Brussels, 30/05/2006 (Agence Europe) - At the occasion of the hearing of the President of the Eurogroup and Luxembourg Prime Minister, Jean-Claude Juncker, as part of the examination of the report by Pervenche Beres on the activities of the European Central Bank (ECB) in 2005, the MEPs of the committee on economic and monetary affairs of the European Parliament mainly stressed the issue of balance within the ECB's board. They also tackled the recurrent theme of the coordination of economic policies and the more recent and controversial issue of the enlargement of the euro zone.
Somewhat puzzled about the solutions proposed, but not opposed to a reflection on the way the members of the board of the European Central Bank (ECB) are appointed, Jean-Claude Juncker stressed that there is no criterion of nationality in the Treaty. If, in practice, the posts are assigned in a way which benefits the main economies of the euro zone, which also means that board members are often replaced by people of the same nationality once their mandate comes to an end, this institutional continuation is in no way instituted by the texts, which quote competency and experience as the main criteria for the appointment. Although there are no official rules on nationality, the Eurogroup President acknowledged that the European Spring Council of 1998 should not have ruled, when appointing the first ECB President, Wim Duisenberg of the Netherlands,that his successor would be French. This certainly fuelled the idea that a sort of inheritance of ranks on the basis of nationality may take root, he said.
The row on the allocation of positions within the organisation, which flared up again with the appointment of Jürgen Stark, the only candidate to take over from Otmar Issing, revealed the frustrations of the European Parliament, unhappy with its minor role in proceedings. This most recent reshuffle within the board, to take effect on 1 June, was preceded by the replacement of Eugénio Domingo with his fellow Spaniard José Manuel Gonzalez-Paramo in 2004 and by that of Tommaso Padoa-Schioppa with another Italian, Lorenzo Bini-Smaghi in 2005. After Mr Stark's hearing in April (EUROPE 9174), the MEPs approved the appointment of the vice-president of the Bundesbank in May (EUROPE 9195), whilst making clear their displeasure at the lack of any other candidates, the lack of diversity in experience of potential candidates and national considerations which may influence the distribution of posts.
Invited to present his ideas on how the procedure could be modified, the director of the Bruegel think tank, Jean Pisani-Ferry, failed to win over the Eurogroup President. Mr Pisani-Ferry's proposals, which Mr Juncker described as ineffectual, went down a lot better with many MEPs, who were drawn by the role the Parliament would play. A group made up of recognised figures would draw up a list of three candidates, which would then be heard by the Parliament, which would select the one with the most fitting profile. This would have the advantage of creating a selection framework concentrating proceedings not on nationality, but on skills, with better visibility than the current procedure when deciding the best way of fitting the skills of the person with the portfolio they will be in charge of. Mr Juncker, on the other hand, had no illusions on how such a process would be implemented and does not imagine that potential candidates for the board would be happy to go before the Parliament to be heard as if they were "choir boys and girls". Maybe, here again, the Member States should stick to the letter of the treaty, he added, calling for the reflection to continue on this issue.
In adopting and reasoning its decision not to propose Lithuania's entry to the euro zone, due to fears about the long-term level of inflation, the Commission was respecting the Treaty and should not be criticised for that, Mr Juncker went on to state. In response to questions from Margarita Strakevièiûtë (ALDE/Lithuania) and indignation from Alain Lipietz (Greens-EFA/France), the President of the Eurogroup was quite inflexible, stressing that the "Commission applies the treaty on the substance and on the form". "I do not want there to be any surprises in Lithuania today", he said, pointing out that "having learnt that the ECB and the Commission had serious misgivings, I spoke to the Lithuanian authorities amicably, advising them to think again about presenting this (early) request", because the risk of rejection was considerable. "I am not saying that all treaties are intelligent, but they are treaties", he said, before regretting that this affair, "ill-undertaken" due to the "recklessness of the requesting party, in spite of the warnings it had received", may have negative repercussions on Lithuanian public opinion, which feels that it has been treated unfairly. However, these things and the way they work should have been explained in depth, he reiterated, charging each to take his or her responsibilities. Unless we change the rules of the game, the Commission's decision also has the merit, he continued, of not setting a precedent creating a hierarchy within the Maastricht criteria. Paying less attention to the criterion of inflation than to the criterion on deficit or debt would be to strip the institutions of any argument, of any kind, to disallow any country from joining the euro zone in future, he explained.
Jean-Claude Juncker said that in terms of economic and budget cooperation, he had suggested to the ECB that the ECB, the Economic and Monetary Affairs Commissioner and himself (as President of Eurogroup) meet up regularly together, and for the ECB to meet with the 'social partners' (employers and trade union representatives). He said the ECB and Eurogroup needed better understanding of each other's policies to help people understand why pay restraint had to continue because it is not sufficient to say that there has not been a rebound on salary levels. Reform of the Stability and Growth Pact has proved to be a good thing despite initial criticism, explained Juncker. He expressed concern at relaxing of discipline in periods of economic growth. He said positive progress had been made in bringing budget deficits back under control in 2005 but there was a king of relaxing of consolidation in 2006 and 2007 and the same mistakes were being made as at the end of the last decade. He said the high oil prices were going to continue and he expected the price of a barrel of crude to hover around $69 in 2006 and $71 next year.