Brussels, 08/03/2011 (Agence Europe) - The left-right split emerged again in the European Parliament plenary on Tuesday 8 March in a debate on the contents of the competitiveness pact to be submitted for approval at the eurozone summit on 11 March. MEPs across the board agree on the importance of using the Community method to achieve tangible results, however, in ensuring the convergence of economic policies.
The EPP Group says that Friday's summit provides a unique window of opportunity and learning the lessons of the financial crisis, eurozone countries should not view closer cooperation as taboo when it comes to tax and social affairs, said EPP leader Joseph Daul (France). He said that solidarity works well if tax and social rules are comparable (rather than identical). In return for greater solidarity, the eurozone should tighten up its budget rules, asking why countries getting into debt should be seen as more sustainable than companies getting into debt. He recommended the creation of a European stability mechanism in the summer of 2013 to protect the eurozone and its social market economy.
The leader of the Liberal Group, former Belgian prime minister Guy Verhofstadt, said i twas a step forwards that countries now agreed with the idea of economic union and he called for an overarching economic governance system that covers more than the suggested competitiveness pacts by covering extra areas, such as retirement systems, labour markets, pay policy and taxation. He urged the European Commission to exercise its right of initiative and unveil what he termed a “Community Act for Economic Governance” (see EUROPE 10329) along with a system for dealing with financial crises.
On the left, there is criticism of the way the competitiveness pact's austerity measures go too far, to the detriment of economic recovery and social protection. The leader of the S&D Group, Martin Schulz (Germany), called for a new balance in favour of social measures and said that he did not believe that Moody's downgrading of Greece on Monday has been done properly (see EUROPE 10330) because Moody's had put the country in the junk bond category below such havens of stability as Egypt and Belarus! Focusing on austerity alone cannot work, warned co-president of the Greens/EFA, Rebecca Harms (Germany), giving the example of Greece. She criticised Germany's refusal to allow the current bailout fund, the EFSF, to invest in bonds from heavily indebted eurozone countries. On behalf of the GUE/NGL, Germany's Lothar Bisky said he was sceptical about the competitiveness pact which could have a “hidden agenda” because the idea mooted of ending the inflation-linking of pay increases would lead to a reduction in people's pensions.
Community method. All political groups at the EP call for the European institutions to have an important role in the convergence of economic policies. Denying any form of what he termed “institutional fetishism”, the president of the European Commission, José Manuel Durão Barroso, said he would fight an unrelenting fight with the member states to defend the Community method. Intergovernmentalism has never worked in the European Union, explained Guy Verhofstadt. Sylvie Goulard (ALDE, France) slammed the European Council for refusing to separate powers of those who decide and those who control.
Despite what he called “legitimate questions” about the creation of a two-speed Europe, the lack of measures to encourage economic recovery and the attacks on the Community method, Barroso welcomed eurozone countries' desire to converge in some areas of national sovereignty in order to become more competitive. He set out several demands - the competitiveness pact had to come under the wing of the European economic governance system; it should provide value-added in addition to the measures already on the table; it should be open to non-euro countries; it should respect social dialogue and the single market and the Commission should help monitor the outcome. Barroso called for the EFSF to be given greater clout and greater powers.
Portugal. Would Portugal gain anything by requesting aid from the European bailout fund, wondered Miguel Portas (GUE/NGL, Portugal). Barroso admitted that it is in countries' interests to avoid international aid because of the high economic and political costs aid entails. Believing that it is in Portugal's interest to have a strong European Union, Portuguese Socialist MEP Elisa Ferreira called for a “solid” and acceptable European bailout fund with “credible” interest rates. British Eurosceptic Nigel Farage criticised the European Central Bank for, he said, buying up 95% of Portugal's bonds. (M.B./transl.fl)