Brussels, 20/03/2003 (Agence Europe) - EU Economy and Finance Ministers sought to reach an agreement, on Thursday evening during their working dinner on the occasion of the Spring Summit, on a political declaration to be forwarded to the European Council on the economic consequences of a war in Iraq. According to some sources, the text should not announce new measures but recall that: - the Stability Pact offers sufficient flexibility to allow Member States to face up to the crisis; - in the current circumstances, coordinated economic measures must be taken at EU level. Ministers should also recall, in substance, that the economic slowdown has lasted longer than expected and that the horizon has been overshadowed by economic uncertainty and global political risks. Hence the need to continue with the implementation of sound macro-economic policies in order to restore confidence and resume connections with economic growth.
Furthermore, in reaction to the beginning of military operations in Iraq, the European Central Bank declared on Thursday that it was ready to act "if necessary". The capital markets can count on sufficient supplies of liquidity, even in exceptional circumstances, as was the case in the past, the ECB writes in a press release.
Lisbon objectives: from words to deeds
The Heads of State or Government are to devote if only part of their work on Friday to the political impetus to be given in order to achieve the goal set in 2000 in Lisbon, that is, to make the European economy the most competitive and most dynamic knowledge economy in the world by 2010. According to a draft agenda with comments by the Greek Presidency, the Heads of State or Government are to recall in their conclusions that major progress has been accomplished over the past three years (Community patent, liberalising the energy markets, creation of Single European Sky, updating competition policy and setting up an integrated financial market at European level), but that much still remained to be done. It is time for the EU and Member States to honour their commitments and demonstrate their capacity to carry through ambitious economic reforms by translating words into deeds, continues the report.
Greek prime minister Costas Simitis said on Wednesday that it was important for the European Council to discuss, as planned, the EU's economic and social policies to show that Europe is continuing to make progress. The Director General for Economic and Monetary Affairs at the Commission, Klaus Regling, said at the beginning of the week that the Lisbon objectives remained valid despite current uncertainties since they were long-term objectives concerning structural problems (pensions, reform of the labour market, etc).
The heads of state are expected to endorse various contributions to the ECOFIN Council on the Broad Economic Policy Guidelines 2003 and on strengthening the coordination of budget policies, which will be echoed in the European Council conclusions.
Broad Economic Policy Guidelines. First of all there is the two page summary document "Reforming Europe for Stronger Growth" presented by the European Council to the ECOFIN Council at the beginning of March. The ECOFIN Council bitterly debated one part of the document which was scrapped in the end to avoid the danger of relaunching debate over the Stability Pact (see Europe of 8 March, p.8). The document notes that progress has been made in terms of structural reform, but "there is still much to be done". For this reason, the Council is focussing about all on the implementation of structural reform rather than setting new targets. "It is essential in this current juncture"("economic growth has also turned out weaker than anticipated a year ago, and the outlook is clouded by economic uncertainties and global political risks") to accelerate our reform efforts to achieve more flexible economies and increase their capacity to grow, in order to raise the standard of living for our citizens." The ECOFIN Council "have committed today to accelerate labour, product and capital market reforms. Our top priorities are to reform employment systems and to foster entrepreneurship and innovation as well as to strengthen the Single Market, and ensure sustainable development." The other document, concerning the main issues to be covered in the BEPG 2003 develops the above-mentioned priorities in ten pages.
Coordinating budget policies. In this report, the Council "thanks the Commission" for its Communication on the coordination of budget policies and says it agrees with the Commission that it is not necessary to modify either the Treaty or the Stability and Growth Pact or to introduce new targets or budget rules. The Council believes that monitoring budget balances in nominal terms is vital, particularly for countries whose deficits are close to or exceed the 3% GDP ceiling; one-off measures will be assessed on a case by case basis, taking account of their utility; Member States in the eurozone whose budget is close to balance or in surplus should cut their structural deficit by at least 0.25% GDP a year; and speed at which the public debt is cut has an important role to play in budget surveillance particularly for highly indebted countries (for which the excess deficit procedure should help guarantee debt reduction is achieved at a satisfactory speed).
European Council expected to endorse changes to ECB's voting procedure
The European Council is expected to be able to endorse by unanimous vote the draft changes to the voting procedure on the European Central Bank's Governing Council. The Finnish finance minister Sauli Niinisto said on Thursday that Finland was prepared to agree to the ECB's recommendation as long as the voting issue is reassessed at a future Intergovernmental Conference, while the Dutch parliament on Thursday lifted its reservations on the proposed changes.