Wroc³aw/Brussels, 19/09/2011 (Agence Europe) - On Monday 19 September, the European Parliament's economic and monetary affairs committee was unable to endorse the agreement in principle reached by the member states and MEPs on changes to the Stability and Growth Pact (changes to macroeconomic surveillance) because of a power cut at the EP headquarters (see EUROPE 10453), so endorsement of the agreement will have to take place later in the week so that the EP can formally mark its agreement in the second plenary this month. The ECOFIN Council is expected to endorse the changes to the SGP on Tuesday 4 October.
Over lunch in Wroc³aw (Poland) on Friday, European finance ministers confirmed the agreement in principle struck by the sherpas on Wednesday (see EUROPE 10453). The agreement was described as a major success by Polish Finance Minister Jacek Rostowski, who said that the new rules would affect all member states, although they would be tougher for eurozone countries, against which it is easier to issue sanctions to prevent tearaway budgets because they share the same currency.
The president of the ECB, Jean-Claude Trichet, described the deal as extremely important and pointed out that the ECB was more on the side of the EP in this connection. He said that the most recent draft legislation was a substantial improvement on the interim political agreement reached by the EU finance ministers (see EUROPE 10337). On several occasions, the ECB called for rules to be as strict as possible under the Lisbon Treaty, particularly when it comes to imposing penalties and sanctions.
The negotiations between the EP and the Council of Minsters were in deadlock for a long time over making penalties for a eurozone nation breaking the SGP rules automatic, even when the country's deficit is below the 3% GDP limit laid down in the SGP. Rostowski said that the solution that had been agreed upon was a two-stage approach. The first stage would see the Council of Ministers requiring a country to rectify its budget policy, with decisions being taken by qualified majority voting. The second stage would be when the Council of Ministers sees that the country in question has not done what was required and at this point, the decisions can either be taken immediately using qualified majority voting or, in the event of failure to reach a decision within a month, by reverse majority voting, with at least nine members of the eurozone deciding to reject a European Commission recommendation. The country in question would not have the right to vote and abstentions would be ignored.
The chair of the EP's economic and monetary affairs committee, British Liberal Sharon Bowles, is pleased with the one month deadline after the second Commission recommendation to the Council (if it fails to respond to the first). She said the month would be useful and would give the country time to reconsider. In addition to the dispute over how decisions about penalties are to be taken, MEPs have also been fighting tooth and nail to expand the economic dialogue process, whereby a struggling country would be required to explain its position to the EP and the president of the European Council, Herman Van Rompuy.
Delighted that what he described as a “marathon” of talks on reform of the SGP is drawing to a close after a year of negotiations, EU Economic and Monetary Affairs Commissioner Olli Rehn hoped the new rules would come into force by January 2012. He said the new rules would lay the foundations for strengthening economic governance in Europe, but were by no means the end of the story. Trichet said Europe had to consider how to improve governance in the eurozone. On 21 July, eurozone leaders asked Van Rompuy to prepare proposals to this end for the European Council in October. France and Germany suggested institutionalising the eurozone by appointing a permanent president and by holding regular summits. The Netherlands suggests introducing the ability, as a last resort, to kick a country out of the eurozone if it continually breaks the rules. The Commission's research into the feasibility of eurobonds is part of this process and may lead to further changes to the Lisbon Treaty, but various countries in Eastern and Central Europe are concerned about this move because they were required to join the euro as one of the conditions of membership of the EU. They fear the creation of a two-speed Europe and not being able to express their views about changes that directly concern them, as Rostowski was careful to explain to the ministers at their meeting in Wroc³aw. (MB/transl.fl)