Brussels, 01/06/2006 (Agence Europe) - On Thursday Parliament adopted by 510 votes for, 40 against, with 66 abstentions, the report by Werner Langen (EPP-ED, Germany) on the enlargement of the Euro zone and which calls for “full respect of the Maastricht criteria”. MEPs opposed “any specific provision” on respect of the criteria and call on the Commission to “rigorously” assess the long term stability of the Euro zone “and its ability to assimilate new participants”. Enlargement of the Euro zone should also provide the occasion for implementing economic governance within it, assert MEPs, who also call on Member States to provide the Commission with the “means of evaluating respect of the Maastricht criteria on the basis of exact, current, reliable and quality data”.
Drawing on the Lithuanian example, Parliament, however, considered, that inflation criteria, based on the levels in the best performing Member States had to be clarified. Examination of these criteria should take into account the fact that the inflation rate in an emerging high growth economy will inevitably speed up in contact with much bigger economies (the Balassa Samuelson effect). Similarly, by adopting an amendment from the Socialist group, MEPs demonstrated their concern about the European Central Bank's (ECB) use of two price stability definitions - one as part of its monetary policy (inflation less than 2% but close to this level) - and the other in its convergence reports (as low inflation as possible, excluding deflation). They believe that these two interpretations “will naturally lead to error and could have negative effects on the market and on its participants in all Member States”. More specifically, Parliament wants to “welcome Slovenia on board as a new Euro zone member” but “deplores the negative recommendation on Lithuania”. It demands “a clear and detailed explanation on the basis of the calculation retained for application of the inflation criteria” and “calls on the Commission to update its 2006 convergence report on Lithuania”. It is also encouraging Estonia to continue efforts for rapidly fulfilling the required conditions.
On 16 May, the Commission refused the accession of Vilnius to the Euro zone on 1 January 2007 because its annual inflation rate (between April 2005 and March 2006) very slightly overshot the reference threshold and that price levels did not all offer long term guarantees (EUROPE 9193). Since then, Lithuania has postponed its accession aim till 2009 at the earliest, which the Commissioner for Economic and Monetary Affairs, Joaquin Almunia, judged “realistic” (EUROPE 9198). Last Tuesday, addressing the Economic and Monetary Affairs Committee, the President of Eurogroup and the Prime Minister of Luxembourg, Jean-Claude Juncker, defended the Commission and also insisted that there should not be any hierarchy of convergence criteria for joining the Euro zone (EUROPE 9201).
During Wednesday evening's debates, the Commissioner himself pointed out that the Commission had just done its work and that “the criteria are not arbitrary or a caprice of the Commission”. Almunia again insisted that they were only applying the treaty in its entirety but not any new conditions. He also said that although the text could be amended, the Commission currently had to implement the conditions in place. Rapporteur Langen had previously congratulated the Commission on its clear report in appreciation of it having correctly applied the Maastricht criteria. Alexander Radwan (EPP-ED, Germany) said that the criteria were too strict and that the Commission should have more scope for scrutinising statistical data. Dariusz Rosati (PES, Poland), on the other hand, said that the Maastricht criteria were not longer adapted to the macro-economic and political context and they needed changes to the Treaty. Margarita Starkéviciute (ADLE, Lithuania) also called for the methodology on inflation to be revised and Guntars Krasts (UEN, Latvia) said that this political decision demonstrated that worries about Polish plumbers had still not gone away.
In a press release at the end of the vote, French Green Alain Lipietz said, “By disqualifying Lithuania, the European Commission is sending an unhealthy message to the Lithuanian people and a contradictory one to the government in Vilnius: yes to catching up economically, on the condition that it is done slowly!” He said that the decision was “scandalous” and that the inflation criteria had been applied “dogmatically” while, “no economic or monetary theory could suggest that a country with such budgetary and monetary discipline could have destabilised the Euro zone because of its rate of inflation”. His Socialist compatriot Gilles Savary said that the conditions for the gradual enlargement of the Euro zone “should never be used as an excuse for 'selective political integration' with regard to new Member States”.