Brussels, 06/09/2004 (Agence Europe) - By putting its proposals on the Stability and Growth Pact (SGP) into writing, the Commission has opened up a debate which will continue under the Luxembourg Presidency in the first half of 2005 (see EUROPE of 4 September, pages 7 and 8). Luxembourg's Prime Minister and Finance Minister, Jean-Claude Juncker, has welcomed the Commission's communication which, he says, answers "Luxembourg's expectations insofar as it recommends a more differentiated way of taking budgetary deficits into account, depending on the size of national debt". Mr Juncker feels that "the European Commission's plans, to be debated and approved by the Ecofin Council, will not lead to a weakening of the SGP". In the European Parliament, the Commission's proposals have gone down well with Socialists, Greens and Liberals, who, whilst adding touches of light and dark here and there, have called upon the Finance Ministers to adopt the proposed modifications. The conservatives are the most critical, fearing that the SGP could be undermined if the Commission's powers are not bolstered.
French Socialist Pervenche Bérès, the President of the European Parliament's economic and monetary committee, feels that "the debate is only just starting". In a press release, Ms Bérès states that "incontestably, there are positive elements to the proposal", but also highlights the lack of "details" and "concrete proposals". If she hopes for a "new era with a more active role for the Commission", she especially regrets the fact that "the European and national parliaments were not involved in the implementation of the Pact, or the examination of the stability programmes or the BEPGs". Speaking for the Socialist group, former Danish Prime Minister Poul Nyrup Rasmussen, considers that "the Commission's decision to underline growth without questioning stability is very wise". He expects the Member States to support the position of Mr Almunia and the Commission. According to French MEP Harlem Désir, vice-president of the PES group, his group wishes to go further along the road to reform, and "encourage a broader reflection on European economic governance so that investments which contribute to growth, employment and competitiveness can be taken into account more specifically".
The Greens/EFA group is also pleased with a step forward it feels comes late, but that it is "important to draw the consequences from the fact that the Pact, as adopted by the Heads of State and Government seven years ago, ensures neither stability nor growth", said the group's President, the German Daniel Cohn-Bendit. The French Green MEP Alain Lipietz, the rapporteur on the European Central Bank, said that "the Pact died last year", and that it was "high time the Commission presents a proposal to remedy the situation which everyone sees as 'stupid', and the application of stupid rules".
The Briton Chris Huhne (ALDE group) welcomed the Commission's communication, from which a "key element" is, however, missing. He feels that the Finance Ministers should get involved in the process and "see that it is in everyone's interest for the rules to be applied", because "without majority support amongst Ministers, the Commission has no power". On the International Monetary Fund model, Mr Huhne proposed visits by Commission economists and Member State representatives as part of budgetary monitoring, in order to build up collegiate pressure and make the forecasts more realistic.
The President of the EPP-ED group, Hans-Gert Pöttering, was more scathing about the Commission's proposals, which he said were unacceptable unless they contributed to the stability objectives. Concerned about the Member States' performances in a difficult economic period which would lead to greater deficits, the CDU MEP pointed out that "today's deficits are tomorrow's taxes". Speaking on behalf of the same group, the Bavarian CSU MEP Alexander Radwan said that in order to be effective, these proposals must go hand in hand with the attribution of the "appropriate competencies" to the Commission. He also warned against "too much individualisation of the SGP", depending on the flexible interpretation of rules. In the view of German Christian Democrat Werner Langen, the proposals are a "mistake" because they will not guarantee that the SGP will be any better respected. In order to reinstate the credibility of the SGP, "the European Commission must be given greater competencies", and the "possibility of starting proceedings taken away for the Ecofin Council", he said in a press release.
Christoph Leitl, President of the Austrian Chamber of Commerce and Industry (WKÖ), who is also President of Eurochambres, the Commission has had an "apt response": "the SGP will not be weakened, as has been suggested, but this will be a new development allowing management to continue effectively in time of economic hardship". On the new rules allowing a country with satisfactory debt levels recourse to small deficits, he added: "this will help the new Member States to carry out the necessary reforms".