Ignorance and reticence. Interminable discussions on budgetary deficits, the application of the "Maastricht criteria", the calendar for the generalised realisation of national budgetary balances etc., create the impression for the moment of a saga of ignorance and a discourse that is non-committal. Many of those who speak or write appear to have just discovered EMU rules and are not aware, for example, of a certain flexibility in the calculation of the ceiling (3%) in the budgetary deficits laid down in the Maastricht Treaty and that the deadline for balance for all the budgets is no imposed by the treaty but by agreement between Member States. The way in which investments are evaluated in the calculation of public expenditure is not a problem that was discovered yesterday but had been discussed at great length during the elaboration of the texts by, for example, Jacques Delors, who believed that Community loans for funding large-scale European infrastructure projects did not constitute an illicit aggravation of the debt because future generations would profit from the objective. Sunday's declarations by Commissioner Mario Monti (who had already contributed to the debate four years ago) re-launched the polemic, although the spokesperson for Commissioner Solbes denies the existence of differences within the Commission (so that everyone can "assess the actual evidence", EUROPE will soon be publishing the ideas put forward by Mr Monti in his "Weekly texts").
It is unreasonable to pretend elsewhere that with the 2004 deadline for eliminating all national budget deficits in the EU, that in a year and a half's time all national budgets will be balanced or in surplus. Several budgets already are but at least four won't be; Pedro Solbes and European Central Bank leaders, as well as the authorities in Member States know this only too well. But they also know that the objective is so important and represents such a turning point in Europe's economic history that a year or two years' delay would not be too dramatic, as long as the direction is firmly maintained. The historians of tomorrow will write that the first years of the new millennium in Europe created a currency and re-established financial equilibrium and the judgement will not change if the objective was fully reached in 2006 rather than in 2004. Ministers will certainly act on this inevitable (and not catastrophic report) in the autumn.
European Commission initiatives. Why then are competent and well-informed people attributing so much importance to the importance of the timetable? The reasons are both institutional and substantial. The European Commission in its role of guardian of Community legality is obliged to demand respect for the Stability Pact, as well as the decisions applied by Member States; failing that, it will have to apply the procedures and provisions in force. Member States, however, are hesitant to revise a calendar that has been fixed by the European Council. The stakes involve the Euro, the confidence of the financial markets, the credibility of the institutions and therefore the credibility of Europe itself. False messages must not be sent out to the financial markets, and the countries, which before the birth of the Euro, were obliged to have two figure interest rates and periodic devaluations, must not forget that in the absence of the single currency, they would have to return to their former rates and that their budgetary deficits would not be hovering around 2% but rather 8% (due to their levels of debt). The stability of the Euro, calculated in particular by the inflation rate (much more important than the exchange rate with the dollar, which results from it and is not a goal in itself) is obviously indispensable. The Stability Pact must not be modified, as it already consists of a sufficient number of flexibility elements for dealing with conjunctural fluctuations but with hindsight (as Pedro Solbes declared last week to the European Parliament), it can be made to work better.
This pact must, in particular, be completed on the lines of economic co-ordination; in order to re-balance the two aspects of economic and monetary union. The European Commission has already defined its orientations and put forward the appropriate proposals concerning both workable improvements without modifying the current treaty and changes that the Convention would be able to introduce to the new treaty. In their discussions, Ministers of the Economy appeared to sometimes be unaware of what the Commission was proposing and created the impression of worrying too much about their autonomy and their mastering of national economic policy rather than the demands for co-ordination at a European level. This section will therefore attempt to reveal that which Ministers left in the shade, by examining the Commission initiatives, in both ECOFIN and Convention contexts. (FR)