The agreement on the substance is obscured by the legal conflict. The more we read and re-read the texts on the Stability Pact, the less we understand how legal confrontation was arrived at. The Commission's press release attempts to play down the significance of its appeal to the judges of Luxembourg against the Council, stressing that it is in no way contesting the economic content of the ministerial decisions; on the contrary, it is more than happy to recognise this content as it, for the most part, corresponds to its recommendations. So much so that the Commission will, in the coming weeks, assess budgetary management in France and Germany according to the Council's "conclusions". At the same time, it is playing up the other two elements of its strategy: carrying out its monitoring and co-ordination role for national economic policies, as usual and according to Stability Pact rules, and the initiative it is preparing in order to strengthen the Union's economic governance, including proposals to tighten up the Pact. But all anyone is talking about is the third plank, the appeal.
On the substance, Commission and Council are plainly in agreement. As recently as last month, French Minister Francis Mer confirmed this, denying the existence of a crisis. At re-reading, his comments still seemed valid: "crisis is when there is disagreement on the substance. That's the great paradox with this crisis: it comes at a time when all Europeans, to a greater extent than has been the case for years, are on the same wavelength on economic policy, reform policy and budgetary policy. We agree on the general philosophy of economic reforms, and we are putting them into place (...) We agree on budgetary adjustment: we must return balance to public funds. To do this, all the countries who are not yet on an even keel must regularly reduce their structural deficit by at least 0.5 points of GDP a year". Mr Mer stressed that France and Germany agreed to the objective of getting their budgetary deficit below 3% of GDP in 2005, and to reduce it further thereafter. The dispute related only to how effort was to be spread out over the years 2004 and 2005. Both governments wanted to distribute effort more over both years, so as not to harm economic growth, modest and new as it still is. In fact, the differences of opinion "centred on sums which were less than the margin of uncertainty in measuring deficits". The debate within Ecofin "led to the political and formal confirmation of the joint commitment to budgetary discipline".
Francis Mer's text was published on 11 December. Today, the Commission itself says that it does not dispute the figures retained by the Council, and has announced a "communication" aiming to improve economic governance in general, and the application of the Stability Pact in particular, using three guidelines: a) combine discipline and economic growth better; b) provide stricter budgetary disciplines in times of economic growth and less restrictive ones in more favourable periods; c) open up the way to a certain flexibility in calculating deficits. These three directions have been ardently discussed by experts for months.
A question of procedure, impenetrable for the people. What is the controversy actually about? Procedure. The Council adopted "conclusions", but should have adopted "recommendations". The Commission has emphasised that its action "will focus solely on procedural elements". After careful assessment, the Commission's legal experts came to the conclusion that the procedure followed by the Council was illegal; the Council's legal experts concluded that it was unusual, but not proscribed. We could have seen that coming, and no doubt we will see more memorable verbal sparring before the Court of Justice. But public opinion is not aware of these nuances. The main thing, the agreement on substance on economic priorities and willingness for more co-ordination of economic policies, is as nothing compared to the fight in the Court of Justice. The title of one major newspaper read: "Europe takes itself to court". People only remember the "power struggle" between Commission and Council, which adds to the nasty taste left by the disagreement over the Constitution. Is the Commission even aware public opinion? It's a very important thing, given the forthcoming European elections. Instead of bothering about this, they hand an extra argument (the inter-institutional court case) to the Eurosceptics and the gutter press, just when the positive bits, which are not in short supply, should be played up: enlargement, improved economic governance for the good of all, the Constitution. It is true that the Commission spoke of a three-plank strategy, and the appeal to the judges is just the third, the least important. But it's the only one you'll find any trace of in most newspapers and other media.
(F.R.)