Preparation and clarifications. Last week's European Council had an essentially preparatory nature - its primary objective was to pave the way for the decisions which will have to be taken by the summit in December (that of November being dedicated to the financial perspectives for the 2014-2020 period). The absence of operational decisions led to a sort of generalised disappointment, with several commentators relentlessly searching in vain for concrete results. This is how the difference between the starting points of Mme Merkel and Mr Hollande on the subject which will only be discussed on 13 December came to be blown out of proportion and transformed into a conflict. But if we forget about looking for decisions that don't exist, it becomes possible to highlight the true meaning of this summit - it clarified the challenges and positions of the protagonists. Let me recall what Mrs Merkel said: “This is not a Council where we are taking decisions. We are preparing December's decisions.”
Yet a preparatory summit does not mean that nothing important happened. Challenges and approaches have been clarified in three fundamental areas, with sometime conflictual starting positions. (1) Confirmation and functioning of the two-speed Europe. (2) Problems and reluctance of the European Parliament in the face of some of the developments under way. (3) Resolve to discipline the behaviour of the world of finance by laying down rules for banks and other key players.
Each of these areas calls for a few remarks.
The “two-speeds” exist but the way they work is controversial. The two-speed Europe is right under our noses. This column has amply commented on the development towards this - be it on Jacques Delors' long-term work or the statements of François Hollande considering the two-speed Europe as in the bag. The border separating the countries which are part of this from the others is essentially participation in the euro, with possible flexibility in cases like that of Poland, which openly aspires to join the euro and is working to be successful in this.
The discussion focuses at the moment on the functioning - especially on the way of monitoring the respect for the rules by the participating countries. This is where Germany's request comes - a request to attribute to a super-commissioner the European option of rejecting a national budget which does not respect the rules of the euro. This formula of the German minister of finance, picked up by Mrs Merkel in the summit, is controversial and is still being discussed. Greece's case with its staggering costs demands a safety mechanism.
But countries like France and Italy consider that the German formula is excessive. These two countries are both heavily in debt but they are at the same time engaged in serious recovery programmes. They call for the responsibility of establishing their national budget to be respected.
A compromise ought to be possible, providing for the German formula only to be applicable to a eurozone country which doesn't respect the principles and mechanisms.
European Parliament's difficult position. The starting point on this topic is summarised in one of François Hollande's comments: some member states don't want to join the euro - that's their prerogative - but then “why would they come and tell us how this zone must be managed?” He also said he was in favour of partial autonomy for the eurozone, including through the separated financial means of the European budget (see EUROPE 10713). And the German minister of finance, Wolfgang Schäuble, had judged that only MEPs coming from eurozone countries should have the right to vote on subjects relating to this zone.
The president of the European Parliament said he is violently opposed to this principle when he spoke before the European Council. He affirmed that the totality of the competences and powers of the Community institutions must be respected and guaranteed “including on the governance of the euro”. The creation of a eurozone budget which would run alongside the EU budget must be excluded, in Martin Schulz' view. He considers that even organisms like the Troika (bringing together the European Commission; the European Central Bank, and the IMF) should give regular account of their action to the European Parliament. On its side, the Council should follow up on the initiatives and position of the Parliament in the areas of EMU (economic and monetary union), as in other aspects of Community life.
The position of the main euro countries is as firm as that of Mr Schulz, but in the opposite direction - it's not right in their opinion that MEPs representing a country that does not take part in the eurozone, and that does not plan to do so, should be able to determine its management and initiatives. The fact that the parliamentary rapporteur on an aspect of the euro may be from a member state which does not participate in the euro is considered absurd. Indeed, in effect this is already the case.
The president of the European Council is reflecting. Moreover we know how far the reflections of Mr Van Rompuy, the president of the European Council, are in the direction of a euro which is master of a destiny that is not able to depend on countries that don't take part in it. His draft report at the summit in December introduces a budgetary capacity of the eurozone. But his notion is not yet clear - the maximalist interpretations, which consider the capacity cited as a true budget have partly been softened as Mr Van Rompuy's colleagues have observed that nothing has yet been decided. What would the task and the limits of the budgetary capacity be? How would it be financed? What would its relationship with the EU budget be? Mr Van Rompuy is reflecting and intends to explore this file by mid-December. But a budgetary instrument will certainly feature in his text.
It is therefore normal that the European Parliament is concerned. An institutional Parliament-Council quarrel could come out of this. The search for a compromise would by far be preferable. A few indications are beginning to appear. I noticed the firm but open position of Rebecca Harms from the Greens/EFA Group, who observed: “The project of a budget for the euro remains nebulous. It includes traps and can't be supported while its content is unclear. Any budget of this type must be complementary to the current EU budget and in no way harm the budgetary powers of the European Parliament. The initiatives in response to the crisis must not weaken democratic controls.”
At first sight this is a reasonable point of view. Guy Verhofstadt observed that some of Mr Van Rompuy's suggestions are rejected even by one or other of the governments. And as to the substance he does not especially dismiss the principle of a budgetary capacity of the eurozone, able also to lend, but on condition that this capacity “is based on the same budgetary rules and procedures provided for in the treaties, fully respecting the rights of the two branches of the budgetary authority. It cannot rest on ad hoc arrangements between member states.” To be clear about this - the powers of the European Parliament must be fully respected.
Controlling the world of finance. The definition of the standards governing the world of finance, and the monitoring of the application and respect for these standards, represent an essential element in the current phase of European construction. This affirmation is almost a banality. It is just as evident that the regulation must be accompanied by reflection on the overall political objectives. But it must never be forgotten that the control of the world of finance, including the banks, is a condition for the political objectives to have a meaning.
Yet one wouldn't say that this reminder of the big principles is banal when one considers how many irregular manoeuvres, or manoeuvres escaping all control, have enriched speculation so scandalously, to the detriment of the productive economy. In this way the Community institutions must be in the lead, with a particular role for the Parliament as co-legislator with the Council. Schulz has proved that he is aware of this, as he has indicated explicitly, in his speech already cited at the opening of the summit, what the European Parliament demands - to ban high frequency trading, to limit speculation on primary resources, to ban “dark pools”, to ban liquidities enabling speculators to maximise their profits, etc. It is evident that the powers of the European Parliament, in the legislative area applicable to the whole of the EU are untouchable.
It is effectively the world of finance that the political leaders must distrust, not the Parliament. Financiers sometimes give the impression of accepting discipline that has been decided or is being developed but their efforts to escape it continue sneakily. Most often it is not the directors who speak but their colleagues, who evidently put into relief the inconvenience of the rules that limit the freedom of action of the operators. They take pains to prove that the financial transaction tax has nothing to do with the Tobin tax, that it would be harmful for all the operators on the markets and will bring almost nothing. This is only one example of the underground campaigns going on.
In these matters, the European Council is defining the approaches and operating its choices. It will do it in December, after discussing the 2014-2020 financial perspectives in November. In two months, it is a large part of the future of Europe which will be discussed. We already know that we will be far from having everything decided by the end of the year, but the essential questions will have been asked.
(FR/transl.fl)