Brussels, 23/03/2011 (Agence Europe) - On Thursday 24 and Friday 25 March, the European Commission will enshrine its response to the sovereign debt crisis, two weeks after the summit of the eurozone (EUROPE 10335). This desire to put on a united front could quickly be eclipsed by the situation in Portugal, where the fall of the government was a possibility on Wednesday 23 March, if the national parliament rejected a fourth wave of austerity measures. Other potential problems include the parliamentary elections in Finland, which limit the decision-making capacity of the government, and the stand-off between Ireland, which is calling for preferential conditions for the loans it has been granted, and Germany and France, which are calling on it to increase its corporate tax rate in return. Not forgetting the scepticism of the financial markets over the measures announced, or the workers taking to the streets in Brussels on Thursday to express their opposition to the austerity measures carried out to improve the stability of the single currency.
Rescue fund. The EU27 will also confirm decisions on the European rescue funds, the current EFSF facility and the future European Stability Mechanism (ESM), which will replace it in mid-2013 (EUROPE 10342). However, the way in which the EFSF (European Financial Stability Facility) should be expanded to €440 billion, probably through a doubling up of national guarantees, is not yet known. The negotiation of terms and conditions for loans granted to Ireland comes within this framework, even though the moment does not yet look auspicious for final decisions to be reached by the end of the week. Whatever happens in Portugal, European main parties should remain attached to the budgetary objectives set.
The ESM (European Stability Mechanism), with €500 billion at its disposal, will help debt-stripped nations in exchange for a programme of austerity measures. Exceptionally, it could buy up sovereign debt securities directly from an issuer country or, as a last resort, provide for the possibility of restructuring national public debt. The decision for simplified Lisbon Treaty revision will be adopted at the summit in order to place the ESM on a sound legal basis. This decision was approved by the European Parliament (see related article).
In exchange for strengthening European bail-out funds, Germany has brought round other countries of the zone to sign up to the pact for the euro. With this pact, the 17 eurozone members undertake to implement measures aimed at strengthening their economies' competitiveness in areas of national competence, such as the labour market, wages, and public finance control. At the summit, a number of countries will announce the first measures that they will be taking and the countries not belonging to the eurozone but hoping to take part in the initiative will make themselves known. At the EP, voices of criticism were raised against the intergovernmental nature of the pact for the euro and the excessive emphasis that is placed on budget cuts to the detriment of investment.
European leaders will welcome the Council's political agreement on the legislative package strengthening the Stability and Growth Pact and will renew the objective of reaching an interinstitutional agreement in June (see EUROPE 10337). Broad economic guidelines will also be decided upon, to be introduced by each country into its stability and growth and economic reform programmes to be presented jointly, by the end of April, in the context of the European semester (see EUROPE 10292). Draft conclusions, a copy of which has been obtained by EUROPE, state the importance of completing the internal market especially with regard to services, and of promoting the regulatory business environment, as advocated by a group of nine countries headed by the United Kingdom. Finally, the EU27 will highlight the importance of putting the European banking system back on an even keel. (M.B./transl.fl/jl)