To sum up a long reflection. The European Commission's communication on the application of the Stability and Growth Pact is a positive one, from several points of view.
Its guidelines (which are not formal proposals for the time being) imply progress on the EMU's Achilles heel, which we well know: weak economic governance at European level, and lack of coherence between national economic policies. The second advantage of the Commission's document is that it takes account of the long, extensive and occasionally impassioned reflections held in all European circles: EU institutions, social forces, universities etc. Joaquin Almunia has put together a kind of summary including choices among the ideas launched and discussed during the debate the Commission itself helped to get off the ground, with a couple of sentences from its President that have remained famous. It is, therefore, reasonable to say that the result to be reached by the Council will not be a million miles from that which the Commission put down in black and white. It is true that the national positions are not uniform, and some of the measures recommended have come in for criticism from one or other of the Finance Ministers, or, more so by some Central Bank governors; the discussions to lead to operational texts will have to be long, and in some cases, harsh. But the overall idea seems to have been accepted, as do a few essential points. In particular, it is not a question of changing the Pact itself, and its two pillars- ceiling of the annual budgetary deficit set at 3% of GDP and overall debt of no more than 60% of GDP- remain untouchable, in theory. The ECB and proponents of stringency may rest assured: the fundamental commitments are not under threat, their need is recognised and the stability of the euro is in safe hands.
Institutional appeasement. The document also confirmed the institutional appeasement between the Commission, the Ecofin Council and the Eurogroup. The conflict between them was a serious one, especially after the Council's decision to suspend the "excessive deficit" proceedings against France and Germany, and the Commission's subsequent recourse to the Court of Justice. The Finance Ministers wanted, in practice, to take the Stability Pact dossier out of the Commission's hands and keep the revision of its functioning to themselves. Happily, the Court of Justice ruling clarified both essential aspects of the Pact's procedure, rightly saying that the Council is not obliged to share the analyses and conclusions of the Commission on the behaviour of the Member States, but that it must respect its competencies, and that it can only deliberate on a Commission proposal.
National concerns. The respective competencies having been clarified, no Minister has protested against the fact that the Commission took the initiative, and they all agree that its document represents the basis of the negotiations which are soon to open, and should end with conclusions under the presidency of Jean-Claude Juncker. He might by then have become the long-term president (two and a half years) of the Ecofin Council and the Eurogroup, a significant development if it comes to pass, and I will come back to it. The discussions between the Ministers and with Joaquin Almunia is to start this Friday and Saturday, informally, and will be on the agenda both of the Eurogroup and the Ecofin Council this November. It will continue for several months, and it will not always be easy. Some national concerns are already in evidence: the small countries with healthy budgets are opposed to any laxity being permitted to the "large" ones (which would compromise the euro's stability to the detriment of all), Italy is worried about the importance to be accorded to overall debt (on this point, it will propose changes to the Commission's text), France and Germany want clarification on the degree of flexibility to be allowed in order to bring a deficit below 3%, the United Kingdom will keep a close eye on the institutional element (it does not want to see the Eurogroup's competencies grow too much, as it is not a member of it), and so on.
Not much remains to be said about the content of the measures proposed by the Commission, nor on the clarifications supplied by Mr Almunia, and what he said about the fact that the Barroso Commission (where he will keep the economic and monetary affairs portfolio) is already very much in the spirit of the new suggested guidelines in terms of the application of the Pact. It is true that Mr Almunia said that the current rules remain fully in force as long as they have not been modified, but it is also clear that the Commission's attitude does not contradict, given the ideas it has just presented. We will be able to come back to these aspects in the light of the first ministerial debates.
I have, however, every intention of putting together a few comments right away on the reactions of the MEPs, and the effects of the Almunia draft on public opinion. (F.R.)