“Pact for the Euro” is born. I would ask readers not to be impressed by the reservation, reticence and objections voiced by those super experts who never tire of placing emphasis on what remains to be done and what aspects have still to be clarified. The truth is that the heads of state and government of the eurozone have taken a truly radical step forward in setting out the principles and rules that are to govern how the euro is to work in the future, as you can see from the pages that follow. Of course, some aspects were settled with a compromise, in order to take everyone's positions into account. Taken as a whole, however, the summit was a turning point. The leading players are themselves aware of this, as demonstrated by the confidence with which they announced that, in two weeks' time, the European Council will be invited in plenary and official session to speak on what, for the eurozone countries, is now already acquired. Representatives of these countries will go ahead with briefing their colleagues of the first measures to be implemented under the Pact for the Euro.
The first positive result concerns terminology. Coordination of economic policies is called the Pact for the Euro, and the future intervention instrument in the area is known as the European Stability Mechanism (ESM). This may seem somewhat insignificant, if not naïve. I believe, however, that simplifying and clarifying the terms used is a whole exercise in itself.
What is essential, of course, lies in the content of the Pact, and the eurozone countries wanted to express their views on this in the clearest and most obviously significant manner. Point 1 of their conclusions affirms quite simply that the Pact for the Euro has been endorsed. It will be presented to the European Council of 24/25 March 2011 with a view for non-euro area member sates to indicate whether they intend to participate. Some countries, such as Poland, have already announced their intention to do so, naturally pending entry into the eurozone. The full text of the Pact is published in annex to our edition No 10335.
Financial allocation, rates of interest, the case of Greece. The conclusions first of all indicate the overall financing capacity of the European Stability Mechanism (ESM), as well as the procedures for its implementation. I am fully aware that the ESM allocation of €500 billion is sometimes considered too low. It is the result of a compromise. The intervention mechanisms were also the result of a compromise. It has been agreed that unanimity will be required to decide what ESM financing should be. However, the European Commission and the European Central Bank will take part in the procedure, which is significant in itself. It has now been decided that the rates of interest for financing underway under the current European Financial Stability Facility (EFSF), in place until it is replaced by the ESM, are being reviewed downward, and that, when the time comes, those of the ESM will also be lower.
Greece will benefit immediately from more flexible debt measures concerning not only interest rates but maturity dates. Earlier, the Greek prime minister had, as we know, strongly rejected the hypothesis of debt “restructuring”, which must be negotiated with creditors. A number of aspects of the conclusions appear, however, to express doubt on this, as if, in reality, restructuring was considered unavoidable. That is one aspect that must be clarified.
A controversial tax, two basic texts. A compromise was also reached on the possible tax on financial transactions. The conclusions simply indicate the need to reflect on this and to take work forward not only at the level of the eurozone and the EU but also at international level. It is well known, however, that the European Parliament has been calling for an immediate decision. The question remains outstanding.
The two annexes (Pact for the Euro and a further publication of the Eurogroup declaration of 28 November last on the European Stability Mechanism) are essential, as they give content and substance to the conclusions. With these in hand, our readers will be able to form their own opinion. My aim is merely to place emphasis on what came out of the meeting which, as I see it, exceeds anything that could have been expected. Everything points to the fact that, in two weeks' time, the eurozone countries will have instruments at their disposal for determining the durability and the functioning of the single currency. (F.R./transl.jl)