Brussels, 28/02/2011 (Agence Europe) - There are only 10 days left for eurozone countries to agree to establish the competitiveness pact demanded by France and Germany in response to the eurozone sovereign debt crisis. The competitiveness pact comprises budget surveillance, employment measures and structural reforms and is due to be endorsed on Friday 11 March by the eurozone countries and then by the full EU27 at the end of the month. Struggling countries are being asked to make a sudden and qualitative improvement in competitiveness in return for extra support from eurozone countries less affected by the economic crisis.
At a hearing in Brussels on Monday 28 February, close advisors to the president of the European Council, Herman Van Rompuy, and the president of the European Commission, José Manuel Durão Barroso, submitted to eurozone countries a reworking of the draft competitiveness pact presented by France and Germany. As instructed by the European Council earlier this month (see EUROPE 10309), the two institutions are jointly consulting national delegations to try and reach common proposals.
According to a draft leaked to the Financial Times, Van Rompuy and Barroso are backing some of Germany's suggestions, like introducing laws to make it impossible for countries to take on too much national debt. Berlin has debt-restriction measures incorporated in its constitution and France is looking at introducing something similar. The Van Rompuy/Barroso document sets out that this is an option rather than compulsory. Instead of simply scrapping inflation-linking of pay rises, a system in place in countries like Belgium and Luxembourg, or linking the retirement age with average life expectancy, the document suggests introducing a monitoring system based on specific figures and tangible indicators.
To reassure non-eurozone countries that would like to join the single currency one day, countries like Poland that are not happy about the idea of a two-speed Europe emerging (see EUROPE 10324), any member state that so desires will be able to join the competitiveness pact. The draft gives the European Commission a greater role in assessing progress as a way of reassuring small member states and the European Parliament that are keen on the Community method and which see the big countries as throwing their weight around. Chancellor Angela Merkel, however, keeps talking about the intergovernmental nature of the competitiveness pact.
On Friday 4 March, the two biggest political parties at the EP will be holding meetings of their rank and file to prepare for the third eurozone summit a week later. They will be examining the competitiveness pact in two capital cities that are poles apart in terms of politics and geography. The leaders of the European People's Party will be meeting in Helsinki, capital of one of the eurozone's “good guys”, while the leaders of the European Socialist Party will be in Athens, capital of the first eurozone country to call for international cash.
On Tuesday, the Commission will be unveiling its interim economic forecasts for seven countries (Germany, Spain, France, Italy, the Netherlands, Poland and the United Kingdom) which between them account for 80% of EU GDP. No updated growth, deficit or debt figures will be forthcoming, however, for Greece, Ireland and Portugal. As a sign of tension on the money markets, the cost of a 10-year loan for Portugal has been above 7% for more than three weeks now, longer than the previous records held by Greece and Ireland, which have both received international financial aid. (M.B./transl.fl)