Changes and objectives. European construction enters a decisive phase in its development this week. It has already seen periods of change every bit as significant: the dawn of the European Economic Community (EEC); the extension of the EU firstly to the Iberian peninsula and then to Central and Eastern Europe; the birth of the euro as the single currency. The issues to be debated and deliberated by the EU between now and the end of June are many and are likely to result in two consequences which do not feature as such in the documents: (a) the euro will no longer be the single currency of the EU as a whole (as, in theory, it is at the moment) but will become the currency of a zone made up now and in the future of those member states which want to be part of it and which abide by its rules; (b) a two-speed Europe will become an acknowledged reality (though it may not be portrayed as such) - a development that even Jacques Delors considers constructive as it will mean that progress can be made in EU integration in areas where there is no unanimous agreement.
These two changes will be the result of the upcoming negotiations, the two most dramatic objectives of which are well-known, and, in part, challenged: the coming into effect of the treaty on budgetary discipline; and the realisation of the twin-track approach of controlling budgetary deficits and economic growth, a principle recognised by all, though the content remains to be determined - not an easy task.
Twin track is essential though waste must be avoided. I believe, and I stress this point, that, in the context given, budgetary discipline is imperative and positive as an instrument that will help eliminate a mind-boggling number of abuses, waste and other bending of the rules of proper management of public money. Discipline without doubt means effort and sacrifice but, at the same time, it brings beneficial correction of, for example, abuses by politicians, tax evasion and other diversions that must be tackled. The clean-up being undertaken is far from over and must be continued, without its being side-tracked by weeping and wailing which, though highlighting the difficulties being faced by the least well-off in society, in fact and above all, are seeking to maintain unjustified privileges.
The economic recovery measures running alongside control of public spending must also be evaluated with care and caution, as they, too, often conceal specific, sometimes unfair, interests. This column has already spoken of the sometimes excessive and even prejudicial subsidies paid to the wind energy sector, and this is but one of many cases. Even construction of public works, of some motorways, for example, is not always a real priority. Tales can be heard on the ground of many motorways which no one is using because of the crisis. One must never let one's guard down.
In conclusion, I would say that consolidation of public expenditure alongside economic recovery is a proper and key principle, but, as always, care must be taken to avoid abuses and wastage.
EU as an entity among the “Big Eight”. The EU is not part of the list of the “Big Eight” who met in Camp David last Saturday. Europe was represented by Germany, France, Italy and the United Kingdom, the other four being the United States, Russia, Japan and Canada. Since its inception, the G8 has been too limited an inter-governmental body, which has punched below its weight and not been as effective as it might have been, principally because the new giants - China, India and Brazil - are not at the party. However, this time, in fact, the meeting was useful as the only real topic under discussion was the euro and the EU as such took part in the meeting, with Messrs Barroso and Van Rompuy present and addressing the summit (see the following pages of this newsletter).
The European currency is recognised as being a key part of the global economy and central to international financial balance. The specific situation of Greece was at the heart of discussions, which confirms that it is the EU as such which interests and exercises minds, even though it is not one of the “Big Eight”.
Community method a necessity. This column recently stated that the Community method was essential to the efficient management of the EU, while the inter-governmental method contained imbalances and engendered discontent. This was not a pedantic claim on my part. Progress towards federalism is a long-term matter which will involve review and revision of the treaties. Federalists have not given up the fight, they will continue to battle, no matter how long it may take, of that we may be sure.
My present considerations refer in part to what already is, but above all to what will soon be, once the treaty on budgetary discipline comes into force. In practice, the countries of the eurozone will soon effectively give up their sovereignty in those areas governed by this treaty. Monitoring their conduct will be done on a Community basis, or at least in common. From the moment the treaty comes into effect, the European Commission will become the main body in monitoring how governments behave and its decisions will only be able to be revised through a significant majority in Council. Surveillance will be a matter, firstly, for an independent European institution, and only thereafter for the governments meeting within a Community framework. This mechanism does not mean that member states will give up all control over the practicalities of their economic policies (their VAT rates, for example). It does, however, introduce a requirement to get results, under the watchful eye of the Commission and the other member states. It is not with these rules that member states will be able to neglect the discipline imposed by the euro. With these rules, Greece, for example, would not have been able to conduct itself as it did.
Let us not forget that this treaty will come into force once it has been ratified by 12 euro countries. Effectively, this means that the countries which remain behind the others will, in practice, find themselves on the margins of the eurozone.
The case of Greece: appearance and reality. The Greek situation continues to develop in the midst of ever more intense controversy, one dramatic turn of events after another, and often conflicting positions being adopted. The latest developments are reported on the pages that follow. This column will reflect on what is taking place tomorrow.
(FR/transl.rt)