Brussels, 09/03/2005 (Agence Europe) - Presenting the plenary with the stakes of the European Council of 22 and 23 March- which will be mainly given over to the Lisbon Strategy (see pages 7 to 9), the sustainable development and post-Kyoto strategy, the situation in the Middle East and the next wave of EU enlargement -the President of the Council, Nicolas Schmit, and the President of the European Commission, José Manuel Barroso, focused on the reform of the Stability and Growth Pact (see yesterday's EUROPE, pages 7 and 9, on the Eurogroup's inability to reach consensus on the proposals of the Luxembourg Presidency).
For a long time now- “some would say too long”- we have been discussing how we can improve the Pact, said Nicolas Schmit, pointing out that the reflection process had already started under the Dutch Presidency. The document presented by the Luxembourg Presidency tried to respond “in a balanced way” to the concerns of the Member States, and aimed for “a compromise based on good economic sense, genuine need for increased flexibility in hard times and the need for greater budgetary rigour in periods of growth and prosperity”, said the Luxembourg minister for European affairs. An extra meeting of the Ecofin Council has been convened for 20 March, and “we still hope that we can resolve the issue before the beginning” of the Summit, he noted, but warned: “an absence of agreement will bring real and serious risks, and this will not, unfortunately, mean that the current Pact will be applied as if nothing had happened. Sadly, this will not help its credibility any”. At the same time, Mr Schmit admits that a compromise “whatever the cost, a second-rate compromise, will be no good either” for a Europe which, he said, is “under close observation”, first by the citizens, which expect their leaders to produce a policy which “sacrifices neither growth on the altar of stability nor stability on the altar of transient growth”. “Do not put is in a failure scenario”, said Mr Schmit, who added: if we reach a solution, “the Commission will have a clear mandate” to make proposals, with the involvement of the Parliament, in line with the rules of the Treaty.
José Manuel Barroso came to give a hand to the Luxembourg Presidency, a “competent and determined” presidency, he said. He spoke of problems with the implementation of the Pact, due mainly to certain “differences of interpretation” which have led to “uncertainty on the modalities of budgetary monitoring”. “Without re-writing the Pact itself”, we must give it greater credibility, he stressed, adding: “I remain confident that the Summit can unveil a more credible Pact, based on a coherent and well-balanced solution”. Mr Barroso repeated: we must maintain the rules of the Pact on deficit and debt, but at the same time: -reinforce its preventative side, by adopting specific medium-term budget objectives for each country; -maintain a healthy budgetary policy in periods of high economic growth; -rapidly correct excessive deficits when they are identified, whereas “economic elements” can be taken into account. Nor is the Commission in favour of a compromise no matter what the cost, but it stressed that an agreement on the Stability Pact would boost the Lisbon Strategy: “there is a link between the two”, said Mr Barroso. The citizens would not understand if, at the Spring Summit, there was no “breakthrough” on this dossier, he said, calling on the institutions to stand together. If we give the impression of a “lack of harmony between the institutions”, if we send out “an uncertain or pessimistic message”, this will be particularly dangerous in this time of ratifying the Constitution, concluded Mr Barroso.
The reform of the Pact must be tackled in a spirit of solidarity and “any divisions, especially between old and new Member States, will be very harmful”, said Nicolas Schmit, in answer to questions from MEPs. He also reassured them on the institutional plank: “we must not undermine the role of the Commission in the management on the Pact (…). There is no question of trying to 'remove' the Commission from the budgetary monitoring exercise”, he said. On the content, Mr Schmit pointed out that “one deficit does not call for another' and that a distinction between “consumption” and “investment” deficits was required. The Pact should be better placed in relation to the economic cycle and it should be able to be changed when it clashes with economic realities but, Mr Schmit warned, “anyone who thinks that there will be no sanctions for letting deficits through the net are quite wrong”, especially as there would be no increase in the interest rates, which would weigh down much-needed investment. I would rather not name names, but one country (Germany) has been cited, said Mr Schmit, who feels that if certain countries have experience “rather extraordinary events”, this should be taken into account.