Brussels, 14/04/2011 (Agence Europe) - The Social Democrat group at the European Parliament recognises the fact that member states need to consolidate their public finances. Nonetheless, it would like Stability and Growth Pact provisions to allow member states a certain margin of manoeuvre for promoting public investment, which is cruelly lacking in Europe. The main political parties at the EP are continuing to negotiate in an attempt to reach a compromise on the six legislative texts contained in the package strengthening economic governance in Europe (EUROPE 10337). On Tuesday 19 April, during the parliamentary economic and monetary affairs committee, the right and left will oppose each other on the issue of whether to vote in favour of the six draft reports.
In a reference to the declarations made by the former president of the European Commission, Romano Prodi, who criticised interpretation of the Pact's rules in 2002, Udo Bullmann (S&D, Germany), said that the, “pact is still stupid” because it does not distinguish between smart investment and outmoded policies. He added that, “we do not want to weaken the Stability and Growth Pact but to make it work”. He criticised European rules that were always brandishing the stick but never the carrot. His Portuguese counterpart, Elisa Ferreira, stated that, “public debt is a real problem but you cannot pay back your debts if you do not have growth”. She said that in order to increase a country's competitiveness, lowering wages was not enough; it was also necessary to look at the wage cost/productivity ratio and then analyse investment in know-how, innovation and new technologies. Stephen Hughes from the United Kingdom was afraid that too much focus on austerity policies would lower public investment in the eurozone to a level close to 1.5%, in relation to the level of GDP by 2015, which is far below that of the EU's main trade competitors.
The S&D group is therefore calling for differentiated treatment for productive investment. Member states should be allowed to borrow to invest in promising sectors but not for funding their current spending. These productive investments would not be calculated in the public deficit calculations. Problems in this area can be located in the definition of what constitutes public investment. Bullmann (S&D, Germany) explained that, “by delegating, the Commission will be able to define specific intervention domains in line with the EUROPE 2020 Strategy”. He also said that investments should target energy efficiency objectives in Europe. According to this MEP, “this is the only chance that exists if the European Commission is to put its foot into member states and evaluate their level of modernisation”. Hughes appreciated the fact that it would be the Commission that had responsibility for defining what constituted productive investment. The Commissioner for economic affairs, Olli Rehn, would play a greater role in economic governance, which would go beyond a simple framework of budgetary and macro-economic monitoring.
Proposals from the Social Democrats would not convince the European right. Hughes recognised that there was an enormous division between the position of the Social Democrats and the other political groups. He said that the EPP group is not flexible and wanted to impose a real budgetary straitjacket on member states. The position of the Liberals is, however, close to that of the Social Democrats in so far as the ALDE group is requesting that the EUROPE 2020 strategy objectives are made binding. The Greens support the socialist proposals.
Macro-economic indicators. Ferreira appealed for a genuine role to be played by the EP in the elaboration of the indicators that will help identify macro-economic imbalances in the eurozone. She declared that, “we want to have our say on the subject of the scoreboard”. According to Ferreira, the EP will not be able to approve a procedure that goes as far as penalising countries for excessive macro-economic imbalance if countries do not know what the objective of the sanctions will be. She called for a list to be drawn up consisting of a dozen different indicators that also take into account the social situation of the specific member state and which focus on income disparities and unemployment rates.
With regard to the question of the timetable, Bullmann considers that a reform as important as the “economic governance” package (negotiated in co-decision procedure for the first time) needed more time. He did, however, recognise that they did not have majority support for changing the 19 April date for a vote in the parliamentary committee. Nonetheless, he warned against the risk of developing texts that are approved by only slight majorities. He said that this situation would complicate Parliament's position in future negotiations with the Council and explained that the objective is one of reaching a definitive inter-institutional agreement in June. (M.B./trans.fl)