Brussels, 01/12/2011 (Agence Europe) - On Wednesday 30 November, EU27 finance ministers had their first discussion of the recent draft legislation to increase the European Commission's budget surveillance powers over eurozone countries, particularly those with weak economies (see EUROPE 10501). The ministers who spoke in the debate generally supported the Commission's approach.
The Swedish finance minister, Anders Borg, said it was important to continue with the budget policy reforms. The Spanish finance minister, Elena Salgado, agreed with increasing discipline and wanted a definition of when a country facing upheaval on the markets is considered ripe for intervention from the European Commission to increase surveillance or ask for international aid. Am ambassador from the Netherlands said one could go further and give the Commission the power to take independent decisions. Luxembourg's Luc Frieden said he agreed with greater control of struggling countries, while Austria's Maria Fekter felt it was right that countries receiving international aid be monitored after they receive the aid. Slovakia explained its experience of having macroeconomic statistics drawn up independently of politicians.
When it came to objections to the idea, Borg said it could cause tension between decisions at national level and decisions by the EU. Backed by Portugal, Frieden quizzed the Commission about the timing of its proposals, commenting that the new Stability and Reform Pact has only just gone through and this is the first year of the European semester. The Slovenian finance minister said that the problem wasn't the rules themselves but making sure they were respected. Fekter said it would be difficult for the regions of federal countries to meet the deadlines set out in the proposals because the Commission suggests that eurozone countries submit their budgets for the following year half way through October.
Eurobonds. The Belgian finance minister, Didier Reynders, said that alongside tighter control of public finance there should also be discussion about the pooling of sovereign debt though eurobonds. The Commission has published a Green Paper setting out three options in this domain with differing levels of pooling. Borg said eurobonds were problematic because they would reduce the incentive for countries to carry out reforms and if there is progress on economic governance, there would be no reason for continuing with the eurobond idea. Salgado defended the idea and the new Italian prime minister, Mario Monti, who is also the country's finance minister, wanted the idea to be looked at with greater distance and to examine the benefit of pooling sovereign debt as a way of building financial integration. (MB/transl.fl)