Brussels, 29/06/2012 (Agence Europe) - At their summit meeting on 28 and 29 June, the EU27 adopted a “Compact for Growth and Jobs”, with a little last minute wrangling to accommodate Italy and Spain. The backbone of the strategy reviewed in favour of growth is based on €120 billion being made available through European Investment Bank (EIB) refinancing, the re-scheduling of structural funds, and the launch of the pilot phase in bonds aimed at financing major infrastructure projects.
Master strategists Monti and Rajoy. For Council President Herman Van Rompuy, however, it was no easy task to bring all 27 EU member states together around this series of measures. Italy and Spain took the agenda hostage at this point to negotiate emergency measures for financial stability. The Italian-Spanish manoeuvre allowed both countries to make adoption of the Compact subject to measures able to bring down the interest rates on their national debt (see related article). Spain's Prime Minister Mariano Rajoy refused to acknowledge that such an approach was being used to pile on the pressure, saying that agreements are not reached through coercion. Nonetheless, Mario Monti, Italy's Premier, acknowledged having undertaken measures which had not been planned initially, to such an extent, he admitted, that his eurozone colleagues did not appreciate Italian and Spanish reservations. France's President François Hollande is said to have been understanding, however, saying that Italy and Spain wished to wait until the summit had come up with as much as it could, although that was not the difficult part. After this feat of strength by the two countries who will be playing against one another in the final of Euro 2012, the Compact was able to take the place allotted to it as planned as an annex to the June Summit Conclusions. In this way, German Chancellor Angela Merkel conceded, the growth agenda has completed the budgetary pact.
€120 billion. Herman Van Rompuy was keen to underline the breath of fresh air given by the €120 billion endorsed by the 27 member states, i.e. 1% of the EU's Gross National Income. Van Rompuy said this would boost funding for the economy. With recapitalisation of €10 billion, the EIB will now be able to disburse €60 billion in loans, especially to those countries in greatest difficulty. A further €55 billion are to be sought in unused structural funds by 2014, when the current multiannual financial framework ends. The member states may, in cooperation with the Commission, redirect funding to projects that are more propitious for growth, such as SMEs, employment and youth. The funds should also be considered as acting as a loan guarantee and for sharing risks taken by the EIB in order to reactivate infrastructure projects or renewable energy projects. The last tranche of €5 billion represents what the pilot project for compulsory loans should bring about as investment in infrastructure in Europe.
Specific country-by-country recommendations. Alongside this flagship announcement, the EU27 came into line regarding action to be undertaken at the level of EU member states, such as restructuring of the banking sector, in favour of growth, employment and competitiveness. The Compact for Growth specifically refers to country-by-country recommendations, that the Council endorsed during the same summit. Some countries nonetheless displayed disagreement through statements that will appear on the minutes of the meeting. Such is the case of Belgium, which considers provisions were “too prescriptive” on the subject of annual salary indexing, a “national tradition”, as the Belgian prime minister, Elio Di Rupo, put it.
EU contributions. Finally, the Pact brings into line the contributions of a string of short- and medium-term decisive European policies for growth, and hence inevitably also for strengthening the single market. With this in mind, the document also underlines the importance in the eyes of certain member states of the reform taking place in cohesion. The Pact underlines the importance of the European Unitary Patent on which the summit took a decision (see related article), completion of the single market for energy by 2014, and the good functioning of the digital single market by 2015. Finally, on trade matters, the European Council calls for rapid examination of the Commission's proposal on access to the public procurement markets of third counties. It also recommends intensified efforts to finalise talks on bilateral free trade agreements with Singapore, Canada and India. Free trade agreements with the United States and Japan are still envisaged. (MD/EH/transl.jl)