Wroc³aw, 15/09/2011 (Agence Europe) - The Polish Presidency of the Council of the EU and the main political groups in the European Parliament (EP) announced on Thursday 15 September that they had reached political agreement the previous day on reform of the Stability and Growth Pact which will improve budgetary and macro-economic surveillance. The Polish Presidency would put the agreement to the Council for approval, it announced cautiously. The Council indicated that this might be as early as Wednesday of next week.
The decision-making procedure, finalised on Wednesday, that could lead ultimately to financial sanctions being imposed under the preventive arm of the Pact is as follows. If the European Commission considers that a member state's medium-term budgetary objectives are insufficient, it will issue a first warning. The Council, acting by qualified majority, can call on that country to take action within five months (three in serious cases). Following that period, if the country concerned has not taken action to sufficiently correct its budgetary policy, the Commission will issue a recommendation noting the lack of progress. It will be for member states to decide, by qualified majority, whether or not to act on this recommendation. If the Council does not adopt this decision, the Commission will be able to submit it again one month later. This recommendation will be deemed to have been adopted unless a simple majority of countries opposes it. Of the 16 countries which have adopted the single currency, nine will be needed to reject the Commission recommendation, given that the country concerned will not be allowed to vote and abstentions will not be counted. Once this stage of the procedure has been overtaken, the way will be open for financial sanctions to be imposed (for example, a financial deposit equivalent to 0.2% of GDP).
Feelings among MEPs were mixed: the division between left and right reappeared just as it had in the EP committee vote. “With this package, responsible economic and budgetary policies can be assured by including the reverse voting system both in the preventive arm of the Stability and Growth Pact as well as in the macro-economic surveillance”, argued Corien Wortmann-Kool (EPP, Netherlands), satisfied that the role of the Commission had been “considerably” strengthened. The Liberals said that the delay in the negotiations had been worth it. “We have finally armed ourselves with the right measures to avoid future crises”, said Guy Verhofstadt (ALDE, Belgium), pointing out that his group had always fought for the adoption of sanctions on the Pact's preventive chapter to be more automatic. Liberal MEP Sylvie Goulard of France welcomed the fact that the principle of open “economic dialogue” to be established within the EP had been recognised.
On the other hand, Social Democrats took the view that the legislative package as finalised was not a solution to the current crisis. According to Udo Bullmann (S&D, Germany), the agreement is “imbalanced” as it does not provide any incentive in favour of growth and employment. “Sustainable fiscal consolidation is only possible if we grow out of the crisis together”, he added. He nonetheless went on to acknowledge progress made in relation to macro-economic surveillance, which will be carried out not only in countries that are in a deficit situation but also in countries in surplus. Philippe Lamberts (Greens/EFA, Belgium) criticised a legislative package that omits to take into account the need for “social justice” and “future investment in the EU”. In his view, programmes of austerity will only make poverty worse and will destroy public support for the European project. (MB/transl.rt/jl)