Brussels, 13/06/2012 (Agence Europe) - On Wednesday 13 June, the European Parliament gave a very clear negotiating mandate to rapporteurs, Elisa Ferreira (S&D, Portugal) and Jean-Paul Gauzès (EPP, France), by adopting without modification their draft reports on the two regulations altering the Stability and Growth Pact (also known as the “two-pack”) (see EUROPE 10632). The MEPs back the idea of setting up a Redemption Fund to temporarily pool excess eurozone sovereign debt and the creation of a €100 billion fund to facilitate targeted investment. The EP did not adopt any legislative resolution and therefore talks will start next week with the other EU institutions to reach agreement in first reading.
MEPs have put the idea of a Redemption Fund into draft legislation (see EUROPE 10528). “We have succeeded in formally putting on the negotiating table a systemic and structural answer to the crisis representing a real firewall to protect the Eurozone”, said Guy Verhofstadt (ALDE, Belgium). The EP wants more budgetary integration, via the pooling of eurozone member state debt. This could take the form of eurobonds or of a temporary redemption fund. Marianne Thyssen (EPP, Belgium) said: “Both are valid ideas, but we cannot treat these lightly, considering their enormous financial scale and the transfer of competences from the member states to the EU these could represent.”
Balancing austerity and growth stimulus. The EP highlights the need to ensure that budget surveillance does not prevent growth and it wants the Commission, when calling for further spending cuts, to ensure that this does not put a brake on growth-stimulating investment. Ferreira said that budget discipline must not be the alpha and omega of EU strategy and the short-term objectives must be rebalanced in order to take action in favour of growth. Philippe Lamberts (Greens/EFA, Belgium) issued a press release saying the vote paved the way to genuine alternatives to the one-sided austerity policy that has characterised crisis response thus far and which has clearly shown its limits. As a counterbalance to austerity policies, he called for mobilisation of the EIB and Structural Funds and measures to ensure that budget cuts do not come at the detriment of vital public services, like education and healthcare.
The Commission is asked to prepare draft legislation to create a growth fund that would put 1% of EU GDP to work each year, but the EP rejected the only amendment to the text for the plenary vote, lodged by the S&D Group, which asks the Commission to list in detail investment spending in eurozone nations as part of its budget surveillance.
Safeguard mechanism. Gauzès is happy that a wide majority voted in favour of the idea of setting up a safeguard mechanism to protect struggling eurozone countries. “If this safeguard mechanism had existed at the time Greece's financial difficulties appeared, we would have gained a lot of time and saved a lot of money”, he said. It would not be possible to declare a country bankrupt for which the safeguard mechanism comes into play and the country would not be able to default on its debt. Lenders would have two months to make themselves known to the Commission and interest rates on loans would be frozen. (MB/transl.fl)