Brussels, 23/06/2011 (Agence Europe) - By voting on the “economic governance six-pack” to bolster the Stability and Growth Pact on Thursday 23 June, MEPs stand firm in their demand for greater automaticity of decision-making taken as part of the Pact's chapter on warnings and sanctions (see EUROPE 10402). They do not, however, slam the door on the possibility of a final first reading agreement by the end of June. On reform of the Pact, MEPs remain divided. The European Left, which is in the minority, denounces rules representing too much austerity, which leave too little wriggle room for growth-incentive investment, so cruelly needed by over-indebted countries. This opinion was rejected by the Right.
The Parliament endorses the result of discussions held with the Hungarian Presidency of the EU Council last week, thus rejecting changes brought by the Ecofin Council on Monday (see EUROPE 10399 and 10401). Corien Wortmann-Kool (EPP, NL) said they were in a situation of 99% agreement with Council, and in coming days they will seek to overcome the last obstacles standing in their way to find an agreement that can be put to the vote during the July plenary session. Two questions remain outstanding: - the introduction into the prevention chapter of the Pact of the decision-making procedure known as “reverse qualified majority voting” (RQMV); - and the taking into account of surpluses when assessing macro-economic deficit. In the eurozone, one cannot analyse deficits without these being linked to surpluses, stressed Elisa Ferreira (S&D, Portugal), pointing out that the legislative package provides for differentiated treatment of these two situations.
RQMV. The European Parliament calls for the introduction, in a single stage of the Pact's preventive chapter, of so-called “reversed qualified majority voting” (RQMV). According to this decision-making process, a Commission recommendation stipulating that a member state has not taken the necessary correcting measures to remedy a deficit and/or excessive indebtedness could be adopted unless a qualified majority of countries are opposed to it. The Council refuses to open the door to this process immediately in the sanctions procedure as it reduces member states' margin of political manoeuvre. This would partly bring into question the Franco-German agreement reached in Deauville, allowing member states to maintain the ability to put a political lock on it. In exchange, the Council suggests public justification should be given of the reasons why it is not following the Commission recommendation (“comply or explain”), or review the rules in three years' time.
On this point, the European Parliament stands united - and it plans to make its voice heard. “We are in co-decision”, said Sylvie Goulard (ALDE, France), who feels the Ecofin Council's stance is “not sacrosanct”. Carl Haflund (ALDE, Finland) pointed at the divisions within the Council where, he said, small member states support the EP in this matter. Some countries wish to continue with their wrangling, he bemoaned, speaking of the case when, in 2004, Germany and France had undermined the credibility of the Stability Pact by trampling on the rules in force. During the plenary debate on Wednesday evening, Hungary's minister for financial policy, András Kármán, said: “It is definitely time for Parliament to reconsider its initial position and to make a move towards the Council” in coming days.
Austerity. Political groups' support for reform of the Pact as approved on Thursday is, in reality, more mitigated. The majority position held by the Right and the Liberals prevailed. Diogo Feio (EPP, Portugal) was delighted that the six-pack provides a course set with targets to be followed for reducing public debt, as well as provisions authorising an interpretation of the rules. He asserted that the Pact was now improved, promoting “smarter application” of the rules.
The Socialists and the Greens do not hear things in the same way. They rejected both reports on strengthening budgetary rules. Ferreira said her group believes that legislative review should deliver a powerful message - that the Pact does not work in times of crisis, as 24 member states are subject to infringement proceedings, and it does not work when countries are in recession. It is indeed essential to have sound public finance, she said, but it is just as important to have growth as, without growth, one cannot reimburse what one has borrowed. Philippe Lamberts (Greens/AFA, Belgium) was critical saying: “By focusing only on public spending and austerity, and by ignoring the income side”, the “short-sighted” and dominant centre-right at the EP and Council “will not provide the basis for sustainable fiscal consolidation and will exacerbate poverty within the EU”. Rejecting the package as a whole, the GUE/NGL Group sought in vain to postpone the plenary vote.
The political groups of the European Parliament were successful in forging a consensus on the two reports relating to the new surveillance procedure for macro-economic imbalance. Such imbalances should not simply be considered through budgetary variables, but should also take account of elements of the economy, without forgetting the role of social partners and national wage negotiation tradition, Ferreira said. “You have won an equal role for Parliament in determining the scoreboard for detecting possible macroeconomic imbalances”, Economic and Monetary Affairs Commissioner Olli Rehn told MEPs on Wednesday. (M.B./transl.jl)