Putting fine words into practice. People now agree at EU level that budget discipline needs to go hand-in-hand with economic stimulus. All the EU institutions are calling for it and even Mario Draghi, the head of the European Central Bank, acknowledges the need for an economic recovery deal in addition to the fiscal compact (which must not be undermined). Getting agreement on this is a good point for Europe and I have been pointing out the benefits for the past few weeks now.
It cannot be avoided that in this pre-election period in France and elsewhere, political debate is not necessarily characterised by objectivity and calm. I am not referring to the exaggerations of national electioneering, but rather to the debate at EU level. The hot temper of comments about election issues in particular member states have a positive side because they confirm that the EU is a single body: what happens in one country is a common event (even though people like the president of the European Parliament could be more restrained in talking about his preferences). When there is agreement on key policies, however, it would make sense to recognise it rather than harping on about disagreements and making personal attacks on the campaign trail.
Economic recovery programmes are making headway. On the ground, work is progressing well to prepare economic recovery programmes and stimulus packages, be it at the EU institutions or national government level. I am not talking about fine words, but rather tangible progress in preparing the operational ins and outs.
Of course, recovery measures must be accompanied by budget discipline: economic recovery must not be used as an excuse for abandoning budget discipline because that would amount to forgetting the over-spending and waste of public money that have come to light among politicians happy to throw taxpayers' money around at national, local and provincial level. We should be suspicious of politicians opposing cuts in spending and budget efficiencies because this is usually a way of protecting their own status and feeding corruption. Budget discipline and economic recovery must go hand-in-hand, not one without the other.
Discussions in full flood. At the risk of repeating myself, my comments above explain, without making a mountain out of a molehill, the hard words and tough talking only acceptable for election campaigns. To give an example, Angela Merkel said in Berlin that the fiscal compact will not be renegotiated, but Francois Hollande in Paris then said that if he was elected, he would tell her that the people of France have made a choice and have chosen renegotiation. The ECB president has already told the European Parliament that the EU needs a new pact (see EUROPE 10602) rather than a renegotiation of something that already exists and could become operational at any moment; in Brussels, a statement is being prepared to this effect that could be unveiled to coincide with the fiscal compact coming into force in its current format and which would amount to a promise for the future. Nicolas Sarkozy says that the word growth is mentioned six times in the fiscal compact. In my view, the disagreements here are not genuine and everything will be ironed out when the elections are over.
This is just one example of the measures currently in discussion because there is a long list of projects being worked upon, such as the financial transaction tax, which could solve much of the problem of the EU's future funding; how the Schengen Agreement operates, which is highly controversial and will not calm down until after the French presidential elections; regular attendance by the president of the European Parliament at meetings of the European Commission which, according to Barroso, gives the EU greater democratic legitimacy and helps set up an institutional partnership that will be crucial for progress in implementing the EU's economic strategy; and the new EU regulation on services of general interest, which upset the functioning of the single market for donkeys' years (see EUROPE 10602).
I have only selected areas where the changes are generally positive, but the list could easily be doubled or trebled. Some changes already agreed upon or under discussion are very wide-reaching and could transform key ways in which the EU operates, or even the very nature of the EU itself. New ideas and plans are legion.
Crucial compromises. Even more impressive is the active, enthusiastic, preparation of economic recovery plans. By this, I mean lively discussions rather than agreement. Given the sheer number of member states and the wide variety of policies pursued by them (which reverberate in the European institutions, particularly the EP), no one political view can decide on a solution - there has to be compromise. Disagreements sometimes lead to good solutions emerging and being taken on board.
The Danish Presidency of the Council of the EU has been wisely pursuing compromise, often with great success. Likewise the Commission and EP, each in its own way. Moreover, most governments are discussing and preparing guidelines for EU policies; this coordination of national views is set out in “common positions'” and coordinated projects that are then submitted to the EU institutions and the other member states; “common positions” here being the open letter from 15 member states, ideas mooted by 12 member states and so on. These projects are often serious plans that need further work and putting into practice among all the member states. Sometimes the Commission backs or subscribes suggestions from member states, while preserving its own autonomy and right of initiative. I think these unconventional methods are quite useful and effective - a bubbling and brainstorming of ideas that lead to positive outcomes.
Putting it all into practice. I am moderately optimistic about all this. We are still at the stage of complications arising from clashes between EU activity and extreme comments made on the election trail, which can stand in the way of compromise and calm discussions at EU level, but we will soon be entering a more constructive phase. Public opinion and some analysts are learning from the debate in the elections that key issues have long been discussed in Brussels; take the Schengen Area rules, for example, and demands that other parts of the world open up their markets and investment to match EU openness.
Arrangements for the upcoming European summits at the end of May and the end of June are being made. The Commission is reported to be preparing a full programme of measures and guidelines for the summits to strike a balance between belt tightening and growth stimulus. Various aspects are being widely discussed, like the special role the EIB could play (the European Investment Bank); a raft of stimulus measures, including using leftover EU regional funding; and details of controversial ideas like the financial transaction tax.
At the same time, there is a mushrooming of unofficial measures. The idea of setting up a European Rating Agency is gaining ground with the aim of freeing Europe from the power of the Big Three US rating agencies (one of them is partly French) when it comes to assessing countries' financial progress and the consequences this has on sovereign bond interest rates. Following intensive discussions throughout Europe, a German press release talks about the criteria for a European Rating Agence (ERA). Several banks already back the idea and the start-up capital (€300 million) is said to be already available.
Alongside all this, there is reflection on unconventional ideas like letting the euro find a lower exchange rate. I do not have enough knowledge of such matters to comment, but it seems clear to me that the European unification project could soon enter a constructive phase.
(FR/transl.fl)