What got the discussion off the rails? It is likely (and desirable) that the question surrounding the warning sent to Germany about its budget deficit will settle down on Monday and the Economics and Financial Council will be able to find a way of bringing Community procedures back to normal. Meanwhile, it is clearly disagreeable because national sensibilities are being mixed up with political rivalries. All the same, this dramatisation is largely artificial.
For example? Much ink has been spilt over the demand that the Stability Pact rules be applied across the board in the same way and for big countries to be penalised in the same way as small, if it comes to that. This has not been challenged by anyone. Two points are clear - Germany's budget deficit is getting dangerously close to the 3% of GDP cut-off point; and Germany's economic policy is appropriate, meets demands and has to be continued or even strengthened but certainly not modified. Given that these two issues are accepted, some say a warning was necessary because the danger exists, while others say that if Europe is to intervene, it should take the form of encouraging Germany to stick to its current policy. Beyond the legal aspects, there is little difference between these two positions and the divisions are not really between Germany and others (on the contrary, the German Finance Minister Hans Eichel, did not oppose the Commission's initiative to start off with, feeling it could help his government continue with budget austerity in the face of people calling for the economy to be stimulated).
What got the discussion off the rails? The phrase attributed to Chancellor Schröder whereby the Commission's initiative was not simply motivated by economics. Some commentators seized on this sentence like vultures, looking for hidden messages along the lines of the Commission's aim to weaken Schröder's electoral position, or whatever… This is unbelievably petty and such insinuations strengthen my view that the "politicisation" of the European Commission would be dangerous and even in the future, the Commission should be run in accordance with two basic principles - respect for the Treaties and the general European interest - leaving politics to one side.
The Chancellor then said that his government did not want to breach the 3% ceiling and there was no alternative to a tight budget policy. As for the other insinuations (that particular Member States were pleased to see the situation of the giant that not so long ago used to lecture its partners on keeping a tight budget), it is crazy to imagine that any government would be pleased with a slowdown of the biggest EU economy, the only one capable of acting as the motor and dragging the others with it into renewed growth.
As we can see, there is no real division between national views, and the ECOFIN Council on Monday should find a way to reconcile respect for the Stability Pact with Germany's sensibilities, possibly by giving time for thought in order to study updated information regarding the current or forecast deficit.
Imaginary review. The second artificially inflated area of the current controversy is an alleged review of the Stability Pact, cobbled together on the basis of two facts, namely, the existence of a new way of calculating structural budget deficits in the eurozone with the aim not of replacing the consideration of the nominal deficit in applying the Stability Pact but giving the eurozone another economic analysis tool; and the relationship between the deficit itself and the overall public debt of the country in question. The Commission has always stressed this link exists since countries whose public debt is considerably higher than the authorised ceiling (60% of GDP) have less room for manoeuvre in their budget policy. This is applying the Stability Pact correctly rather than reviewing it (which may be considered at some time, but certainly not in current circumstances).
We should keep our sanity and welcome two points - 1) stability culture is gaining ground in public opinion as the only way of leading to sustainable growth; and 2) the Community method has confirmed its vitality and usefulness. Against the intergovernmental backdrop, the EU would have found a solution through reciprocal accommodation. Only the Commission, with its role and independence, could reveal the dangers of the current situation and put the spotlight on Germany after having done the same for Ireland (for different reasons).
(F.R.)