Jacques Delors' "obsession". For years, the need to restore balance to Economic and Monetary Union seemed to be the obsession of a single personality, Jacques Delors, who used to say that he did not recognise its offspring, the lop-sided outcome of the Maastricht Treaty with its solid monetary base but a distinctly feeble economic wing. This imbalance is recognised today by all politicians (bar one) who call for initiatives to strengthen economic governance and this is one of the Spanish Presidency's priorities.
A few words first of all about the dissenting voice - Mr Trichet of the Bank of France (potential new President of the European Central Bank (ECB)), who said that EMU was complete, had an appropriate economic pole and that both the ECOFIN Council and Eurogroup function properly. He feels that the European Union is on a par with any other existing federation (like the United States and Switzerland) when it comes to monitoring national budget policy. Recognising that the euro has protected Europe from outside currency problems and enabled the EU to come through the 11 September tragedy without changing its exchange rate or interest rate, he simply believes that the EU does not need tighter economic co-operation.
As far as I know, he is alone in his views since all other prominent figures who have expressed views on the subject have argued the opposite, with Romano Prodi announcing that the European Commission would be unveiling a document on this highly topical issue in the next few months. In an interview with Baudouin Bollaert of the Figaro, Jacques Delors pointed out that in the 1989 Delors report, the economic plank was as meaty as the monetary plank but that today, there was an institutionally well-structured, functioning monetary pillar and an anaemic economic section. We play around with Eurogroup, he said, but live in cloud cuckoo land because it does not perform. It does not have any resources of its own and hardly stands out through its members' desire to really co-ordinate their macroeconomic policies - the system is unbalanced.
The experience of Didier Reynders, President for a year. The Belgian Finance Minister chaired Eurogroup throughout 2001. When he stood down, he said that the current system for informally managing the eurozone had been pursued in full coherence with its own logic. He felt that he had given Eurogroup greater visibility (hardly surprising according to one observer since it's visibility was virtually zero before) but said this was not enough - Eurogroup had to be formalised and the eurozone had to have its own characteristic economic policy. Eurogroup discusses matters but decisions are taken by the ECOFIN Council, which includes non-euro Member States. While eurozone members are clearly in the majority on the Council, this will change with enlargement. Mr Reynders says Eurogroup should launch in-depth discussions and not shy away from issues like German budget excess (that was never openly raised at recent meetings) rather than the excess spending of little countries like Ireland and Austria; discuss its members' economic and budget policies well before they are finalised; and examine national situations in the light of new indicators defined in common by qualified majority voting if necessary.
Crazy situation. If opinion is so undivided on the need for rebalance, then why is the operation so difficult? For two basis reasons - the understandable reluctance of the three non-euro Member States, and institutional complications. Eurogroup is not an EU institution and is not included in the Treaties. Its launch was decided upon by the eurozone countries, so it operates on an intergovernmental basis with the Commission simply being invited to take part in its meetings. This is crazy because along with the euro, EMU is the most federal, integrated part of the entire Europe project, but is run half on intergovernmental lines, without Parliament and with the Commission relegated to observer status! This is why the Commission does not suggest strengthening Eurogroup in its current form, but we'll have to wait and see what direction is recommended in the document announced by Mr Prodi. The Commission is already being called upon to take the issue on board - hardly surprising since EMU management will be a vital part of the Europe of the future, as Giscard d'Estaing is well aware.
Ahead of the rest and proposing new ideas, as is his wont, Jacques Delors has put forward a solution - if readers can wait another 24 hours, I will reveal all tomorrow.
(F.R.)