Nothing dramatic despite some bitterness. Yesterday, by highlighting the positive effects of the Almunia project for reorientation of the Stability Pact, I restricted myself to considerations of a general and institutional character, without commenting on the different adjustments suggested, as the main debate on this subject is just beginning. I have, nevertheless, observed, that at present, remarks, indeed, criticism is coming from all sides and one gets the impression that certain hasty reactions are the result of inattentive attention paid to the text. Joaquin Almunia, has not concealed, for example, that he has the feeling that criticism from the Hungarian prime minister targeted the press rather that the actual contents of his document (the press had, the day before got the wrong end of the stick, particularly with regard to the very cautious observations of the president of the European Central Bank (ECB): some journalists have overtly displayed their disapproval of the Commission's draft, others went in the opposite direction. In actual fact, Mr Trichet re-asserted on the eve of the Brussels decision, his opposition to any revision of the text in the pact but did state that he was pleased with an improvement in the way it worked. This goes in exactly the same direction of the Commission's communication. The ECB has not given any subsequent commentary on its contents.
Exchanges of opinion assumed a more bitter tone. The way in which the Bundesbank created the impression that it was seeking to dictate its wishes to the Ecofin Council and what it had to do, appeared to be not at all to the liking of the president of the Council, Gerrit Zalm, who impassionately emphasised the exclusive responsibility of the ministers (see our bulletin yesterday p 14). A few words inserted in the press statement which followed the meeting between Jean-Claude Juncker and José Manuel Barroso should be highlighted because the former will be presiding the Council and the latter the Commission during the decisive phase of the debate (first half of next year). It says in this communiqué (see our bulleting 8 September p 6) that the two of them agree on a link being made between developments in the economic situation and respect for the rules on the one hand and flexibility on their application on the other, "which would allow for more rigorous respect of the pact".
Overall, there is no reason to over-dramatise things. The fundamental orientation of the documents is going in the direction of what was requested from almost all quarters: to make the Pact work more "intelligently" and make it more supple. The European Confederation of Trade Unions (ETUC) acknowledged that the documents went in the right direction but considered that it did not go far enough in support for economic growth. The ETUC announced that it would be producing provisions, which is both desirable and positive; John Monks is right to call for active and sensible participation of the unions in this European debate.
Reactions from MEPs were, on the whole, positive with regard to the general orientation of the project, with a few exceptions, notably from the right in Germany (see our bulletin 7 September p 13).
First section should be re-read… Comments mainly focused on the first section of the Almunia draft ("re-orientating the Stability and Growth Pact") than on the second (co-ordinating budgetary policies) and Joaquin Almunia was not altogether successful in stressing the parallels and close link between the two, the second being just as important as the first. Certainly, the first part is more spectacular; is has sometimes been presented as a turning point in the direction of a "Pact à la carte", namely, adjustable according to how each Member State sees fit. Almunia rejected this interpretation and it was not without a degree of malice that he pointed out (in an interview) that it was not the Commission but rather the Ecofin Council which had reserved differential treatment for France and Germany with regard to what it decided beforehand in relation to less demanding countries. The four reorientation points in the pact (importance of criteria for public debt, taking into account of national circumstances in deficit correction, inclusion of "low growth" among exceptional circumstances, surpluses in periods of growth) have been discussed widely. I will therefore limit myself to suggesting that the integral text of the communication should be read instead of simply relying on the commentaries (although the Commission has broadly diffused the text, it will be published in our "EUROPE/Documents" series next week so that our readers can read it at their leisure.
…and a second much neglected second section. On the other hand, the second section on co-ordination of national budget policies has been rather neglected. Moreover, the economic significance is obvious: establishing rules in Brussels and adopting the "Broad Economic Policy Guidelines (BEPG) every year at an EU level is an appealing proposition, but which is just not effective enough, if subsequently the concrete application of the BEPGs does not happen to coincide with the national budgets being drawn up, and is then not jointly monitored within the Community institutions. The operation is not an easy one, because budgets are discussed and approved by national parliaments, whose autonomy is above question, but which are not sufficiently aware of the BEPGs, or if they are, don't take account of them. And it is at this point that the second plank of the Almunia document also takes on a highly political significance.
Involving parliaments in drawing up the BEPGs. Pervenche Bérès, the president of the EP's economic affairs committee, had some very intelligent things to say about this in a recent interview. To quote her (our translation): "the national parliaments should be involved in discussions on BEPGs from the time they are drafted, in April of each year (for the next year). They would take over where the European Parliament left off. Debates on the economic guidelines should become politicised within each Member State. Otherwise, the citizens will inevitably say that everything is decided over their heads in Brussels". This trick is quite common and has been honed to perfection by the national authorities (followed closely and ingratiatingly by a section of the press): if policies to boost the economy are inadequate or non-existent, the fault always lies with Brussels: the European institutions are holding things up.
To return the floor to Pervenche Bérès: "Today, governments never refer to the BEPGs in national budgetary debates. The economy ministers see them as belonging to a purely academic debate which they sideline from the national fora. This is what needs to change. If we are to boost growth, we cannot content ourselves with adding national economic and budgetary policies. We need more common goodwill".
Excessive misunderstanding. The first element of the formula to be applied is the joint involvement of the European Parliament and the national parliaments in producing the BEPGs. The position of the French Socialist MEP confirms this excess of mutual misunderstanding. The European Parliament and the national parliaments have long seen themselves in some kind of stand-off, the former jealously guarding its prerogatives and busy stamping its foot about them, the latter untrusting and perplexed about the successive transfers of powers towards Strasbourg. Efforts to create contact centres between the national and European members of parliament, although unarguably laudable, didn't meet with much success to start with. The turning-point came, in my view, within the Convention which drafted the European Constitution. For the first time, national MPs sat in a joint body, on an equal footing with the Community institutions and national governments, and the results far outstripped expectation. Most of the national MPs threw themselves into it heart and soul, often taking positions very strongly in favour of European integration, and contributing enormously to the success of what was a very difficult job (I can personally bear witness to the commitment and value of the actions of many of them: Pierre Lequiller, Lamberto Dini, John Bruton, Ben Fayot, Hubert Haenel, etc). A permanent link between national parliaments and the European Parliament was strongly recommended by Convention president Valéry Giscard d'Estaing. What Pervenche Bérès is now calling for would help this link to materialise.
Mr Almunia is already heading in the right direction. The second plank of the Almunia document already heading in this direction. It affirms that a Community monitoring of national budget policy should overtake the "disciplinary plank" to be placed in a wider context, and he adds: "reinforcing the link between the BEPGs, the Stability Pact and national budgetary processes would improve the efficiency of economic policies". To this end, it suggests changes to the current timetable of Community procedures and analyses in order to make it more compatible with the national budgetary process, by putting forward specific suggestions, and it also refers explicitly to the possibility of "getting the national parliaments more involved at an early stage in budgetary planning". The link between the recommendations of the BEPGs and the national budgets is clearly indicated.
Towards the economic governance of the euro zone. Pervenche Bérès's suggestion goes further, and with her usual exuberance she makes the end goal clear: "Joaquin Almunia's proposals are still far from the mark on the indispensable reinforcement of the economic governance of the euro zone. The EU, to cap it all, has made no progress on this point since the single currency came into being!"
Of course it won't be easy to advance in this direction, because a happy medium must be sought between the autonomy of the States and the national parliaments in defining economic policies, and the coherence these policies must have within the euro zone. Added to this is the institutional reluctance on the part of countries which are not in this zone, headed up by the United Kingdom, and which will not play a full role in these exercises. But we must congratulate Pervenche Bérès for having raised the fundamental issue of the economic governance of the euro zone once more.
(F.R.)