Brussels, 03/10/2013 (Agence Europe) - The European Commission hopes that the European Summit in December will endorse the idea of competitiveness contracts whereby member states would receive financial aid to help them cope with the negative social impact of structural reforms the countries pledge to introduce.
Speaking to a group of reporters on Wednesday, the head of the European Commission, José Manuel Barroso, said that some doubts had been lifted about the idea of competitiveness contracts and he felt they now had a chance of being approved. Some new member states had been sceptical at first for they feared the contracts would only apply to countries in the eurozone and the cash for these contracts would reduce the amount left over for them in the EU's budget.
Barroso admitted that within the eurozone, there was not yet agreement on the question, some countries not wanting a mechanism that would be badly perceived by non-euro countries, but the fact that the contracts were now being considered in terms of loans rather than just aid had cleared the air somewhat. He said it was in the interest of the eurozone as a whole for struggling countries to return to economic growth and the idea was making progress in Germany.
The Commission president mentioned technical debate about the option of companies in “peripheral” countries raising loans at lower rates than they pay now simply as a result of their location. Barroso said that if a country pledges to introduce certain reform, the Commission believes it should be helped with loans at European levels for companies that are currently facing problems as a result of the crisis. He said the loans would not be a burden to the public debt of the beneficiary countries and the EIB might be involved in this connection. He said that there were constantly discussions with the ECB about the problem of fragmentation in the European banking sector.
Social dimension of EMU. Barroso said the EU has made giant steps on economic governance such as the two-pronged reform of the Stability and Growth Pact and the creation of the European bailout funds. He said the idea of monitoring national budgets would have been out of the question five years ago.
A Commission report on the social dimension of EMU, adopted that same day, is not aimed at re-inventing the idea of a social agenda that was mooted by Jacques Delors, but simply to incorporate a social dimension in the new economic and monetary governance system. Pointing out that the EU has limited powers when it comes to employment and tackling unemployment because Article 149 of the EU treaty does not allow the harmonisation of national rules in this domain, Barroso said that the treaty also prevented the Commission from unveiling plans for a European unemployment benefit system (see separate article). He said, however, that in the medium or long-term, there could be mechanisms as part of Budget Union to deal with asymmetric shocks through unemployment insurance systems. (MB/transl.fl)