. In order to protect the general European interest, measures must not damage the way the EU operates and must not set up competing mechanisms alongside those set out in the Lisbon Treaty.
The Competitiveness Pact aims at convergent economic policies among the 17 countries in the eurozone over and above solely budget rules. It seems to be the price to be paid by struggling economies if they are to be granted an extension of the bailout systems funded by the stronger economies. As far as German Chancellor Angela Merkel is concerned, the pact would amount to intergovernmental cooperation without transferring power to the EU. The EFSF fund was created in May 2010 to back security in the eurozone. It is an intergovernmental fund, as was the financial aid package for Greece. The European Stability Mechanisms (ESM) to be set up shortly to replace the EFSF in the summer of 2013 will also be an intergovernmental (non-EU) fund.
The chair of the ALDE party at the European Parliament, Belgium's Guy Verhofstadt, is furious about the way France and Germany are arranging things amongst themselves using the intergovernmental method to sidestep the European Commission (see EUROPE 10310 and 10311). On Wednesday 9 February, he wrote to Barroso: “I believe that it is now time for the Commission to propose a global and coherent package on the governance of the economy within the Eurozone”, and urged Barroso to mount a defence of the Community method. Verhofstadt added: “I call on you (Ed: the European Commission) to make, on top of the six proposals currently being examined by the EP, a strong and ambitious proposal on economic governance that would include pensions, taxation and employment policies, especially within the eurozone (Ed: areas are also covered by the Franco-German plan and the Commission's Annual Growth Review). This should also include a proposal on economic governance structures within the Commission itself with, for example, a number of competent commissioners tasked for its implementation. This structure could be the counterpart of the European Central Bank's management of monetary policy.” “This is ever more important as certain member states are tempted by the intergovernmental way, believing, as in the failed Lisbon strategy, that agreement between themselves is sufficient to bring about progress”, explains former Belgian prime minister Verhofstadt. “Concerning the six current proposals on economic governance, I strongly believe that they should include real automaticity within the sanctions for the Stability and Growth Pact.”
At the EP, Europe's left is also champing at the bit. French Socialists and German Social-Democrats have joined forces in their criticism of the “Merkel-Sarkozy Pact”, described in a joint press release by France's Catherine Trautmann and Germany's Bernhard Rapkay as being unacceptable in terms of both methodology and content. Two member states drawing up proposals and then forcing them on the other countries is the total opposite of the spirit and the letter of the Community method, how things are done in the European Union, they explain. Trautmann criticises this attempt to cast in stone a rigid and inflexible austerity policy that would lead to a fall in business activity and rising unemployment. Rapkay says that the political right hold most of the power in Europe and they constantly hide behind calls for “subsidiarity” whenever it comes to a tax on financial transactions, tackling fiscal dumping or the suggestion of launching eurobonds, but are happy to flout respect of national powers whenever it comes to social affairs. He said that making salaries a cheese-paring structural adjustment variable in order to grasp a few competitiveness points is suicidal in the long-term and the right thing to do is to set minimum pay throughout Europe. (M.B./transl.fl)