Once again, Jean-Claude Juncker has got everything off his chest. Well, almost everything. But when he did not say everything he thought (about the autonomy of the autonomy of Eurogroup from the Ecofin Council), he had the intellectual honesty to say so. For an overview of his declaration, see Albin Berger's report in EUROPE 9285. I will add a few reflections to some aspects.
Autonomy of Euro zone and nature of political body he directs. The position put forward by the president of the Eurogroup is institutionally orthodox. He explained that Eurogroup is not an EU institution and does not plan to become one because the Euro zone is expected to gradually extend to all Member States even if the body that manages it corresponds with the Ecofin Council at that time. Eurogroup will therefore maintain an informal character even if its budgetary and economic governance on countries in the zone is expected to expand and get stronger. Jean-Claude Juncker added that his “response could have been more precise but I don't intend to say everything I am thinking here and now”.
We can deduce what he is thinking from his description of the situation. He does not intend to draw up a balance sheet of the activities of the Group he presides because this balance sheet is not yet sufficiently solid or completely satisfactory; the “feeling of the unaccomplished” remains and the “pedagogical effort” has not yet succeeded. But in its current shape, with a stable presidency, the Group is already more efficient, the analyses have been expanded, certain procedures have been reinforced and above all, the essential objectives are better understood and accepted. Especially one of them: the more sensible use of surpluses from tax returns by prioritising deficit and debt cover. From this point of view, reform of the Stability Pact has been efficient. Previously, neither public opinion nor even the European Central Bank grasped the importance of this aspect; today, good budgetary housekeeping is generally recognised as a priority. It is indispensable that all Member States apply this principle; action in this regard should become horizontal and cover the whole zone. In a Monetary Union, different orientations on this subject are impossible and countries that successfully apply this principle will not accept that other countries shirk from it (Mr Juncker then used the “theoretical example” of Italy) because responsibility for the stability of the Euro should be assumed by all.
The horizontal character should also cover the use of growth potential, structural reforms (even if there are still problems: how to win elections after carrying out reforms?) and other aspects of governance, thanks to common criteria for index linked wages, inflation provoked by the cost of certain services, developments in real estate.
Progress in the external recognition of the Euro zone. Mr Juncker's ambitions also cover the external aspect of the Euro. For the first time the Euro zone is recognised by the IMF as a monetary zone in itself. The day will come when this zone will be represented as such at the IMF, even if there is still no consensus (in Benelux countries, the “northern part” does not agree “but agreement will come later”). Globally, it was predictable, according to Mr Juncker, that “the real music will be progressively played at Eurogroup” and that the European economic and monetary political axis would shift in this direction, even if this evolution is not to everyone's liking, especially London's.
In this context, we can understand that for Mr Juncker, the informal or formal nature of Eurogroup could be secondary. He has already acknowledged that Euro ministers now prefer to discuss certain aspects of the situation and some of the orientations. Nonetheless, he did express the greatest of respect for the Ecofin Council (to which he always gives a report as the president of Eurogroup) and regretted that ministers for the Euro had a tendency, as soon as their meeting was over, to leave the premises…He regards the draft constitutional treaty as a “good start” in the direction of autonomy for the Euro zone.
Opposition to arrogance against countries from Central and Eastern Europe. Mr Juncker is very firm on the question of the gradual entry of other Union countries into the Euro zone. He does not speak about “new Member States” because this definition is not part of his vocabulary: there are no new or old countries, there are Member States and that's all there is to it. He rejects the notion, or even the impression, of a “closed Euro zone”: all EU countries have the vocation of joining it, the objective being that of enlarging to the point of incorporating the totality of Member States.
Accession to the Euro zone cannot be negotiated; as soon as a country respects the criteria, it can join and if it is ready it will do so without suffering any shock. No convergence criteria should be added to the current criteria and none should be amended. Candidate countries cannot introduce their own criteria; Euro countries cannot make existing criteria any more severe or refuse entry to those who are up to scratch. In this field, there is no reason to be arrogant. Central and Eastern European countries have accomplished extraordinary transformations and reforms: six out the eight did not even exist as independent countries ten or fifteen years ago, this is some achievement!
The president of Eurogroup is therefore clear about it: the criteria are clear, the common rules apply to all, the revised Stability Pact explicitly shows that there is no “pressing need” for new reforms. What is of the uttermost importance is to consolidate and apply what exists. He therefore both rejects temptations to be arrogant or attitudes of superiority from some Euro zone countries and wants certain Eastern and Central European countries to tone down or revise their inflation criteria because he considers that its application is too mechanical (the case of Estonia comes to mind with its Euro zone entry postponed because of a minimal overshooting of the rate of inflation allowed). Mr Juncker believes it wise to accept and respect the rules in force, without discussing the autonomy of the European Commission and the European Central Bank in an assessment of respect for criteria.
Autonomy of statisticians. Apparently technical, this point has in fact had crucial economic importance, as any deficit allowed in the evaluation of debt reduction etc. are linked to the reliability of calculations and the effective autonomy of the Statistical Offices. Jean-Claude Juncker considers it essential for the Statistical Offices to be independent from the political powers, particularly Eurostat (although personally he does not entirely agree with some of Eurostat's assessments concerning the budgetary advantages that his country has had due to the fact that certain Community institutions are based in Luxembourg). It is perhaps in the framework of Eurostat where current affairs questions should, for example, be discussed, such as the real level of Hungary's deficit and Greece's request for introducing part of its “gray economy” into calculations of GDP.
Dialogue with president of European Central Bank. A lot of ink has been spilt on this case (see this section in EUROPE 9268). Mr Juncker spoke about it in a simple and calm way. He stressed that sharing competencies and responsibilities between the president of Eurogroup and the European Central Bank is to be unreservedly respected and that finance ministers, as well as governors were “very sensitive individuals”. Nothing is working marvellously yet but “we are currently developing a good dialogue I am satisfied with and which I consider as positive”. In his opinion, it is possible, while respecting the respective competencies, to exchange remarks and opinions on policies each party is responsible for, as long as discretion is assured (and if excessive declarations are avoided in the press…).
Future financing of European Investment Bank (EIB) in third countries. While observing that this affair did not involve Eurogroup but rather the Council of the EU as a whole, Juncker believes that the EIB should represent an important instrument of the Union's external policy. It is not by reciting poems throughout the day on Europe's friendship with such and such a country from Asia, Latin America or Africa that the EU will put its neighbourhood or friendship policies into practice. Without ignoring the reticence of certain countries (the Netherlands, we are aware believes that it will be necessary to gradually get rid of funding from the Bank in Asia and Latin America), Mr Juncker considers that the EIB should continue to assume a reasonable level of funding outside Europe. He thinks that an agreement at the Council will occur soon by amending the Commission's proposal (foreign affairs ministers will be discussing this case this very Tuesday in Luxembourg), by compromises between Member States which, like Spain and Portugal, would like emphasis on Latin America, while others are more disposed to Asia.
A unique experience. Although I've spent a lot of time on the “working lunch” organised by the European Policy Center (EPC), it's because Jean-Claude Juncker used the occasion to reply to several questions on the situation and prospects for the Euro. Economic and Monetary Union is not the only place where Juncker can play a central role either. He has unique experience of the European Council (he is by far, among the current members of this body, who has participated at the most summits) and undoubtedly has a lot of ideas on Europe's institutional and constitutional re-launch. He spoke about this subject last week at a conference organised by Etienne Davignon's “Friends of Europe”. Agence EUROPE, however, was not invited, and I am therefore unable to tell you what happened there.
(F.R.)