Brussels, 16/11/2011 (Agence Europe) - Stronger economic governance in the eurozone is possible now, without changing the European Treaty. If institutional changes are required to make further progress, then it must not divert attention from dealing with the sovereign debt crisis. Whatever happens, the European Parliament wants to be involved throughout the process. These were the main points during the debate on economic governance at the EP plenary on Wednesday 16 November.
According to the President of the European Council, Herman Van Rompuy: “A lot can be done within the treaties, including the use of instruments such as enhanced cooperation”. It would in fact take time to alter the treaties as this would require ratification by every member state. For starters, the 17 eurozone nations would have to agree on what they want before working out how to achieve it. Playing down talk of a two-speed Europe, he said three issues needed to be considered - areas of the economy where convergence would boost competitiveness; tools to improve budget discipline (making penalties more automatic, suspending voting rights and EU funding, centralising power to intervene in member states' budgets at European level; and boosting Economic Union by harmonising taxation and possibly social affairs, pooling part of state debt and introducing tighter controls on the money markets.
In December 2011, the president of the European Council will unveil a roadmap on how to move beyond the Stability and Growth Pact and the Euro Plus Pact (among 23 member states). Decisions will be taken in March or April next year.
A legislative package to be unveiled by the European Commission next week will include measures that do not require changes to the treaty. Two draft regulations based on Article 136 of the Treaty on the Functioning of the European Union will allow euro nations to take action to boost budget and economic surveillance. “The first regulation is for enhanced surveillance of euro area member states that are experiencing severe financial disturbance or requesting financial assistance. It will provide an interface between intergovernmental financial assistance and Treaty-based surveillance - in other words, bringing it into the Community framework. It will step up surveillance for euro member states receiving precautionary assistance and assistance under an adjustment programme, and will also ensure post-programme surveillance. The key here is to ensure coherence between reinforced governance in the euro area with the overall acquis of the 27 member states of the European Union. Increasing convergence in the 17 members of the euro area without damaging the interests of all the European Union”, explained the president of the European Commission, José Manuel Durão Barroso. “The second regulation is for enhanced surveillance for euro area member states in excessive deficit procedure, thereby translating one of the commitments of 26th October. It will set out graduated steps and conditions for monitoring national budgetary policies. It should enable the Commission and the Council to examine national draft budgets ex-ante and to adopt an opinion on them before adoption by the national parliaments, requesting a second reading in serious cases. In addition, the Commission will monitor budget execution and, if necessary, suggest amendments in the course of the year”.
The legislation will be accompanied by a Green Paper setting out options for eurobonds (“Bonds for Financial Stability”), some of which may require changes to the treaty. “I believe that Euro stability bonds will be seen as natural when we achieve our goal of reinforced governance and of course discipline and convergence in the euro area”, said Barroso. Not to mention a report on how the eurozone is represented abroad, which will call for greater European visibility in international bodies like the G20 and the IMF.
The chair of the Eurogroup, Jean-Claude Juncker, called for more political debate within eurozone governance bodies, with frank plain-speaking and more detailed discussion of the domestic situation of the various member states. He said that it would be clear at the end of his term of office (spring 2012) whether a permanent chair of Eurogroup was needed.
EP. The heads of the main political parties at the European Parliament (EPP, S&D, ADLE and Greens/EFA) called for the EP to have an important role to play in economic governance, saying that, if changes were needed to the treaties, then a convention should be set up. The solution to our problems is more Europe, not less, said Joseph Daul (EPP, France) along with rectification of the error of setting up a single currency without any economic policy. He said that all the Euro Plus Pact countries should take part in this debate. “I don't know whether Monti and Papademos need talk about a new treaty at the moment”, said Martin Schultz (S&D, Germany), but any institutional changes like that under pressure from Angela Merkel should be the subject of a Convention. On behalf of the Liberals, Belgium's Guy Verhofstadt asked the Commission to suggest introducing Budget Union as the only way to deal with the crisis in Europe. He called for eurobonds, mentioning the suggestions by economic advisors to the German government in this connection. Criticising politicians for abdicating all responsibility, Daniel Cohn-Bendit (Greens/EFA, Germany) said that only ECB intelligence could save Europe because setting minimum pay at €5 or €6 in Germany and €9 in France was harldy economic convergence.
The chair of the employment and social affairs committee, Pervenche Berès (S&D, France) said that true debate and true governance would only be possible if the EP and national parliaments were involved. British Labour MEP Stephen Hughes said that Barroso's idea about positive action had to be fleshed out with the introduction of an investment strategy, economic growth and aid to get young people into work, adding that at the moment people were talking about re-arranging the chairs while the ship was sinking. Italian Socialist Roberto Gualtieri said the legal basis for strong eurozone governance could be found in existing treaties but the EP would not accept reform relying solely on stability and ignoring growth and democracy.
On the EPP, Germany's Werner Langen described the current crisis as an institutional crisis and called for moderate reforms of the EU Treaty to give the finance commissioner the same powers as the competition commissioner. French Socialist Jean-Paul Gauzès said that ordinary people had to be won over before the markets were wooed, adding that he had worked on the financial markets and knew they would never be satisfied, always asking for more. He said they were useful, necessary even, but they must not be allowed to take advantage. Gauzès regretted that the Commission had backtracked on rating agencies and given up on the idea of banning the rating of struggling countries (see EUROPE 10495).
Italy's Mario Mauro (EPP) said that the new, technocratic government in Italy (a country notorious for dragging its feet over reform) was good news for Europe, and a result of the interdependence of EU countries, criticising some countries' prescriptive approach. Saying that a two-speed Europe must not be set up, Poland's Jacek Saryusz-Wolski (EPP) said that the countries not in the euro, like Poland, were in the top speed group when it came to reform.
“Your agenda is much too leisurely, it is a bureaucratic timetable”, British Liberal Democrat Andrew Duff told Herman Van Rompuy, warning his British colleagues that if the United Kingdom thinks it has “the moral authority and the political will to block what is necessary and has been decided by all”, then it would be a tragedy for the UK and the whole of Europe alike. French ALDE MEP Sylvie Goulard called for ambitious measures to represent the European Union around the world and for eurobonds to instil foreign markets with confidence. Italian ALDE MEP Niccolo' Rinaldi said that tax evasion in Italy was likely to increase this year (after rising from 16% to 17% in 2010) and corruption cost the country €60 billion a year. German Green/EFA MEP Sven Giegold said that tax evasion was a problem across the EU and urged Barroso to unveil legislation to deal with social and economic imbalances.
Barroso said he agreed that taxation should be fair and just and that fat cats and over-consumption should be taxed, rather than labour. Tax evasion also needed to be tackled and he expressed bitterness that the Council of Ministers had refused to give him a negotiating mandate for tax evasion issues with tax havens, although some member states said that while their country was rich, the state was poor, because not enough income was clawed back in tax. He said a range of tax measures would help deal with the crisis and prevent it spreading, but the Commission's main concern was not to jeopardise the proper functioning of monetary union.
At the end of the debate, Jean-Claude Juncker said that many MEPs' comments had been dominated by national concerns and governments should not always be blamed for everything in an exaggerated way, treating them as caricatures. Pointing out that the political parties disagree among themselves about eurobonds, he said they were a good thing, but he did not have the powers needed to decide on the matter. Juncker has always called for flexibility in responding to the crisis, but that would require breaking the unanimous decision-making rule.
Herman van Rompuy said that budget discipline was required to solve the crisis, saying it was patently obvious why some member states were doing better than others, and budget discipline was a necessary precondition for pooling the debt, along with step-by-step budget harmonisation and ensuring eurozone stability. He said the eurozone therefore had to be given the resources to protect the euro because failure would cause worrying divisions among EU members. (MB/LG/transl.fl)