Brussels, 20/12/2013 (Agence Europe) - The European summit toned down its plans, by postponing until October 2014 agreement on contractual arrangements between member states and Brussels on the introduction of reforms in return for financial aid.
The structure of the contracts, known as “partnerships for growth, jobs and competitiveness”, is starting to firm up, but the summit in Brussels on Thursday 19 December was simply a staging point rather than the great leap forward demanded by the German chancellor, Angela Merkel, in October. She said in June this year that a decision would be taken on contractual arrangements in December, but this has not materialised. The last draft conclusions document, dated 18 December, stipulated that overall agreement will be reached in June 2014, after work on the substance of the contracts and the related financial mechanisms. The summit postponed matters because of the European elections, according to Germany, and because of resistance to the idea, according to other countries. Merkel said on Thursday evening that the deadline had been extended a little because of the European elections, but that had given people a little more time. During the talks, she had suggested 31 December 2014 as the deadline, but most member states wanted October, before the end of the current European Commission. She said this was proof that there was genuine desire to make progress.
Solidarity mechanism. French President François Hollande stated that the delay was due to “still a great number of uncertainties over the funding which could be provided” to support the states in the implementation of the reforms. The conclusions state that President of the European Council,Herman Van Rompuy is called upon to explore “all options concerning the exact nature” of this solidarity mechanism, in other words, for instance, subsidies, loans or guarantees. “France does not expect subsidies” to implement the reforms and nor will it wait until October to undertake them, said Hollande. He believes that the funding for this solidarity mechanism cannot come from the European budget and that the response therefore lies elsewhere. Why not use the revenue from the financial transactions tax (FTT), or the European Investment Bank - “but that is not its job” - or even a eurozone budget. But the eurozone does not have a budget of this kind and this solution could cause problems, as contracts are open to states which do not use the single currency. This solidarity mechanism must not be conceived as an instrument to reduce inequalities in terms of revenue, or have any impact on the multi-annual financial framework. Lastly, it must not involve any financial obligation upon states which are not participating in the partnership system.
Prevention is better than cure. In the view of the German chancellor, who is at the top of the list of those in favour of the idea, the emphasis must be placed on preventing crises. In support of her argument, she said that contributing an extra billion a year to the multi-annual financial framework in order to prevent the crisis from happening again was “always going to be less expensive than having to deploy the European mechanism again”. She explained that some people were stressing the fact that, in the past, they had already been called upon to pay, so why do so in future for those which implement the reforms. To this, she replied that it was not possible to impose impossible conditions on the states: getting into the minefield of the budgetary pact, whilst investing in research or training. “If they cannot do it, then we have to help them”, she said. She added that the presidents of the European Council and the Commission both supported this approach.
Points of agreement. The Council takes the view that this partnership system should be included in the framework of the budgetary surveillance process, commonly known as the European semester. It should be compatible with the single market, open to states outside the eurozone and applicable to all countries which use the single currency, with the exception of those which are under the economic adjustment programme. It would focus on measures to remove obstacles to growth and employment, or which represent a potential risk to the eurozone. It would be based on the national reform programmes submitted by the states to the Commission, taking account of specific representations for each country. It is worth noting that the passage providing for countries under deficit procedure or excessive micro-economic imbalances procedure, the corrective measures plan or economic partnership programme to be able to replace the contractual arrangement has been removed from the final conclusions.
“The word 'binding' is no longer in the text”, said Belgian Prime Minister Elio Di Rupo. It is more of a “common agreement”, whereby a state works with the Commission on various objectives, whilst retaining a certain margin for flexibility. Czech Prime Minister Jiri Rusnok, however, stated that a group of countries was in favour of more obligations and commitments. He spoke of tough discussions.
It will indeed be a matter of “economic policy objectives” rather than just reforms, according to the conclusions of the summit. The states will draft these for themselves, then discuss and approve them with the Commission prior to submission to the Council, which will give its approval. The Commission, which is tasked in the draft conclusions with “monitoring” the implementation of specific landmarks, has lost a bit of ground, at least semantically, and will be called upon to follow the application of the measures on the basis of a timetable agreed jointly.
Italy to tackle the issue. The discussions are not “yet ripe”, said the head of the Italian government, Enrico Letta, who feels that each instrument which is “used to increase the connection between the countries is a positive step”. He said that the question would be tackled in greater detail under the Italian Presidency of the Council of the EU, in the second half of 2014. In the meantime, the leader of the S&D Group at the European Parliament, the Austrian Hannes Swoboda, welcomed as a “temporary victory for Europe” the postponement of the decision “on the absurd contractual arrangements”, via his Twitter feed on Friday. (EL with MD, CG, AN and FG/transl.fl)