Beyond the new treaty. As was to be expected, no account has been taken of the European Parliament vote calling on member states not to press ahead with the treaty (or compact, or agreement) on budgetary stability. MEPs themselves give the impression of having forgotten their call. Maybe they never really believed it? Attention is now once again focused on this project; our newsletter regularly reports on it. There is the feeling that the differences that remain can, once and for all, be overcome and that, at the very highest level, attention is gradually turning to related but more overtly political points.
How can the two demands be reconciled? The first issue for discussion relates to the balance between budgetary rigour, which is essential if ruinous public debts are to be reduced, and the need - that is every bit as crucial - of maintaining or stimulating economic growth. Theoretical discussion abounds. The lessons and advice explaining how and why dramatic reduction of public spending brings with it a fall in economic growth are without number. There is not a renowned economist or university professor who cannot inform us of how and why the first factor influences the second. There is no opposition party (of either the Right or the Left) which is not saying how the party in power has messed everything up. Given that the new treaty introduces discipline that has to be observed on deficit reduction and controlling public expenditure, the strand that is being highlighted at present is getting people back to work. How can these opposing demands be reconciled? Growth forecasts in Europe have just been revised downwards by both European bodies and global organisations, sometimes with dire warnings. The International Monetary Fund is renowned for being particularly strict when it requires countries seeking its financial assistance radically to reduce their budgetary deficits. And yet here is that same IMF, in its new economic forecasts, stating that excessive budgetary adjustment could damage recovery, erode social provision and undermine market confidence!
Differing positions. The EU authorities, led by the Parliament and the Commission, are looking for this balance. Mr Barroso has announced proposals on this for Monday, underlining: “Europe cannot be built on the idea of discipline and sanctions” (see EUROPE 10538). Guy Verhofstadt, leader of the Liberal Group in the European Parliament said: “The Eurogroup and finance ministers would be more credible if they spent less time arguing about new legal provisions and more time focusing on the measures to restore growth. There is virtually no progress on the multi-annual financial framework negotiations nor on project-bonds despite the key role in providing the means for future investment and growth”.
Positions on these issues are far from being uniform. The discussions and policy directions that could develop will be no less important than the fine-tuning of the text of the new treaty.
Ideas of European unity differ. A further issue exercising the mind and of concern relates to the ever deeper differences among member states with regard to the very idea of European construction. One must not expect this issue to be debated within the European Council, but who not aware of this problem? How can it not be noted that the United Kingdom, Hungary and some other Central European countries are not on the same wavelength over European construction as the countries of the eurozone? This is not a geographical matter, as Poland is already hoping to be considered as a soon-to-be eurozone member. Nothing is cast in tablets of stone, however. The outcome of a national election can from one day to the next alter the attitude shown by a country. The Parliament takes the view that protecting unity resides in strict application of Community rules. For example, a large majority in the EP is calling for the new treaty on budgetary discipline to be incorporated in to Community law within a maximum of five years. How can this be imposed? Can anyone believe that the British will accept this?
Some MEPs are calling for greater rigour, for example, with the application of Article 7 of the Lisbon Treaty towards any member state which fails to observe Community principles (specifically targeting Hungary). Which government would agree to lose its voting rights, however?
A formal debate in the European Council on these issues may be unthinkable. No one can deny that such problems exist, however. (FR/transl.rt)