Indispensable and advantageous. I wasn't wrong to think that one should accept everything Jean-Claude Juncker said in his outburst at the end of the Ecofin Council. He had threatened to not submit the much awaited draft to the next European summit. The draft aims to revise how the Stability Pact works (see this section 11 March). His warning contained a lesson and appealed to wisdom. In fact, the following day, he again began his high level contacts and made it clear that he still believed it possible to iron out any differences. The dossier is coming on. Over the last few days, Juncker has spoke on three occasions at the Eurofi Conference, during the meeting with national parliaments and in an interview with the Figaro (EUROPE 15 March pp 17/18 and yesterday pp 7 and 8).
The first time, Mr Juncker seized the occasion to illustrate how the pact was the first and for the time being, the only instrument for budgetary and economic governance monitoring the Union had, which was both indispensable and advantageous for everyone. This was an extremely useful reminder because having read certain commentaries and listened to certain declarations from politicians (even those at the highest levels), we sometimes get the impression that the pact is an invention conjured up by the Community bureaucracy in an effort to bully countries and obstruct their freedom of action and their attempts to relaunch economic growth and create jobs. This is ridiculous and yet it is what we are in fact reading and hearing. Mr Juncker began by underling the fact that because the euro was everyone's currency and mistakes made by some people would have a negative impact on others; moreover countries that had adopted a disciplined approach should not pay for countries that had been less virtuous (even if these are some of the big countries). The stability of the euro is necessary for all. I would like to add that it wasn't necessary for the president of the Ecofin Council to repeat to an audience of bankers and financiers that only a stable euro created advantages of the lowest interest rates for fifty years, prevented the storms of monetary volatility that sometime struck the world and prevented dramatic devaluations and re-evaluations of national currencies, which occurred before the single currency and which so perturbed the way Europe functioned.
Dozens of lists? That said, Mr Juncker did point to the three main principles of reform that should be confirmed: a) 3% of GDP ceilings for annual budget deficits and a ceiling of 60% of GDP for overall debt; b) sanctions to be maintained in the range of pact instruments; c) the Commission is “confirmed in its role, which consists of initiating excessive debt procedure”. But at the same time, it will be clearly indicated (in the Treaty itself) that a deficit above 3% of GDP is not necessarily “excessive” when it is “exceptional, temporary and close to the reference value”. What still needs to be done, is to clarify what criteria should be considered is slippage is allowed (given the fact that no spending category would be excluded a priori the calculation of the deficit. Is a list needed? Mr Juncker was caustic in his reply, “I've been asked to make a list and I have done. Then I'm told that it's too long. And at the same time everyone' asking for a spending category to be added to it which they deem important!” Yesterday you read that the solution he suggested was getting rid of the list! Each Member State would indicate in their discussions with the Commission what expenditure needs to be understood. This is going to be complicated! (Dozens of lists!) But if this is what they want…
Non euro-zone countries should accept agreement between euro-zone countries. On this basis, Mr Juncker considers that a compromise is possible between countries in the euro zone. But what about the other Member States which, at the Eurofin Council, expressed such reservations, with the United Kingdom at the head of them? The procedure will be simple: if there is an agreement on Sunday at Eurogroup, Juncker could submit it to the Ecofin Council on the same say. If reservations remain, he can take the same text to the Heads of governments at the summit two days later (which he will be chairing). If the text does not get through, the Stability Pact will stay as it is, which will obviously be very serious. After so many discussions, with an agreement in hand between euro-zone countries, is it reasonable to give in to the opposition of one country or other that is not part of the euro-zone? Don't euro-zone countries have the right to manage their national currency? I think that the repercussions of failure will be in a number of respects, serious. And therefore it is more reasonable to think of success. After which, Mr Juncker, as president of the Eurogroup for two years, will be busy with the coordination of economic policies and therefore in charge of making the atrophied leg of EMU, stronger (European Monetary Policy). He's already announced it. I'll be speaking about it when the pact had been updated and in principle accepted, which will, I hope, be during the second part of next week.
(F.R.)