The idea that budget discipline should go hand-in-hand with economic stimulus did not ring true. Looking at the European summit after a gap of a few days, it failed to meet some expectations.
As predicted, the budget pact was signed by 25 member states; the date of 2 March 2012 will go down in the history of Europe as long as countries now ratify the pact and things go according to plan. But nobody was moved by the actual ceremony because it had all been decided in advance. One of the aims of the summit had been to send a message to public opinion that budget discipline must go hand-in-hand with economic stimulus and job creation. The other aim took up most of the politicians' time but was not reported upon very much - an attempt to convince people that Europe is about more than simply budget austerity. This failed and neither the European Parliament nor public opinion were won over. Meanwhile, the trade unions virtually gave up on the planned demonstrations.
Important document that leaves public opinion indifferent. The economic stimulus document is not unimportant, of course. I would even say that the debate among heads of state was promising, despite disagreements, and that the document they approved is the most tangible and factual since the European summit was set up. The document has been reported upon at length in this newsletter, and EUROPE 10566 gives readers the information they need to draw their own opinions. Disagreements exist on, for example, the areas of the single market set out in the 12-nation letter that Merkel and Sarkozy say would introduce too much deregulation. Many other objectives, however, were set out in detail, often with timelines.
For example - a decision is to be made by June 2012 on the city that is to house the European patent (where it will be run and managed) and on the energy saving directive. But how can announcements like this influence public opinion? They are both important aims (I will be returning shortly to the second). To clamp down on tax evasion, EU negotiations with Switzerland (rather than individual country agreements) have been announced. No tangible details were given for other listed targets, like job creation, while others are more technical and of little interest to the media, like changes to the financial industry, including the Tobin Tax, the common tax basis for company taxation and an updating of EU credit rating agency rules.
This is an important programme, but there is precious little for public opinion to get its teeth into.
Hence only the first of the two summit aims was achieved - the signing of the new budget pact (which some of the European Parliament say is a waste of time).
No need to exaggerate Spanish and Dutch budget news. The budget pact ceremony was overshadowed by the news from the Spanish and Dutch prime ministers that in 2012 both countries will fail to reduce their public deficits by the planned amount. The president of the Commission said that the rules would not be eased (the stability and growth pact) and normal procedures would follow. Commissioner Olli Rehn said (see yesterday's bulletin) that the Spanish announcement was a serious matter, but one needs to read between the lines. His comments are firm, yet reasonably optimistic.
There is no need to exaggerate. The Spanish prime minister said that his country has not changed the overall debt reduction timeline and the aim is still to reduce the deficit to 3% of GDP in 2013. The Dutch are one of the four member states to retain their top credit rating (triple A) and the question here is more a matter of domestic politics. I would say that the changes to the eurobond plans and the Tobin Tax are far more significant matters.
Interparliamentary cooperation. One of the impacts of the budget pact (when it comes into force) should not be overlooked - close cooperation between the European Parliament and national parliaments. The latter retain power over member states' budgets and therefore over the funding of eurozone bailout funds and other funding mechanisms. I will be returning to this. (FR/transl.fl)