Paris, 26/11/2001 (Agence Europe) - As we pointed out earlier, the "Notre Europe" association has published a study by Lluis Navarro entitled: "On the eve of practical introduction of the euro: a critical report on three years of EMU". It is a critical but albeit positive report of three years of European currency, which sketches out the "roads for the future" (see Jacques Delors' introduction in Text of the Week 23 November, p.3). Lluis Navarro mainly denounces the "institutional insufficiency of the EMU economic pole, which has not allowed the necessary move forward in the coordination of economic policies". "It will be necessary for the countries that share one and the same currency and one and the same monetary policy to have the means to manage the inter-dependency of their policies", says the author. He goes on to add: "It is difficult to imagine that the centralised management model prevailing for monetary policy could be reproduced for economic policies: the States will not agree on new major transfers of sovereignty and they will keep ample latitude in their national policies". In a chapter entitled "Roads for the Future", Mr Navarro suggests it is necessary to:
- Give more body to the Eurogroup. According to Mr Navarro, the Eurogroup should regularly exercise the function of "Guidance Council" and "finalise common guidelines and orientation" serving as a reference framework for the economic policies carried out by the States in the area, which could "take concrete shape in three documents": - guidelines prior to the stability programmes which would allow the Eurogroup, after joint analysis of the situation in the euro zone and the direction hoped for overall budgetary policy, to "reach certain broad lines for guiding the preparation of the national stability programmes"; - a reference framework for the economic policies of the euro zone, as, as the Irish case demonstrates, "without a common framework for analysis, the formal Council recommendations may be challenged or lack legitimacy in the eyes of the country reprimanded". The existing framework should therefore be completed by a "Charter of Principles" that would guide the economic policies of the euro zone and define the changes to be made according to how the situation develops; - provisions specific to the euro zone in the Broad Economic Policy Guidelines (GOPE).
- Make the instruments more effective. According to Mr Navarro, there is "ample margin for manoeuvre to strengthen all the procedures of the Stability Pact". For this, one could above all: - finalise more complete and specific stability programmes (extended for the long-term perspective), mainly taking into account the future burden of the ageing population); - refocus the approach on underlying deficits, as, by focusing attention on balances adjusted to take economic variations into account, one could make a more precise assessment of the origin and nature of the adjustments and deviations observed; - use recommendations in a firm but flexible way as a "formal recommendation of the Council is interpreted as a public reprimand" (here also, Mr Navarro cites the Irish case, which, he says, shows that one should make "very cautious use" of this instrument); - better integrate the various processes, mainly by harmonising dates for the elaboration and approval of national budgets, as the "long delays that currently separate the presentation of the different programmes and the opinions of the Council are detrimental both to the compatibility of the underlying hypotheses and to the intelligibility of the zone's overall position"; - adopt more operational BEPG, for example by introducing a hierarchy that would clearly place emphasis on a reduced number of "key recommendations" for the current year.
- Make the European Commission fully play its role. Thus, according to Mr Navarro, it is necessary to have: - a Commission that "proposes elements of analysis, organises the Eurogroup and represents common interest"; - readjustment of the communication and representation of the euro zone by granting a more important role to the European Commission (the idea of a "Mr Euro", however, would "only add to the confusion", as "there would be two Mr Euros: the president of the ECB, for monetary affairs, and the representative of the Eurogroup, for political affairs".
Mr Navarro notes that these measures could be implemented initially without formal changes being made to the current institutional framework, as they "would come within the gradual process of change that has been a feature of the EMU economic pole since it was created". However, in time, "indepth revision is required" and the organisation of the EMU must take up a key position in the debate on the future of the Union with a euro zone that has a "sound government structure, whether this be in the context of a future amendment to the Treaties, the setting in place of "enhanced cooperation" or the creation outside the treaties of institutional mechanisms and instruments proper to the EMU countries.
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