The “fiscal compact” is real. It has been awaited for years. But now, after being long invoked and called for, it finally brings economic discipline to economic and monetary union (EMU). The text of the fiscal compact is sufficiently detailed and thorough to give us hope that it will work effectively. Official approval will be given in March, and it is expected the number of ratifications needed for it to take effect should be quite rapidly reached. EMU will thus have rules binding eurozone countries, to be upheld by the member states that so wish. As we know, two member states, the United Kingdom and the Czech Republic, have refused to sign up to it.
Approval of the fiscal compact has been heralded as a triumph in the media.
Correct name. Written texts and careful commentators and officials describe the pact as “budgetary” rather than “fiscal”, which is correct as it in no way concerns taxation (an area that remains within the scope of member state competence), but budgetary policies. At first sight, this might seem like a trifling linguistic detail - but it is not, and we shall come back to it.
Economic recovery. On Monday, the EU heads of state and/or government gave pride of place to adoption of the statement on recovery of economic growth. Their aim was quite obviously to first of all deliver the following positive message to the attention of public opinion: - austerity, constraints and discipline are not the only things of importance on Europe's horizon. The thick, rich preliminary document sets out a wealth of ideas, and above all it announces and describes a considerable number of initiatives. To my knowledge, only our bulletin summarised correctly and took account of explanations set out by José Manuel Barroso and other heads of government. It is wrong to say that this document does not comprise any operational initiative. One only has to mention the new allocation of €23 billion from the European Social Fund (currently unused) and that of €82 billion from the Structural Fund in favour of youth employment, through small and medium-sized enterprises. To this is added the fact that a number of single market aspects, not sufficiently exploited, have been given concrete substance (especially in the fields of services and energy). There is a timetable and guidelines. I shall be coming back to this, also.
Financial aspects. The allocation and arrangements for the use of the financial instruments linked to the budgetary treaty have remained partially outstanding. This is a difficult issue as everyone is right in their own way, not only the restrictive member states but also the others. But it is not just a question of numbers. According to Mario Monti, the bigger the allocation the less it will be used as its volume reassures the markets. There is an evident connection with the functioning of the budgetary treaty and developments in Greece will have considerable influence. Germany believes eurozone countries must give up their autonomy when it comes to managing their national budgets - if they want bailout facilities to be automatic in nature and unlimited in practice. If supervision of budgets is total and effective, Germany may even agree to eurobonds, Schäuble said. Other member states, however, dismiss the idea that Greece should give up its sovereignty when it comes to its national budget. Would that be a matter of substance or a way to keep up appearances? Who knows? But there is very little time left - just a few weeks.
Contradictory parliamentary responses. Within the EP, the reaction of the majority political group, the EPP, was on the whole positive. According to its leader, Joseph Daul, the budgetary pact will strengthen budgetary discipline of member states. He now believes one should move forward in other, related areas. Greater reticence is shown by other groups (according to Guy Verhofstadt, progress there is but no solution), or they are downright negative. According to Daniel Cohn-Bendit, it's hopeless. Hannes Swoboda's reaction is astonishing. Speaking on behalf of the Socialists, he says it is a failure that creates two Europe's, one of 27 members and one of 25 (as if the two countries missing had not chosen to not take part). Swoboda went on to add that the “ratification” aspect is still unresolved as, he says, “François Hollande, no doubt the next president of the French Republic, has clearly said he wishes to renegotiate the text”. As if Sarkozy was not entitled to commit his country or that the budgetary pact would not enter into effect as soon as a certain number of ratifications have been acquired. This would seem to be the position of the French Socialists rather than of the EU Socialist Group. (FR/transl.jl)